You recently wrapped up an excellent search engine optimization (SEO) campaign and are thrilled with the extra website traffic. However, it’s not long before someone asks what the company got out of it.
Marketing pros quickly learn to show the value of their marketing efforts and offer reassurance there is an acceptable return on investment (ROI) from each.
How can you confidently measure and calculate an accurate return on investment to show your SEO strategy’s success? You can do this by carefully tracking and measuring SEO key performance indicators (KPIs) and using that data to calculate ROI.
What is a key performance indicator (KPI)?
KPIs measure how well companies or business units are performing compared to established goals. They are important indicators of progress (or lack of progress) toward a target. KPIs provide structure and focus so you can make smart business decisions based on data, not guesswork. They can be a powerful way to break down large organizational targets into smaller, measurable goals and help you spot when you’ve gone off course.
Top KPIs to track for SEO
It’s important to know which key performance indicators you need to track to measure the right results. Otherwise, you run the risk of bad decisions or costly errors. They are:
- Organic sessions (visits to your website from search engines)
- Keyword rankings (where your keywords are positioned in search engines)
- Click-through rate (CTR)
- User behaviour (measured by bounce rate, pages per session and session duration)
- Audience retention (returning visitors)
- Conversions/leads (visitors who complete a desired action to become a lead)
- Core Web Vitals (user experience metrics such as page load time)
Digging into the top SEO KPIs will help you better understand which KPIs impact your bottom line and if you have the expertise and tools needed to track, measure and interpret each one.
What is the ROI of SEO?
Let’s look at what the ROI of SEO means. It is a way to demonstrate the value created by your SEO activities. ROI is calculated by adding up your SEO spending and measuring the returns you have gained from that investment.
There are many metrics you can pull to assess the success of your SEO activities. The trick is to focus on numbers that make a difference to your bottom line and help you figure out if your efforts are profitable.
Why it’s important to measure ROI
People who don’t routinely work in SEO might find it hard to understand the value of website traffic numbers. However, almost anyone can understand a strong return on investment.
It can be hard to defend your budget and even harder to get future amounts approved without the right data. Communicating value is one way you ensure continued investment in various marketing strategies. Knowing what works helps you repeat your success.
How to calculate ROI
To determine your ROI, you’ll need two key numbers: the cost of your SEO activities and the revenue generated from those SEO activities. The latter is measured by your e-commerce sales results or your conversion tracking. If you don’t have the experience or tools to establish what those number are with confidence, enlist help to assess your results properly.
Measure SEO costs accurately
If you’re going to calculate your ROI, you need to make sure you measure your investment in SEO activities correctly.
SEO costs include any dedicated SEO staff, proportional costs of various team members who assist from time to time, related software, paid SEO tools and other fees. It may be eye-opening to see what it costs you to manage your SEO in-house. If an agency manages SEO for you, the cost is much easier to calculate as it should be built into the fee.
Let’s say you’ve added up all these items for the period in question, and your cost totals $20,000.
Establish the value generated by your SEO activities
How can you establish the value of your SEO activities? You’ll need to understand where your campaigns are contributing to revenue, and that’s where tracking and measuring the right KPIs comes in. While SEO can raise awareness of your company and what you sell, these gains are trickier to measure. For this calculation we’ll look at easier measures of how SEO contributes to revenue.
If you run an e-commerce business, you’ll be able to see results in your online sales. Your customers convert or complete their transactions right on your website by purchasing your products online. Your total sales from your website are your revenue for this exercise.
If you offer a service business or sell off-line SEO value is harder, but not impossible, to measure. You’ll have to decide what activity creates a completed conversion for your business. You might track how many people complete a form to be contacted by your service department or track calls from your website.
From there, you can measure the number of leads generated by your SEO. How many do your sales team close? Let’s say the campaign generated 100 leads, and your team closes an average of 20 per cent of them. That’s 20 new customers.
Next, calculate the lifetime value of your customer. You’ll need to consider your average purchase value, how often your average customer buys from you and how long the average customer does business with you. Multiplying these numbers allows you to estimate how much revenue they might bring in over the length of time they remain your customer.
If the lifetime value of a customer is $6,000 and the campaign netted you 20 new customers, the campaign’s value is $120,000.
Calculate your ROI
You can now calculate your SEO ROI with this formula:
(value of SEO activities – cost of SEO investment) ÷ cost of SEO investment = ROI
For example, if an SEO campaign brought in $120,000 and cost your company $20,000, you would calculate your ROI as follows:
($120,000 – $20,000) ÷ $20,000 = $5
You can confidently report that for every dollar invested in SEO efforts, your company saw a return of $5. That’s a 500 per cent return on investment.
What does that tell you about your SEO efforts? It tells you they’re measurable and profitable. The numbers show SEO isn’t an expense; it’s a revenue source adding to the bottom line. While SEO is a strategy that will benefit you in the long term, it’s important to realize these gains may take a year or more to produce revenue. Be prepared to set goals that allow time for measurable results.
You can see more examples of how to calculate the ROI for SEO to help you understand where these numbers come from and how to make them work for you.
Working with us
Partnering with an agency gives you confidence that you’re using the right numbers to assess your SEO success. An experienced team can manage your SEO and provide detailed reporting on important KPIs to keep you on track.
We’ll ensure that everything is in place to track, gather and report accurate data on the KPIs that matter most to your bottom line. From there, we’ll measure progress and your return on investment so you can make confident decisions based on numbers.
We can help you direct your marketing budget toward profitable channels and help you understand just what you’re getting out of your efforts. Most importantly, you’ll be protected from the mistakes and overspending that comes from guessing.
Understanding what you’re measuring and which investments are worthwhile can be a powerful step for your marketing team. It can allow you to argue for more resources and be confident when outlining strategy and results. With the right help, you count on seamless SEO management and reporting to show its contribution to your company’s bottom line.