- How to calculate SEO ROI and generate real results
- Importance of website traffic and lead quality to predict SEO ROI
- Why is measuring SEO ROI important for business?
- Challenges of calculating SEO ROI
SEO, and online marketing in general for that matter, can seem like a daunting endeavour to business owners and marketing execs who are just breaking out onto the web world. After all, you can quite quickly sink a large budget into your online activity without being able to accurately predict the return on your investment (ROI) in terms of traffic and, subsequently, possible sales.
Still, the same could be said for more ‘traditional’ forms of marketing – billboards, flyers, radio adverts, for example. If anything, it’s easier to foresee your ROI with online marketing, as the statistics are all available if you know where and how to look for them.
How To Calculate SEO ROI and Generate Real Results
Marketers need to demonstrate ROI from their SEO activities, irrespective of whether the investments into marketing are sourced internally or externally, as you need to showcase value to business owners or stakeholders.
However, all too often, the value of SEO stops at KPI trackings such as traffic and ranking positions. Here’s how you could calculate your SEO ROI and get a grasp of how your online marketing strategy may play out:
1 – Estimate Web Traffic
It all starts with generating traffic. Without traffic, you won’t generate revenue from online searches. Therefore, it’s essential to know the size of the marketplace and subsequently how much of that market you will be able to attract to your site.
You can start by targeting one of your products or services to analyse, preferably your most popular. Then, take that product or service, and create at least 10-15 keyword phrases that a potential customer may use when searching for that product/service.
Easy peasy.
Once you have your list, take it into Google’s Keyword Planner, which will give you monthly search volumes based on geographic location. Google Keyword Planner is a great place to start and will provide you with a general idea of the online market for your particular products and services.
Using this (estimated) figure, we can also gain a rough idea of how much traffic you could potentially get based on your position on the Google search engine results page (SERP). The below table shows the relative average Click-Through Rate (CTR) based on rank:
Average Rank | Average CTR (%) |
1 | 17.6 |
2 | 9.94 |
3 | 7.64 |
4 | 5.31 |
5 | 3.5 |
6 | 1.63 |
7 | 1.09 |
8 | 1.04 |
9 | 0.44 |
10 | 0.51 |
So using the above table, we can (very roughly) use a formula to calculate the average monthly web traffic you could be getting from organic searches.
The formula is as follows: Monthly Volume x CTR.
Simple right?
Of course, it depends where your website will rank, and unfortunately, you can’t predict this. Still, you can look at how your competitors are ranking for those keyword phrases and garner a rough estimate of what positions you can achieve and, therefore, what kinds of volumes you can expect from organic searches. We can then use this information to estimate potential revenue.
2 – Estimate Revenue
After determining how much traffic you could be getting a month, it’s possible to get a general idea of the amount of revenue you can generate. To do this, you will need to determine your website’s conversion rate.
If you don’t know this information (you can gather this using Google Analytics), you can use the following generic conversation rates instead:
- For an e-commerce website, use a 2% conversion rate
- For a lead generation website, use a 5% conversion rate
You will also need to know:
Average Sale: What is the value of an average sale across your entire catalogue?
Close Rate: What percentage of leads your company receives are closed as a sale?
With all of this data, you can again use a formula to project your potential monthly revenue: Monthly Traffic x Conversion Rate x Close Rate x Average Sale = Monthly Revenue.
Of course, the above will only give you a guideline of what you can potentially achieve. You will also need to calculate profitability and consider the timeline of your strategy.
Using Website Traffic and Lead Quality to Predict SEO ROI
Although website traffic metrics are essential, you won’t attract users to your site if your lead generation is lacklustre.
What is lead generation?
Lead generation refers to attracting potential visitors and converting them into interested users who may purchase your product or service.
You can measure how likely a potential customer is to sign up for a newsletter, engage with your brand or purchase a product through a process called lead quality.
Suppose your traffic is increasing, but your bounce rate has also rocketed. There’s more than likely an issue with the technical aspect of the site or content on the page, which is preventing you from bringing in qualified leads.
When customers find value in your website, they will take time out of their day to browse the products or services that you offer.
How do you qualify your traffic?
One way to bring in qualified leads is to produce high-quality, compelling content. To create content that resonates with your audience, you must research their interests, pain points, and goals to offer potential customers value.
You can determine whether your content has generated qualified leads by tracking the performance of your blog posts. For example, if a user has clicked your post, left a comment and then navigated to your product page, that is a high-quality lead.
However, if you find that the people landing on your blog page are exiting quickly, you should consider reworking the content.
Calculating ROI using SEO Ranking
Marketers and business owners can also use their SEO ranking to determine the ROI.
According to recent reports, blogging firms have 97% more backlinks pointing to their content than other companies, meaning that you need to create high-quality content if you want to drive brand awareness and build page authority.
