These days, almost everyone understands the basic value proposition of SEO and online marketing. It’s clear that the top positions on Google for important search queries are very valuable for driving traffic and generating leads online. Most businesses have at least considered an SEO program, and the general practice of online marketing has become very mainstream.
However, savvy business owners also know that marketing programs always need to be evaluated in terms of return on investment. It’s not enough to just believe in the general value of SEO – you’ve got to make plans on actually measuring your real performance in terms of revenue and spend.
One great value of online marketing is that it is often more measurable than other forms of marketing like TV and print. Analytics tools offer much more visibility into SEO and online marketing performance than you’ll get from a magazine ad. To use your analytics effectively however, you need to go beyond just pageviews and visits, and develop your own unique methodology for measuring ROI. We’ll cover some basics of ROI modeling and measurement for SEO in this post.
Tracking Conversions and Measuring Value
The first step in tracking ROI in SEO is to figure out what conversions are important for your business. This could include filling out a form, making a phone call, downloading a white paper, or some other form of engagement or activity on your website. Whatever is important for your business to achieve online should be tracked using analytics tools.
Your webmaster or marketing agency can help you setup the technical side of this tracking. Website actions like filling out forms are pretty easy to track using analytics software like Google Analytics. Phone call tracking is a little more complex and could require an outside vendor, but it’s worth if if calls are a common conversion for you.
Once you’ve setup conversion tracking from a technical perspective, you have to start thinking about what each conversion is worth in terms of dollar value. There are different ways to think about this, but a common one would be to model each conversion against conversion rate and average order value. For example, let’s say 10% of incoming calls convert into customers, and an average order is $100. Each call therefore is worth $10 of revenue.
Understanding Lead Source
Not every lead your website generates can be attributed to SEO. Some leads come in from word of mouth, others from your offline marketing, and some may come from other digital channels like PPC or social media.
To calculate leads specifically created by SEO, you’ll have to use your analytics platform to filter leads by organic traffic only. However, even this isn’t really a completely fair picture, since a considerable amount of your incoming traffic will probably be from branded search terms that can’t really be attributed to SEO success.
One thing you can do is measure the improvement in new leads generated by organic traffic since the start of an SEO program. Month over month and year over year comparisons can both be valid, depending on the seasonality of your business. By “counting” only improvements in leads generated by SEO, you’ll have a pretty conservative measure of what your SEO program is really achieving.
Thinking About Lifetime Value and Cost
Be careful when building ROI models to consider more than just the value of a single order. For example, let’s say you’re a dentist, and an average patient visit is worth $500. That doesn’t mean that a new customer is only worth $500! Consider how many times that customer will visit your practice overall. Will they refer their friends and family? Will they need more expensive treatments over time? The lifetime value of a new customer might be hard to know exactly, but estimating LTV and using it within ROI calculations is key to building effective marketing analytics.
Once you understand the input side of your ROI equation, you’ll have to think about costs. Knowing the cost of SEO can be easy in cases where you have an SEO provider charging you a fixed monthly cost, but could be much harder if you’re doing SEO internally. If your SEO takes place mostly in-house, think about how many hours of your employee time is going into SEO and what each hour of work is costing you. Also consider external costs such as website development efforts and your own management time.
With these factors in mind, you should have the basics in place to measure SEO. You know how many leads your website is generating, and you know roughly what a new customer is worth. You also know what your SEO program is costing you. You can get an idea of your ROI just by plugging these numbers into a standard ROI formula.
Even with the amazing analytics capacities of modern digital platforms, measuring ROI in SEO won’t be an exact science. However, by following the system above, you’ll have a pretty strong picture of how valuable your SEO program really is. If you’re looking for help in understanding your digital analytics and improving your online ROI, please contact the team at Tech-Critic today for a free analytics analysis.