How to Measure the Return on Investment (ROI) From SEO
Conversion rates and revenues
To establish the return you are getting on your investment in search engine optimization you need to be able to track the traffic to your website and analyze how much of that traffic results in conversion to paying customers. (If you wish, we can do that for you.) You also need to know the value of the increased business brought as a result of your SEO work.
The return on investment is then a simple calculation: it is the extra revenue minus the cost of the SEO program, divided by the cost of the SEO program. For example: If you calculate that you have gained an additional $40,000 profit (remember to take the gross revenue and deduct the cost of goods/services) from a 6-month SEO program, and the program cost you $12,000 to run, your ROI is ($40,000 – $12,000) / $12,000 = 233%.
That was for 6 months: if the profit level was maintained for a full year, and the SEO program finished after 6 months, your ROI would be ($80,000 – $12,000) / $12,000 = 567%. That would not be unusual – results of 10x (1,000%) have been reported in the past.
Another factor that you need to monitor is the conversion rate of the website: this is the number of visitors who take the desired action, for example, placing telephoning the office with an inquiry, compared to the total traffic to the site. For instance, if 100 people visited the site and 2 people called in, the conversion rate is 2% (2/100 x 100).
The conversion rate depends on a number of factors, such as the design of the web pages, the quality of the content, the effectiveness of any call-to-action (CTA) and the suitability of the solution provided to the visitors’ problem.
Once you know the ROI for your website, and you have maximized the conversion rate, then SEO can drive more traffic to your site, resulting in more business and increased profitability.
Increased traffic to your site
Increasing the visibility of your website is the objective of the search engine optimization program, but it is not just any traffic: it needs to be more qualified visitors, i.e. potential buyers. Therefore, the process leading to increased profits can be stated as:
The benefits of SEO =
- Optimize the conversion rate of your website;
- Enhance the visibility of the site;
- Increase traffic to your site;
- Leading to an increase in sales;
- Increasing your revenue and profits.