SEO is one of the most effective ways to draw traffic to your website and increase your business’ revenue. Once your SEO strategy is developed, you’re going to want to measure how effective it is – that’s where you need to be able track your return on investment (ROI) from your SEO strategy.
Calculating SEO and ROI
SEO is all about building up your bottom line, but it’s not going to happen overnight. Keep in mind that SEO is a longer term strategy and not a quick fix tactic. SEO takes time and consistent effort. We liken it to getting healthy through diet and exercise.
When you consider ROI, you have to look how much you’re investing and how much you’re getting back. A quick and dirty way to analyze your ROI and at least give you some ideas of SEO and ROI is to figure out some basic costs.
- Take a look at your sales over the last 3-6 months. Go through the list of sales and see if you can tally those that are a direct result of your SEO program
- Total up the sales figures for those, for example, say $50,000
- Now total up the expenses for the SEO services (vendor, materials, services, etc), let’s say they are $10,000
- Subtract the expenses from the gross revenues (of the SEO related sales) $50,000 – $10,000 = $40,000
- Now divide net revenues by the SEO Expenses $40,000/$10,000 = 4
This is very crude and an accountant might cringe but this at least tells us that for every $1 we put into SEO/Marketing expenses, it generates $4 in revenue. It’s a 400% return on our money. Put $1 in, get $4 in sales or revenues. It’s crude but it gives you something to work with. Naturally you’d have to figure out all your costs if you really wanted to truly get an accurate picture, but what this simple ROI calculation tells you is what the Marketing costs are to generate the revenue. This is handy because you can compare it to other forms of marketing to compare the ROI.
What if you go to a trade show? You could do the very same comparison. Factor in the costs of the booth, travel, hotel, car, meals, staffing, etc. and you could get a similar crude figure.
Another thing you can do is to take the number of sales and divide that by your SEO/Marketing expenses. This tells you the Marketing cost per sale. Another important metric you may want to keep track of. Example: 100 sales acquired by spending 10,000 in SEO services = $100 in marketing expenses per sale.
Knowing this number, you can divide the average sales order by your marketing expense per sale and get a %. This will tell you what % of your average sale is your marketing costs. Example, average sale is $1,500 and you spent $100 per sale on Marketing = $100/1500 = 6.66% of every sale is the marketing expense.
All these little quick calculations start to give a sense of the effectiveness of your SEO.
Interestingly… when we pick up new SEO projects we mostly see negative or very little ROI. Many campaigns barely break even and this is less than ideal.
Lifetime Value of Customers – SEO and ROI
Another factor that is often overlooked when companies are trying to decide whether to invest in an SEO campaign is what a customer is really worth. Initially customers are thinking about the monthly fee for SEO and trying to justify the costs. But in order to justify the costs you do have to understand the lifetime value of a customer to your business. This will help you to understand what you can afford to spend on SEO services and still be operating at a profit.
Assume, for example, that each customer who purchase from you, will spends an average of $1,500, and that they order from you twice per year. On average, you can expect a customer loyalty period of two years. Further assume that each of your customers is going to recommend your business, and bring in two new customers for you.
So, each new customer will spend $1,500/each x 2x’s per year x 2 years of loyalty = $6,000. Then the two referrals will also be worth another $6,000 x 2 referrals = $12,000. Customer lifetime value may be $18,000 and so this all has to be factored in when you’re thinking of online marketing. Many small businesses do not consider or quantify these revenue implications which leads them to a short-sightedness with regard to their own marketing.
Other Types of Conversions
In determining your ROI as it relates to SEO, you also need to consider what percentage of your site visitors actually perform other actions on your website besides a purchase or signing up for your services. SEO also brings in leads which will need to be nurtured with an automated lead nurturing program such as a monthly newsletter. These leads that come through could be in the form of:
- Online emails
- Online form submissions
- Newsletter sign ups
- Blog subscribers
- Product or Service inquiries
These types of leads are also important to factor in because a portion of those will eventually turn into customers too, if you stay in contact with them and provide them with helpful information.
Phrases and Keywords Have their own ROI
Different keywords that you target will also have different conversion rates and different levels of ROI. All keywords do not produce the same results. Some are just better and bring in more highly qualified traffic. You could have a lot of traffic coming to your website that never turns into sales. This could be because you are targeting the wrong keywords. So an analysis can be done to refine & improve your conversion rates by keyword – you want to know which keywords are generating the desired action on the part of the visitor to your site. The keywords that convert at a higher rate are the ones that are the most useful to you – and you’ll want to SEO optimize your website around the best performing keywords.
As you can see there are ways to measure and track SEO and ROI. Most of them are sort of a manual and clunky process but the information is important and as you learn to track it, it becomes easy and second nature. Many businesses prefer to simply leave SEO and ROI in the hands of an SEO company like ClearTech Interactive. However you choose to handle your SEO, though, don’t make the mistake of neglecting it, and don’t go with the least expensive provider – remember, you get what you pay for.
Why Every Company Needs SEO & ROI!
The importance of SEO for online businesses can’t be overestimated. It’s what drives the traffic to your website and generates the leads that get you sales. There’s not much worse than being buried deep in the search results for Google and other search engines, because you know that hardly anyone ever checks out more than a page or two of search results. You want to make sure that you have a good position, and that traffic is effectively directed to your website. It’s not enough just to have an attractive website. Almost any competent designer can create a site for you that’s rich in graphics, with attractively positioned text and videos, and yet those efforts are for nothing if leads aren’t being generated, customers aren’t getting in touch with you, and you’re simply not getting the traffic.
An effective SEO strategy is what gets you the traffic. For results you’ll see on your bottom line, you need to develop a good SEO strategy, and do it immediately. Otherwise, your competitors are going to be improving their position while you languish on the results pages no one ever looks at. If you find the prospect of handling your own SEO a bit daunting, you should consider hiring an SEO company like ClearTech Interactive. Many business operators find that outsourcing this activity to experts to be very cost-effective and rewarding.
Why Choose ClearTech?
We can’t overstate the importance of SEO. You need a good strategy, and ClearTech Interactive has the experience. We’ve helped hundreds of clients to reach top positions since 2003, and we’ve also assisted new businesses in creating SEO strategies that have enabled them to see results in a very short time. We will ensure that you get highly satisfactory ROI from your SEO.
Why not contact ClearTech Interactive today? We’d welcome an opportunity to help you develop an SEO strategy that will maximize your ROI, or to discuss any other aspects of your web page development. We can be reached at 727-562-5161 Monday through Friday from 9am-5pm eastern standard time, or reach out to us online.