Measuring results is a vital step to improvement. Unless we focus on measuring results, it’s hard to figure out where we stand. It further helps us take control of the situation and finally bring in changes to achieve our goals.
As per Search Engine Land, on average, any online business today drives more than 53% of traffic through organic search and only 15% through paid search. But, SEO isn’t free – it demands a fair amount of time and money. Also, SEO is a continuous process that makes measuring results all the more important.
How Does It Work?
Return on search engine optimization investment gives the numerical value on the traffic, sales, and leads generated. The primary method to measure ROI of SEO is quite simple. Here’s the formula:
ROI = [Gain from Investment – Cost of Investment] / Cost of Investment
Methods to Calculate the ROI of SEO
Apart from the above-mentioned simple formula, there are other methods used to calculate the ROI of SEO.
To start with, determine the cost of all the investments involved in SEO.
- Agency investments : If you are outsourcing SEO, you may need to shell out a fixed monthly fee to operate. This is a direct investment that has to be included. The agency may charge separate fees for individual strategies like paid ads, influencer marketing, backlinking, on-page optimization, etc. It is important to keep track of this and include all this as part of your investment. The calculation for outsourced investments is very simple – just make a note of how much you are spending as a commission and costs.
- Tools Charge : All the software tools you buy for your SEO need to be included as part of the investment. Some could be fixed annual costs, or some could be monthly outflows. Either way, ensure that you keep a note of the expenses incurred from time to time and include these in the overall investment value.
- In-house SEO resources : These are the charges one pays on an hourly or daily basis to copywriters, developers, designers, and marketers who work as a team on SEO tasks. You need to include all the parameters for your resources, like salary, benefits, overhead costs, etc.
All the above three investments are added up to arrive at the initial SEO investment cost.
Determining the Conversion Value
After calculating all the investment costs, the conversion value needs to be measured in the next step. You can make use of Google Analytics to access all the required metrics. To calculate conversion value, you need to know the average lead conversion rate and customer lifetime value. You can get the average lead conversion rate by calculating the percentage of leads that have turned into sales. The customer lifetime value can be obtained by calculating the average spend that a customer makes overtime. By multiplying these both, we get the conversion value.
Conversion Value = Customer Lifetime Value x Lead Conversion Rate
The numbers obtained from the conversion value and SEO investment are used to determine ROI by using the formula:
ROI = (Conversion Value – SEO Investment) / SEO Investment
This is the simplest method to determine the ROI. A positive figure shows success and tends to increase the value for stakeholders.
Know why Google is not admiring you like you want it to?
Other Factors to Measure SEO Success
The other essential parameters to be determined besides calculating returns to analyze and find out whether the SEO campaign or initiative is a success or not are:
- Check the Total Sales : The ultimate aim of any online marketing campaign is to see a substantial increase in sales. A comparison of the online sales before and after an SEO campaign can help measure its impact.
- Traffic from Non-Paid Sources : If you are getting traffic directly through a keyword search or link click backs from other sites, you have been successful with SEO.
- Sales Qualified Leads : Sales Qualified Leads are those that come from running specific campaigns with trackers on the website.
- Organic Traffic Conversions : These are also called assisted conversions. The percentage of sales happening through customers who visit the site in their buying journey gives you the organic traffic conversions.
The primary goal of any eCommerce marketing initiative is results. Tracking your business progress with SEO is possible only with the right data. Ensure that you invest in tools and data-related specifics that can help measure ROI on SEO. Having the numbers on hand gives you the edge as it helps understand how SEO is helping to push sales and conversions. The bottom line is to achieve more returns than investments. You can have a periodical analysis of ROI on SEO to check whether you are moving in the right direction. Depending on the nature of business and investment on stake, you can do it quarterly, half-yearly, or annually.
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