Promotion ROI % (Profit-based)

Contribution Margin ROI (Profit-Based)

Description: Contribution ROI measured on incremental profit (margin-adjusted) instead of just revenue.

Formula: Contribution ROI % = (Incremental Profit – Trade Spend) ÷ Trade Spend × 100

SQL Calculation:

((SUM(incremental_units) * unit_margin - SUM(trade_spend)) / NULLIF(SUM(trade_spend),0)) * 100 AS contrib_margin_roi

Why It Matters: True profitability measure of promotions, factoring product margins.

Metric Type: Result (Profitability)

Essence: Lagging

Frequency: Per Promo Event

Units: Percentage (%)

Suggested Breakdowns: Product, Retailer, Promo Type

Questions Answered:

• Did the promotion create profit, not just revenue?

• Are we overspending on low-margin promotions?

Potential Causes of Worsening: Heavy discounts on low-margin SKUs, excessive trade spend, competitor price wars.

Tactics to Improve:

• Prioritize promos on higher-margin SKUs

• Reduce discount depth

• Bundle products

Related Metrics:

• Promotion ROI %

• Incremental Units

• ROI per Case

Related Explores:

• Contribution ROI Analysis

Related Sources:

• URMS + Margin Data from ERP