SEO ROI: How to Calculate and Measure the ROI from Organic Traffic
Are you considering launching an SEO strategy for your company? Wondering what sort of ROI could SEO deliver?
I know that it sounds cliche but it actually is true – SEO truly is one of the most powerful digital marketing channels. There’s plenty of data to prove it:
- For instance, we know that 46% of all searches in Google are for a local business or service.
- An average business gets more than half of its traffic from organic search results.
- We also know that after searching on a smartphone for something nearby, 76% of people visit that business within just 1 day.
- Finally, according to Google, 28% of local searches result in a purchase.
But I also realize that stats like what I quoted above might not be enough to convince you. SEO is a serious investment, after all. The traffic you receive from Google might be free, but you have to pay an agency to implement the strategy first to get the results.
So, how do you know whether your investment will pay off? Is there a way to calculate the ROI of SEO even before you begin?
Well, there is, actually, and that’s what I’m going to show you in this post.
We’ll discuss why you need to know the SEO ROI before you even begin, how to find it out, and even, how to monitor it once you’ve launched the strategy.
It’s a lot to cover, so let’s get right to it.
Why You Should Establish SEO ROI Early On?
There’s one thing about SEO that often makes clients a little uncomfortable when they realize it:
SEO is a long-term strategy.
Unlike PPC and other paid ads, SEO doesn’t begin to deliver results from day one. Depending on your situation, your agency might need to start by fixing issues on the website, then realign pages with relevant keywords, and do several other things to get things started. And then, begin implementing the actual SEO strategy.
It’s a process, and results don’t happen overnight. As a result, it’s good to know what to expect from the strategy before jumping into the investment.
Below, I’ll outline some ways to help you do that. However, a good SEO agency should provide you with that information at the pitching stage.
Now, we’ve talked a bit about SEO ROI. So, let me also explain what I mean when I talk about the ROI of SEO.
What is SEO ROI?
The term – SEO ROI – relates to a calculation you conduct to discover the return on investment from SEO efforts.
The metric shows you the actual gains for your business from SEO investment. It takes into account all your costs associated with the strategy and weighs it against your wins – new cases, new business, and so on.
Of course, each category – expenses associated with SEO and the gains – will differ from business to business. Therefore, calculating the ROI from those efforts also involves looking at several aspects of the strategy.
Let’s cover that now.
How to Calculate the SEO ROI?
In principle, calculating the ROI of SEO is quite simple. As I mentioned above, you need to deduct expenses from wins, and you know the return from the strategy.
But that method works only if you evaluate the performance of an existing strategy. It won’t help you discover the ROI beforehand.
You don’t know your wins yet, after all.
So, to calculate the ROI of SEO before you begin, you need to take a different approach. You need to evaluate it based on the projected value of your target keywords.
Let me explain.
#1. Single Keyword ROI
The first approach is to take each keyword you’d like to rank for and use available SEO data to establish its value.
The value itself is based on two factors:
- The search volume, which you can acquire through various SEO keyword research tools.
- Search potential that is measured by the average organic click-through rate.
Let’s take the keyword “personal injury lawyer new york,” for example. Based on keyword data, I know there are 2900 searches for this phrase in the US.
Now, according to various research studies, keywords in the top-3 positions get, on average, a 15% click-through rate. It means that pages ranking in those positions can estimate to receive around 15% of the total keyword’s search volume.
Using this data, therefore, we can estimate that our keyword could deliver about 435 visits, on average, providing that we manage to rank on pos. 1 or 2.
Using that data, you could:
- Estimate how many leads you could get from this single keyword alone each month.
- Use your firm’s average conversion rate to estimate how many cases you could win, based on those rankings, and
- The average settlement value of each case.
All this data combined would reveal the potential return from investing in rankings for that keyword.
A quick note about the deal value.
Establishing an average sale value is easy if you sell goods and services with a pre-defined price tag.
The situation is quite different for law firms. For example, a large truck accident case could be worth millions. On the other, a small slip and fall case may be worth a few thousand only.
