As I was talking to my business coach the other day I was telling her how motivated I am for this next coming year. I was telling her that I finally feel like I am at the place where I know the formula. I know my analytics. I know my conversion rate at the keyword level. I know how much traffic is generated per month and per year for specific keywords and where I am currently ranking for each of those keywords. I know that if I improve my ranking from number 13 to number 1 for a specific keyword then my sales should increase by x amount of dollars. I know my profit margin on sales and how much money is left over for marketing after expenses. With all that information I can take my SEO knowledge and invest the specific budget of marketing dollars for a specific keyword and know that it is going to take x amount of time to achieve top ranking and make a profit. I know which keywords are more profitable and which ones are a complete waste of time and resources. The guesswork is gone and success is in the numbers.
So let’s get started!
How to determine the ROI of your SEO Campaign!
1. Build Your Website. Make sure your website is SEO friendly and follows best practices for your visitors. Focus on the adding features that will improve the conversion rate of your site as well as make it extremely easy to navigate.
2. Install Google Analytics or other favorite analytics software and track your sales and conversions at the keyword level. This step is essential. If you are not tracking your sales and conversions at the keyword level, it will be impossible to determine which keywords to focus your SEO campaign on.
3. If your site is new or does not yet have analytics data, then set up some PPC tests. This also must be done correctly and at the keyword level so that you can track the impressions, click through rate, and conversions. Set your ppc budget high enough so that your ads will show but not so high that you lose your shirt (or house) in the process.
4. Determine the average transaction value of an order. If you can, also determine the lifetime value of a customer. This is particularly true for sites that have a low front-end, but offer a membership or other products.
5. Narrow your list of keywords to the top 20-100 based on search volume and the conversion rate for your site.
6. Record the following info into an excel spreadsheet:
b. Global Search Volume Exact Match
c. Monthly Search Volume Exact Match
d. 50% of Monthly Search Volume
e. Actual Page Views
f. Average Transaction Value
g. Current Organic Rank
h. Conversion Rate
i. Profit Margin
7. Determine what percentage of traffic you are currently receiving by dividing the Actual Page Views by the Monthly Search Volume.
8. Determine your annual sales by multiplying your actual page views by your conversion rate and the average transaction value and by 12 (for each of the 12 months).
9. Determine what your annual sales could by if you were ranking number one for the keyword by multiplying the 50% of monthly search volume by your conversion rate and the average transaction value and by 12 (for each of the 12 months.)
10. Subtract the number from the calculation in step 8 from the number in calculation in step 9. This is how much your sales could increase if you moved from your current organic search rank to be number one in Google for your keyword.
11. Repeat the above for each of your keywords and determine which keyword will give you the most increase in sales.
12. Calculate your Annual profit margin and divide it in half to determine what your marketing budget should be for each keyword.
Although the above 12 steps might seem overwhelming at first, most of the steps can be outsourced to a virtual assistant for a few dollars. The most difficult part, the analysis, should be done by the business owner or search marketing manager. Also please note that the 50% click through rate for a number one organic listing is only an estimate. The actual percentage rates are only known by the search engines themselves. If you do the analysis however, you can safely determine which keywords will be the most profitable and know where to focus your efforts on for your search engine optimization campaign.
For a personalized ROI report for your business and to determine which keywords are the best to focus on for your site, give us a call!
1 thought on “Calculate the ROI of your SEO Campaign and Get Rid of the Guesswork”
Fantastic breakdown. Thank you very much.