The Difference Between ROI and KPI Metrics

Hi, everyone! Laurel Mintz here, CEO & Founder of Elevate My Brand, and this is EMBiz.

What is the difference between ROI and KPI—that's not BS? I know that there are a lot of jargon-y terms out there, and I hope that you see that one of the main points of the content we create for you is to demystify this jargon. So today, we're going to talk about the difference between ROI and KPI.

What is a KPI?

KPIs are key performance indicators. Don't let the jargon fool you; it's really just a way to measure traction or progress towards success. So you should have a KPI (or multiple KPIs) for every single marketing channel that you're executing within. And you can also have KPI targets once you have enough of a baseline to back up those numbers to.

What is ROI?

ROI is what measures the actual results. It's return on investment. Basically, did the investment that you make return a value greater than the investment that you made? Otherwise, it's not really going to be balanced, and it's not really worth your time. There is, however, a caveat to that: when most brands are starting up, they're not going to have the biggest ROI because they haven't built their audience yet. So, an ROI for advertising should be very, very clear, but an ROI for something like building a brand or building brand awareness is going to be a bit more of a vanity metric because you're not really tracking towards a conversion.

How to use ROI and KPI together

You want to use KPIs to improve your ROI because one tracks to the other. We talk about the funnel all the time, and the KPI is kind of at the top of the funnel, and the ROI is really at the bottom of the funnel. The ROI also helps to validate future KPIs. So it creates this kind of cycle of virtue when you're doing it the right way.