When preparing for case interviews, ROI and ROAS are two concepts you'll encounter repeatedly. Both are key metrics that enable you to evaluate a company's success and measure the efficiency of investments.
🔎 In this article, you’ll learn how to correctly apply ROI and ROAS in your case analyses and how to structure your answers clearly.
Return on Investment (ROI) measures how much profit a company generates relative to its investments. This metric helps you assess whether an investment was worthwhile. In a case interview, ROI is particularly useful for evaluating the efficiency of a proposed strategy or project.
💡 Pro tip: A positive ROI means the company is earning more than it has invested, indicating a profit. A negative ROI points to losses.
How to calculate ROI:
Example: If a company invests €100,000 and earns €120,000, the ROI is 20%. This means the company has achieved a 20% profit on its investment.
Return on Advertising Spend (ROAS) is a specific metric that plays a key role, especially in marketing cases. It shows how efficiently advertising expenses are converted into revenue. Simply put, ROAS helps you evaluate the success of marketing campaigns.
How to calculate ROAS:
Example: If a company spends €10,000 on advertising and generates €50,000 in revenue, the ROAS is 5, which means the company received five euros back for every euro invested.
💡 Pro tip: A ROAS of 5 or higher is generally considered a good value. However, in case interviews, you should always inquire whether this figure is sufficient to cover costs and achieve long-term goals.
ROI and ROAS are used in many areas, especially in the analysis of investments and marketing measures. Here are some important application areas:
In most case interviews, you are expected to assess financial or operational decisions. Specific metrics like ROI or ROAS are often used to determine how efficient a measure is. Both metrics indicate how well a company utilizes its resources – whether in advertising or investments.
This means you need to be able to not only calculate ROI and ROAS, but also contextualize them correctly. You must understand when a number is good or bad and which additional factors to consider, such as market trends, customer goals, or competitive conditions.
💡 Pro tip: When interpreting ROI and ROAS, it’s essential to understand the specific case. In consulting, there is no "one-size-fits-all" solution. You should always tailor the framework to the respective client and situation.