In those cases, we focus on the attribution of leads. We track leads in a CRM to see how far the leads get into the funnel – did they show up for a consult, did they retain, and the client’s lifetime value (either in billable services or projected settlement).
#2. SEO Strategy ROI
In this method, you evaluate the impact of traffic growth on your firm’s performance.
The premise of this calculation is to determine what effect a significant increase in relevant traffic would have on the number of new cases opened.
To conduct this calculation, you first need to evaluate your current organic traffic levels. You also need to compare them with the number of leads and new cases opened through this channel.
Then, you can estimate how these numbers would differ if SEO traffic would increase by a certain, ideally significant, amount.
So, if your company currently receives 1500 organic visitors per month. Your visitor to lead ratio is 17%; therefore, you generate 255 leads per month. Of those, 3% convert into new cases, resulting in 8 new sales per month.
Based on your current situation and rankings, you know that there is room for improvement. For example, you don’t rank in the top 3 positions for most keywords, and the firn isn’t at the top of the Maps listings either.
This is only a quick estimate, of course, but let’s say that you’ve evaluated the search potential and know that you could, actually, be getting 900% more traffic.
Using the data above, we can estimate your potential traffic at 13500—the number of leads at 2295 and the number of new cases at 68.
Challenges with this method.
Unfortunately, as simple and straightforward as this method is, the are challenges with calculating the SEO ROI.
For one, customers reach businesses through multi-touch strategies. Although they begin their journey using one channel, they are likely to convert through another.
At Envoca, we regularly meet with our clients and talk about assisted conversions and how various parts of the SEO campaign contribute to their conversion and retention. We do this to help our clients understand how each channel works in tandem with the others and provide them with a clearer understanding of the ROI of their campaigns.
#3. The Value of Website Traffic
Finally, the quickest method to calculate SEO ROI is to look at the value of your traffic if you were to purchase it through paid ads.
Remember, SEO traffic doesn’t cost you anything. You don’t pay per visit, as you would with Google Ads or other advertising platforms.
It’s a rough estimate, of course, but the calculation can put your SEO fees into perspective.
Costs Associated with SEO
To calculate the ROI of search engine optimization, you also need to know your costs, of course.
Some of these are obvious; other costs are harder to realize.
So, let’s go through all those in turn as well.
- Agency fees. These, typically, are a monthly retainer you pay your SEO agency for their work.
- Content fees. This is an optional expense, as sometimes it’s already covered by the agency fees. However, you might also be using additional writers, and therefore, incurring this cost.
- Consulting fees. Sometimes, you might need to bring in an external consultant to help with a highly-technical aspect of the project (i.e., improving page speed or fixing other technical SEO issues.)
- In-house resources. This expense comes in the form of time that someone in the firm dedicates to managing the strategy.
- Additional assets and licenses, such as software or image copyright.
- Paid ads. Although not directly an SEO cost, many companies I talk to bundle the two expenses together.
- Professional profiles in industry publications. These support link-building efforts and could be used as part of the SEO strategy.
- Costs associated with digital PR and acquiring links, and more.
How to Monitor SEO ROI Continuously
The three strategies above help you evaluate the ROI of SEO efforts before you even begin.
But once you do, you should monitor the results carefully as well. This way, you can evaluate how well the strategy is working, and whether you see the projected results.
There are several ways to do it:
First, set up conversion tracking across all lead generation channels – calls, lead generation forms on the website, live chat, etc. This way, you’ll know how many leads you’re getting, on average, in any given month.
Secondly, use the Goals feature in Google Analytics to specifically monitor conversions from the organic channel.
We set up conversion goals based on a conversion event (i.e., reaching a signup confirmation page, etc.)
You can use this method to monitor calls and chats as well, by the way. For example, at our agency, we use software called CallRail to track calls from the website. The software then passes back conversion events to Google Analytics, and we can use those to set up goals.
The same method works for the live chat. This time, the chat provider sends back an event that tells Analytics when the event started and when the conversion was completed, allowing us to