Calculating your return on investment (ROI) is important to understanding the value of SEO services.
SEO takes time and agencies are under pressure to produce rapid results. Because of this, the monthly reports they produce are sometimes misleading. For instance, they may show rank upgrades to many keywords early on.
That’s great progress, but first page rankings for high-value keywords are what drive traffic and ultimately add to your bottom line. To calculate the true value, you need to measure ROI. Here’s how.
First, establish baseline traffic and conversions. To do this, you need analytics set up with conversion goals. Most agencies do this. Conversions are when a user performs an action, such as scheduling an appointment, completing a form, click-to-call, or calling a campaign specific phone number.
Once baseline is established, look at the difference in traffic and conversions in the Organic Traffic channel in analytics over the length of time you’re calculating ROI.
Now determine your cost over the same term. For instance, $4,000/mo for 12 months or $48,000.
Calculate conversion value by calculating the average lifetime value of a client. To get this, divide your annual revenue by the number of clients in your caseload annually. For instance: $312,000/1560 = $200/client.
Now let’s say your SEO efforts delivered 50 new clients a month over a year or 600. 600 x $200 = $120,000.
Calculate ROI: (Revenue – SEO cost) / SEO cost. From the above example ($120,000 – $72,000) / $72,000 = ROI .67% or $1.67 for every $1 spent.