As a small business owner, you know the importance of tracking the return on investment of your marketing efforts. If you’re going to spend money to attract customers, you need to know that you’re making money as a result.
This is true for online marketing as well as traditional marketing.
In the online marketing world, your website is one of your biggest assets, and search engine optimization is the top tool to promote that website and turn it into leads. So how can you measure the ROI of your SEO efforts?
Here’s a breakdown of how you can measure the return on investment, so you can be confident your efforts are paying off.
Why Measure SEO ROI?
Why should you put in the effort to measure the ROI of your SEO efforts?
In a nutshell, you need to measure this because SEO costs you money. In fact, according to Forbes, SEO spending in the United States alone is over $80 billion a year. That’s a big chunk of money for the modern business owner.
SEO has a cost whether you’re doing it yourself or paying someone else. If you are paying someone to help you with your SEO, then you have that investment figure. If you’re tackling your SEO in-house, you are spending time and manpower to optimize your online presence — and your time is the most valuable thing in your business Either situation, SEO comes at a cost. You need to be able to show that the money you’re investing is paying off.
If you can prove a positive ROI, you’ll know that you’re investing well in your SEO efforts. If you find that the SEO is not bringing in a positive ROI, you can fine-tune your optimization efforts to make them more effective. Either way, you need the facts that show whether your SEO efforts are bringing in financial rewards.
How to Measure the ROI of Your SEO
You can measure the return on your SEO investments in one of two ways. The first is complicated. It involves tracking values through Google Analytics. For many small business owners, this process is time-consuming and fairly technical.
An easier way to measure the return on your SEO investments is to look at leads, click-through rate, and close rates.
First, you need to find your number of leads per month.
Check your analytics data to find your monthly search volume, click-through rate, and lead conversion rate, then apply these to this formula:
- Monthly search volume x click-through rate x website lead conversion rate = total number of leads per month.
Using this figure, you can then figure out your monthly new customers rate using this formula:
- Leads per month x close rate = monthly new customers
Now that you know your monthly new customers, you can determine the new revenue those will bring with this formula:
- Monthly new customers x customer lifetime value = new revenue
You might be wondering at this point where the talk of SEO will come in. Once you know the new revenue your monthly search volume is receiving, you can consider SEO. Here’s the final formula:
- New revenue – SEO cost = ROI
As you can see, with just a little math, you can quickly determine the ROI of your SEO efforts. If they’re done well, you’ll probably see a high ROI.
Calculating SEO Cost
In order for these formulas to work, you must know your SEO investment. To do this, you need to add up all the costs associated with your SEO efforts. These may include:
- In-house SEO team: This is the team that works on your SEO efforts, including any website developers or copywriters. If these professionals work on other aspects of your business, break down their daily or hourly rate and determine how much of that time is spent on SEO.
- Tools: Any tools you use for SEO efforts, such as keyword research tools, Google Analytics, or content ranking tools, need to be part of this figure.
- Freelance or agency help: If you hire an agency to help with your SEO, add their fees to your costs.
Add all of this up to determine your total SEO costs.
Don’t Neglect to Calculate the Cost of Inaction
Using the formulas above, you can figure the cost and ROI of SEO efforts. Yet there’s another cost worth considering in this discussion, and that’s the cost of inaction.
You can choose not to invest in SEO. In fact, if you do, you’re in good company. Around half of all businesses don’t invest in SEO.
But being in good company doesn’t mean you’re achieving success. Remember, a high percentage of today’s purchases involve some sort of online search. If you’re not showing up in those searches, you’re losing money.
When you don’t invest in SEO, you lose potential revenue in three distinct ways:
Lost SERPs Position
When you don’t invest in SEO, you lose in the Search Engine Results Page or SERPs. Your competition that is investing in SEO doesn’t, and they get the organic traffic you’re missing out on. You don’t want to be on the second page of Google search.
Stagnation or Deterioration of Your Site
If you aren’t working on SEO, your site is going to stagnate. Other pressing issues will pull your attention away from keeping your site dynamic and current, and it will become outdated quickly. Sometimes, the neglect of your site causes it to deteriorate, and this hurts your brand.
Links to your site from other sites are a great way to boost your SEO efforts, but a stagnant, outdated site is not going to get links. Your link profile will suffer, and this will further hurt your positioning in the SERPs – especially if your competitors are racking up the backlinks.
Putting a monetary amount on the cost of inaction is challenging but still worth considering. Not only do you lose the ROI of solid SEO efforts, but you lose further by hurting your overall online presence and missing out on organic leads that could be helping your business grow.
The Bottom Line – SEO Pays
So what is the return on investment for SEO? The answer is going to be different for every business, but the bottom line is this – when you invest in quality SEO, you get your money back through better leads that turn into paying customers.
The cost of inaction is simply too high to ignore this tool. Are you looking for help to outshine your competition with improved SEO? Reach out to the Engenius team today!