Most businesses rely on SEO as their partner in digital marketing. Some used organic traffic to increase their leads and boost their sales. On the other hand, some prefer using paid advertisements to persuade their target customers efficiently.
Not all business owners approve SEO as a marketing partner. Some are still hesitant to incorporate it into their operations. They want assurance that the profit they receive will outweigh the cost of spending on SEO and advertising.
How can the SEO pro persuade the business owners to trust the process? Well, you should provide them a reasonable ROI estimate. If you’re looking for an SEO Expert Brisbane specialist, you have visited the right page. We will be discussing more how to calculate ROI and its impact on your business.
What type of business do you own?
When you do a calculation, it must be quantifiable to express an equation and formulate a conclusion based on the results. If you’re computing for a return on investment in SEO, you should determine first what type of business that you’re engaging in. Is your business e-commerce or lead-based type?
Generally, e-commerce can measure its ROI in terms of the transactions in selling commodities and paying direct and indirect costs. Since there are physical products and quantifiable services to offer, the calculation will be convenient and straightforward.
On the other hand, a lead-based type of business means that your sales are highly dependable in the interaction of the customers. For instance, if you are a blogger or a Youtuber, the revenue relies on the viewers, readers, watchers, and SEO.
The income is challenging to calculate, but you can always do some estimates. In this article, we will be focusing on lead-type businesses and how they can assess whether the company is successful or not. Now, let’s proceed with the computation itself.
3 Steps in Calculating Your ROI in SEO
You can calculate the return on investment by using the equation: Return on Investment equals Revenue less Cost.
If you’re interested to know the percentage, you can use this formula as follows: Return on Investment equals Revenue less Cost divided by the Cost. Now, the question is how you can determine the revenue based on the clicks, web visits, keywords, etc. Here is how:
Set Up the Conversion Tracking
An e-commerce site would use data to measure its ROI, such as conversion rates, the total number of transactions, revenue generated amount, order value, direct and indirect costs. These variables are significant in computing its ROI based on Google Analytics.
In a lead-type business, they need to use three alternatives in computing for the ROI, namely the CPC method, assigning a monetary value approach, and benchmarking. Let’s tackle these options one-by-one.
a) CPC Method
In this approach, the business must be using web tools to extract data and gather the necessary variables for computing the return on investment. Generally, they can use the Google AdWords Keyword Planner and Ahrefs Keyword Explorer to get the search volume, data trends, suggested bid, number of clicks, CPS, RR, keyword-related ideas, and more.
The Google AdWords Keyword planner can display the suggested bids in which these amounts refer to the estimated cost of buying one click. Whereas, the Ahrefs Keyword Explorer uses its metrics to get results for specific keywords. Aside from these two tools, you may also use the Advanced Web Ranking tool to get the CTR that identifies the percentage of searches using a computer and mobile devices.
To illustrate these concepts, you can follow these step-by-step procedures:
- Use the Ahrefs Keyword Explorer metrics to get the total search volume for that keyword
- Use the Advanced Web Ranking Tool to get the Click-Through Rate or CTR and identify the specific percentage of the visits
- Next, proceed with the Google AdWords Keyword Planner to get the suggested CPC bid.
- Then, you can use all the variables that you’ve gathered to identify the revenue in monetary amounts
- You can use this formula if you are opt-in using this method
- Estimated sales = (Total Search Volume x CTR x CPC bid)
b) Monetary Value Approach
Businesses can also use the Google Analytics Goal features to assign monetary amounts on a per transaction basis. For instance, they can assign a value on the email signup, subscribing to the site, gathering web visits, clicking the link, and buying the product, sharing the content, and more.
They can also use the default setting and grouping channel to get an estimate using Google Analytics. In the latter part of the columns, it will display the conversion rate for that website or keyword research. To get the monetary value, you can still use the previous computation, but you must use the conversion rate as follows:
Estimated sales = Total search volume x CTR Conversion rate x Assign Value Per Transaction
c) Benchmarking Method
If it’s hard to identify the right pricing and costs, you may compare your business with the same industry. You can use the benchmarking approach and consider their procedures in assessing the value of the services. You may also check their financial reports on how they arrive with their amounts.
Analyze the Data in Your Conversion Tracking
When analyzing the data, you must consider the costs incurred. Generally, you can identify the expenses instantly, such as hosting fees, subscriptions, ads, web tools, apps, and more.
If you compute an ROI, you must have a profit and loss statement and balance sheet to understand your profitability, performance, liquidity, solvency, cash flow, and financial position as a business.
In this way, it summarizes all the financial information on a monthly, quarterly, and annual basis. You can able to measure the SEO ROI of the business effectively and efficiently.
Compute the ROI based on the Data
Now, you gathered all the relevant information to compute for the ROI. As a quick recap, first, we determine what type of business you’re engaging with, next assign monetary values on your transactions, and finally, identify all the costs related to your business.
Now, it’s the perfect time to compute for the ROI. To get your return on investment, you must use this basic formula:
ROI = Revenue less cost or if you prefer a percentage
In this way, you can assess the success of the business, and you will know if the SEO works exponentially or not. In case there are some issues with your digital marketing, you can always perform maintenance and SEO audit checks to solve any problems.
Did your client say YES to SEO?
Marketing is the hardest part of running a business. To convince the clients, you must show a feasible business proposal. Your plan should boost sales and outweigh any costs.
In this way, your potential leads will trust your service, and they will become your long-term partners in the business. You must not just introduce the SEO to them but prove how they can profit from it.