How To Calculate The ROI Of SEO For Your Marketing Strategy7 min read
This post was sponsored by Semify. The opinions expressed in this article are the sponsor’s own.
Have you ever wondered how beneficial SEO would be for your business, or how much of your budget you should invest in it?
Do you sometimes worry your SEO efforts won’t bring in enough profit to justify the cost?
56% of small businesses still don’t use SEO or aren’t sure if it’s part of their marketing strategy.
That means that 56% of small businesses are closing their doors to an evergreen, free traffic source.
Chances are, your competition may not be kickstarting their online presence with SEO, making the investment into search engine optimization a great way to get ahead.
But how can you demonstrate the true value of SEO?
How do you convince your leads or your boss that SEO is worth the effort?
We’ve created a powerful tool to take the guesswork out of the equation.
Today, you’ll learn how to calculate the return on investment (ROI) of SEO.
Why Is The ROI Of SEO Important For Businesses?
It’s hard to spend money if you’re not sure how it will benefit you down the road.
You may already know that SEO offers the lowest cost per lead of any marketing channel.
SEO also helps to crack the code on organic search.
The number one spot on Google search result pages (SERPs) receives at least a quarter of the organic traffic share, so investing in SEO can even the playing field against your competitors.
But while SEO is one of the most affordable marketing tools available, you may need to know if those costs will pay off.
We can conclude that better rankings equal more traffic and conversions, but how does that translate to a dollar amount?
As you can imagine, there’s no substitute for hard (or even estimated) data.
When you can prove with numbers – rather than theoretical concepts – that SEO is worthwhile, you’ll get the “Powers That Be” on board.
What’s Challenging About Determining SEO Return On Investment (ROI)?
That being said, it’s not always easy to get that kind of granular data for the ROI of SEO.
For one thing, no one knows when or how Google will rank a given website. Even if you have all your ducks in a row, anything from algorithm updates to technical website issues can slow your progress.
Although we think we know what Google wants, we can’t control how quickly results occur – nor whether a campaign will perform the way we think it should. We can make predictions based on our experiences, but there are no SEO guarantees.
And unlike display or PPC ads, which offer answers right at your fingertips, SEO requires more data compilation and general know-how to determine whether you’re moving in the right direction.
Isolating data can also be a challenge when you’re pursuing a multi-pronged digital marketing strategy.
Since most marketing techniques tend to work best in conjunction with one another, figuring out the source of your success won’t always be straightforward.
Finally, because SEO is a long-term solution, it may seem like progress is at a standstill. For folks who are accustomed to seeing immediate results, SEO can feel like a huge leap of faith.
So, you need to convince your leadership to stick it out by showing the ROI of SEO.
What’s The Best Way To Measure The ROI Of SEO?
At Semify, we’ve come up with a reliable tool that can show the potential impact of SEO over time – an ROI of SEO calculator.
When paired with up-to-date keyword research, you’ll be able to instantly learn how profitable your search optimization efforts could be!
Below, we’ll walk you through how to calculate your SEO return on investment.
Step 1: Download A Free ROI Of SEO Calculator
Your first step is to get a customizable ROI of SEO calculator that allows you to plug in your information and instantly learn how profitable your SEO strategy could be.
To make it easy, we’ve created an ROI calculator that includes 1-month projections and 18-month projections for a more realistic rankings timetable.
With these numbers in hand, you can set better expectations and show the value of SEO.
Step 2: Perform Keyword Selection & Ranking
In order to calculate the ROI for your SEO strategy, your ROI of SEO calculator will need to know:
- Which keywords you’re planning to target.
- What each target keyword’s monthly search volume is.
Once you have these two pieces of information, likely already in your SEO strategy, simply add them to the ROI of SEO calculator.
How To Discover A Keyword’s Monthly Search Volume
Today, we’ll pretend that we’re proving the ROI of SEO for a hypothetical local dentist.
To get the most accurate ROI, you’ll want to make sure that you’re selecting long-tail keywords that specifically match your prospect’s search intent and relevance.
So, instead of simply targeting [dentist], we recommend targeting [dentist rochester ny] instead.
Next, put [dentist rochester ny] into your favorite SEO keyword research tool to discover its keyword volume, or monthly searches.
The keyword [dentist rochester ny] has about 1,600 monthly searches.
Step 3: Discover Your Click-Through Rate (CTR)
Your SEO click-through rate is the percentage of users who perform a relevant search and then click to your site.
Organic search click-through rates are largely determined by where the site appears on SERPs – the closer to position one, the more likely your site is to be clicked.
- Over 25% of users will click on the first organic search result.
- CTR drops exponentially after the first spot.
If you download our ROI of SEO calculator and navigate to the drop-down menu for your ranking position, you’ll see that the click-through rate automatically adjusts to reflect these figures.
Step 4: Add Your Average Conversion Rate
In this context, conversion rate refers to the percentage of visitors who come to a website and complete a desired action.
If you know your own conversion rate, based on your business goals, purposes, and desired visitor actions, place that into the CTR row on your calculator.
If you don’t know your average conversion rate:
- Locate your industry on this conversion rate analysis chart.
- Copy the percentage under the column, in the “SEO (Organic Search)” row. This number is your average conversion rate for your specific industry.
- Paste this number into the CTR row on your calculator.
In our dentistry example, we focused on the average conversion rate for B2C SEO and compared that to data from DentistryIQ, which suggests that the typical dentist conversion rate sits somewhere between 1% and 2%.
In our example, we gave our dentist the benefit of the doubt with a slightly inflated conversion rate.
When you enter your own conversion rate data, we recommend you perform industry research and obtain a more exact figure for your business or client.
Step 5: Add Your Sales-Qualified Lead (SQL) Closing Rate
If this has already been added to your calculator by default, you can move on to the next step.
But for the most accurate ROI of SEO, it’s important to determine your true closing rate.
For our hypothetical client, we used study data to settle on an appropriate SQL closing rate. One Frontspin article cites the average closing percentages for sales-qualified leads range from 25% to 35%. Based on those figures, our dental client has a higher SQL closing rate than is typical.
Though you can use our default, you’ll ideally want to obtain more precise information from your business or from a client for the most accurate calculations.
Step 6: Configure Lifetime Customer Value (LCV) & New Sales
Lifetime customer value is a measure of a customer’s profitability over the course of your relationship.
Although many businesses use a standard $10,000 LVC figure, we learned that dental industry experts estimate their sector’s average LCV at anywhere from two to four times higher than that. A higher LCV usually comes with a higher ROI, but we opted for the $10,000 number in our example to keep things conservative.
You’ll notice that changing your website conversion rate (as well as your keyword ranking and your CTR) will also affect your new sales field. This is an estimate, so you won’t need to provide this information.
You can click on those fields to view our exact calculations.
Step 7: Add SEO Spend & Get Your Monthly SEO ROI
With SEO, you’ll typically get out what you put in. But that doesn’t mean you have to spend millions of dollars to see gains.
In our example, we guessed that our dental client might spend $2,000 per month on SEO. Feel free to play with that figure to see how it impacts the ROI over time in the 18-month view.
While the first few months may look a bit hairy even with a healthy SEO budget, the tide turns around six months in. As the client makes progress with their keyword rankings, those negative monthly ROI figures turn into positive ones.
After nearly a year, those numbers really shine – illustrating that good things come to SEO pros who wait.
Here’s Your Chance To Prove The Value Of SEO
As marketers, we know that SEO is worth the investment. But you’ll need a more convincing argument if you want others to buy in.
Personalizing the potential payoff can make marketing feel far more tangible. And when the potential payoff is clear, it becomes a whole lot harder to deny the power of SEO.
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