Back when I was running my investment management company, we often met with potential clients who asked us to do a portfolio analysis. More often than not, they were surprised to see their portfolio wasn’t doing as well as they thought. This was mainly due to the fact that they didn’t understand ROI or Return On Investment. Once we calculated every little expense & fee they were paying, the return on their investments was a good deal less that what they thought. They were focused on the stock charts. We were focused on their actual worth. For the same amount of risk, they could have been doing a lot better.

As a broker and business person, ROI is one of your most important metrics – don’t leave home without it.

Measuring ROI allows you to compare apples to apples; to see how different search or newspaper campaigns are performing against each other. It helps you make decisions like where to spend your marketing dollars and where to spend your time. And it’s even effective in evaluating your current split. Most brokers are paying an enormous amount of their income to a managing broker – but what’s the return?
To answer that measure your ROI. To do that just divide your net income (before taxes) by ALL your costs (split, marketing, franchise fees, advertising, tech expenses, etc.). You’ll end up with a percentage. The larger the percentage, the better off you are.

Here’s a spreadsheet to get you started: ROI Calculator.
Next time you’re about to do a direct mailing, get this spreadsheet out and run the numbers. Keep a running history of your various marketing campaigns and in keeping track of ROI, some interesting patterns will emerge.