Calculating your ROI (return on investment) from SEO can be tricky and overwhelming at times, but it's pretty straightforward to learn.
How to Calculate SEO ROI
The formula is simple enough:
(Gain from Investment - Cost of Investment)/Cost of Investment
Suppose you invested $1,500 in content, press releases, and freelance help. From SEO, you tracked $5,000 in profit from Organic traffic.
Your SEO ROI would be calculated as follows:
$(5,000-1,500)/$ 1,500 = 2.34
If you want to calculate in terms of percentage, multiply the decimal value by 100:
100 x 2.34 = 234%
Great! Now you know how to calculate ROI, you will need to identify Organic Traffic and Leads.
The three primary sources you will want to track are:
- Phone calls
- Form fills
These three items can be tracked using a CRM (Customer relationship manager) and other automated tools (Call Tracking Metrics, Salesforce, etc.). But for this explanation, we will keep it simple and talk about manual tracking.
Using your website's form, export all entries for that month or year and identify those who purchased.
The same can be done for phone calls. Whoever answers the phones can keep a notepad or excel sheet open to record data points (name, phone number, etc.)
For now, I'm excluding the step-by-step automation guides because they can get very complicated and will lose some readers. The primary purpose here is to understand SEO ROI.
The two central values you want to calculate are conversion rates, how many people are converting on your website, the lead value, how much each lead is worth to know how much you can invest in future marketing campaigns.
If you had 1,000 visitors fill out your contact form or call your business, and 50 of those people turn into leads, then your conversion rate would be 5%.
Conversion rates are calculated by dividing sales by leads, multiplied by one hundred to get the percentage.
50/1000 = 0.05x100 = 5%
Conversation rates can help you forecast how well new articles will perform and how much you can spend on marketing.
Lead value calculates what leads to worth to your business; you calculate this by dividing the total revenue from converted leads by the number of inquiries.
If you had 500 people contact you, out of those people, 20 converted, each making a $500 purchase, then the lead value would be $20.
[(20 x 500)]/500 = $20
You can invest with less risk when you know your conversation rates and lead values.
What SEO ROI reveals
Calculating your return on investment will help see the effectiveness of a strategy, where marketing needs to be improved, and conversion ratios.
Conclusion: Optimizing your SEO campaigns
With this data, you will determine the best types of content for your target audience, and which keywords (topics) should appear in future SEO campaigns. You can also see whether certain landing pages need improvement or upgrading to align with user needs more closely.