You can do this by developing your SEO strategy. A successful SEO strategy should include:
- Short and long-tail keywords
- Featured snippets and schema
- Active on social media channels and relevant sites to gain more backlinks
When your content is optimised correctly, you’ll have a higher chance of generating qualified leads, which will improve your chances of seeing better ROI.
Calculating ROI through Social Media
Another way you could predict your ROI is through social media engagement.
According to the latest figures, nearly 4BN people use social media platforms such as Facebook, Instagram and YouTube, with Facebook boasting 2.74BN active users.
Several businesses already leverage social media to drive results. If you have a strong presence on social networks, you’ll have an easier time connecting with users that could benefit from your products or services.
You can monitor your social media engagement through analytics dashboards already set up in the app or via Google Analytics – a more comprehensive measurement tool. Google Analytics helps businesses grow through intelligent data collection, allowing account users to analyse content performance across multiple channels, including social media.
With Google Analytics, you can learn about the type of content that interests your followers and inspires them to engage with your posts or click through to learn more about your brand.
A HubSpot survey of 467 consumers revealed that more than 50% had purchased products through social media, making it a valuable platform for businesses.
To calculate the ROI for a specific campaign using Google Analytics, go to Acquisition > Social > Conversions in the dashboard.
Set up an appropriate goal, and insert a destination, which will be the URL you want to direct those consumers. However, make sure this goal is not indexed in Google so that the only way for someone to land on the page is via social media to avoid distorting the data.
You could then work out the ROI by:
- Calculating the lifetime value of the customer and multiplying that by your conversion rate
- Calculating the average sale amount
If you’re spending money on ads, you’ll also need to measure your spending to determine whether you have a positive or negative ROI. Besides cash, you should also factor time and content into your ROI calculations.
Why is measuring SEO ROI important?
According to a BrightEdge Research study, organic search makes up 53% of all search traffic. That reason alone makes it extremely important for businesses to understand the financial value of SEO.
Although it is important to track KPIs such as conversion rate and rankings, the ultimate measure of success is ROI.
Businesses that can’t estimate how much money is returned for every dollar spent will struggle to know what marketing channels work effectively and which areas of the strategy need to be scaled up.
When you’re able to demonstrate a positive ROI, you’re also generating a buy-in to the channel from investors, which will help boost growth further.
What are the Challenges of Calculating SEO ROI
Calculating the ROI of SEO has been a challenge for years, primarily because search engine optimisation does not typically have a fixed cost.
Other methods, such as pay-per-click (PPC), are far easier to measure as they have associated costs, which you can attribute to the investment across any given timeframe. For example, price is linked to how long the ad is displayed and agency fees (if you’re outsourcing your marketing activities).
However, SEO is more difficult to measure as earnings are generated organically. There is no fixed cost for each click, so ROI has to be predicted by looking at search rankings, organic traffic, and goal completions.
How to determine the right price for your business’s SEO services
Have you ever found yourself wondering whether you’ve sold your agency short? Or fretted about whether raising your prices would deter potential clients?
Whether you’re a startup agency or fully established, the price point will be a pressing question when looking to secure a potential client.
Pricing ethics and legality sit in a grey area, especially amid the ever-evolving digital shift, which has diversified SEO services and made benchmarks foggier.
However, you could avoid being caught in a cycle of anxiety and disappointment by doing two things – striking a balance between profit and client satisfaction.
Easier said than done, right? But, don’t worry; we will cover the fundamentals about what’s behind the “right” price.
How to balance profit and client satisfaction
It’s important to be objective when determining what a good profit looks like for your agency and a good deal to the client.
You should analyse three factors before making an offer. These are:
- cost
- perceived value, and
- price.
It’s also important to identify the link and differences between them to incentivise your sale, which will help you cover costs and earn a profit.
Pitch the difference between your client’s perceived value of the service and what your agency offers to alter their perception of the value of your business and make them more willing to buy.
We also recommend avoiding focusing too much attention on the operational costs of using your service, as this could demotivate the client and cause you to lose the sale.
Misjudge your client’s perceived value of your service, and you risk losing them if they consider your agency too expensive. Offering value for money to the client and generating profit for your business is a balancing act between cost and the perceived value.
It would help if you also considered the difference between offering SEO value to a client that owns a startup business and an established e-commerce company. Determine your ideal client so that you can create a threshold for your services.
When mapping out your client portfolio, consider questions such as:
- Who are the customers?
- What stage of growth has their business entered?
- How many revenue streams do they have?
Several strategic management tools are available, such as TUZZit, which will help you build a business model canvas that captures your company’s value. Business model canvases demonstrate value by taking an in-depth look into customer segments, revenue streams and cost structures.
You should also look into your agency’s history, identifying and analysing past failures associated with previous clients to help you develop strategies to avoid this in the future.
Consider time spent, resources used, and profit margins. Knowing which clients to refuse is just as important as identifying potential lucrative opportunities to ensure a stable policy.
