Measuring the success of your search engine optimization attempt is an important parameter to know whether the money, time and efforts allocated are effective or not?
SEO is one of the most common organic activities of driving relevant traffic/visitors to your website that may convert as your customers since they are mostly interested to purchase your products or services
It Is now possible to calculate the ROI of your SEO campaign, in this blog, specifically we’ll take a look at
Most average business drives its 53% traffic from organic search. So you must understand the actual money value that the channel is driving to your business.
There are standard SEO KPI like sales and conversions but the ultimate measure of success is delivering a strong ROI. When you’re able to ascertain a positive ROI, your showing success and generating buy-in to the channel from stakeholders right across the business
Unlike PPC, SEO doesn’t typically have fixed costs associated with it to calculate SEO accurately.
We can easily attribute the investment on PPC across a given period as PPC has click costs associated with it. Typically, the cost per click of running the ads adding with agency fees, we can simply reach an accurate figure of our monetary investment.
On the other hand, SEO is a little complex and difficult to measure, given that it is all about organic visibility. There is no fixed cost with every organic click and now we are here to help you figure out how to determine ROI on SEO and give you tips on how to calculate it properly.
First, we need to calculate the cost of your SEO investment. So for this, you need to combine the costs which are associated with the channel and use this as your monetary investment figure. Here, these costs include:
We need to break down the cost of in-house resources who work on SEO 100% of the time to an hourly or daily rate based on their tracked time. So as long as your team is tracking their time spent on SEO tasks, this shouldn’t be too complex and difficult to calculate.
If you work with an SEO agency, then calculations for ROI on SEO become easier. The majority of engagements expected from an agency is to retainer model with a fixed monthly fee. Take and add any agency SEO fees into your investment calculation.
In SEO, tools are very important and have their special place to carry out SEO services. It is advisable to truly understand the ROI of your SEO activity, you need to make sure that you’re calculating the value of your investment by including tools costs.
It doesn’t involve any complex formulas for calculating ROI on SEO, as long as you are aware of the figures to input. Since you’ve already calculated the cost of your SEO investment, now you need to track and measure the value of your conversions.
This is different among different websites to calculate and approach with a method for eCommerce and lead generation sites. So, Google Analytics would be the best help to you, it can be quick and easy to capture your business’s revenue from the organic search.
If you have an eCommerce tracking code set up in Google Analytics, you’ll have access to all the metrics you need to measure ROI on SEO. If you don’t, it’s simple to set up.
When in any business, the primary type of conversion is leads, it’s a little more complex and challenging to track your conversion value. Unlike eCommerce transactions, a lead doesn’t have any associated value because actual conversion usually takes place offline, and not every lead generated will turn into your customer who will pay for your product and services.
Customer LTV is the average spend that a customer makes with a business over a specific period of time.
Lead conversion rate is the percentage of lead you generate that turns into sales.
If the average lifetime value of a customer is $10,000 and your closure rate is 10%, your goal value should be set at $1,000.
Of course, this is making only certain assumptions. However, it’s a proven way to calculate the ROI on a business where the leads are the main source of conversions.
Use this formula to calculate ROI on SEO:
(Value of Conversions – Investment Cost) / Cost of Investment
Let’s work out an example. Assuming that over a month, your SEO campaign generated $100,000 and that the costs associated with this were $20,000.
After putting these figures into the formula, we get:
($100,000 – $20,000) / $20,000 = 4
In other words, your ROI here is 400% (4 x 100 to get a percentage). That’s all there is to it.
Different methods of attribution are an important aspect that we need to consider when it comes to calculating the ROI of your SEO activities.
It is by default, Google Analytics uses last non-direct click conversions, which means that conversions are attributed to the last channel that drove the visitor to your site unless it was a direct hit.
We need to consider that majority of visitors require multiple interactions with your business before they pay for your product and services.
Go Click On is the Best SEO services company in Melbourne that will help you assist in your SEO goals and ROI on your SEO investments.