One key to getting good data is to accurately communicate what you want. The lingo of measurement includes a few terms that have, well, somewhat variable definitions, depending on who is trying to sell you what. Here’s your guide to a few of those tricky definitions.
When you hear any of the following terms or words, make sure you ask the person using them what he or she means by them. If their definition does not match the one below, be very careful who you are dealing with and what you are buying.
ROI is an acronym that stands for Return On Investment, an accounting term for a specific calculation of financial results. The formula for calculating ROI is:
ROI = (Gain from Investment – Cost of Investment) / Cost of Investment
That’s it. There is no other definition, despite the many uninformed people who use ROI as if it means “results.” So unless you can calculate net gain, you can’t measure ROI. Many people seem to think that ROI and measurement are the same thing. They’re not.