The Return on Investment (ROI) of Search Engine Optimization (SEO)

It can be difficult for small business owners in Appalachia or business owners of any kind, anywhere, to decide where they should spend their marketing dollars. You obviously want to spend your money on the types of marketing or advertising that will bring in the most customers.

But how do you know which one(s) to choose?

Typically the most important factor to consider when deciding to go forward with any marketing campaign is the potential return on investment (ROI).

How much are you going to get in return for the amount of money you spend?

If you’re considering SEO and online marketing, you might be surprised just how much potential ROI is out there waiting for you.


How do you calculate the ROI of SEO?


Well here’s the formula:



So what does all this mean?


Well we’ll help you break down the equation piece by piece.


Number of Searches per Month = the number of times keywords related to your products and/or services are searched for on Google

To determine your number of searches each month, you will need to select keywords that your customers will use to find your Louisville business.

These target keywords are words or phrases that potential customers might type into Google when searching for your products or services, not business jargon.

Your number of searches per month is the total number of times the target keywords you just selected are searched for on Google monthly. If you need help determining those keywords and the number of searches, Google Keyword Planner can provide that information.


Click Through Rate = the average percentage of clicks each position on the first page of Google (1-10) receives

As you can tell from the screenshot below, the higher you are on the page the more percentage of visits you will receive versus the lower positions.

Where your website shows up (or ranks) when someone does a search for your target keywords on Google will play a huge part in how many visitors your website receives.



Conversion Rate = the number of website visitors who are converted into customers divided by the total number of visitors to your site.

Conversion rates will vary from industry to industry as well as being influenced by many other factors (such as pricing, salesmanship, etc.).


Measuring your conversion rate is important even if you do not sell products directly on your website. Regardless, any website should have some form of call-to-action for customers to submit requests for quotes, request free consultations, schedule service appointments, etc.

Each of these actions can be tracked and then used to measure the effectiveness and ROI of your SEO efforts.


Average Value of Sale = the average cost/value of the products and/or services that you sell

Many of the business owners we talk to tell us “the cost of our products and services vary widely”.


Well, folks, that’s why it’s called an “average”.


If you know your numbers (or any type of account software), you should be able to calculate the average cost of your products over a month or year’s time fairly easily. Simply take the total of your gross sales and divide by the total number of sales/invoices. That will give you your average value of a sale.


So let’s take what we just learned and bust out an example.


The Potential ROI of SEO: An Example


Let’s say a business in Pikeville, KY would like to increase sales but is not sure if SEO will provide the return on investment they are looking for.


For this example, they did research and found out that if they target a handful keywords that describe their business, there are 60,000 searches per month in their area.


If their site appears anywhere on the first page, even the last spot, their average click-through rate would be 2%. Let’s assume conservatively that they only convert 5% of their visitors and their average value of a sale is $100.

If you follow the ROI equation, you can see that this company gained $6,000 a month just being in the last spot on the first page of Google and with a very low conversion rate.

If they invested $1500 a month to ensure that they were on the first page, this example company would still have a 300% return on investment. ((60,000 x 2% x 5% x $100) – $1,500) / $1,500 = 300%.


They would have reached their goal of increasing sales, and also paid for their SEO budget.

Keep in mind that these examples assume that your website is somewhere on the first page for the target keywords. If your site isn’t already on the first page, it may take anywhere from 3-6 months for your site to show up there depending on the competition.

SEO is a long term strategy and the ROI of SEO won’t be seen immediately, but if you take this ROI example one step further and consider the yearly value of new customers you will see why it won’t matter.


So what is the potential value of SEO for a year?


If your company understands the long term investment of SEO, then you will appreciate more the value of being on the first page over the course of a year. By multiplying the additional monthly sales by twelve months in a year, the example company could potentially earn $72,000 annually.


And if your average value of sale is greater than $100 a transaction, then the value of SEO would increase substantially.


Only you know the value of your average sale or service but it’s safe to say: higher search engine rankings equals more business.


If you applied the ROI of SEO example above to your business, what would this increase in sales mean for your business?


If you're concerned about your current marketing plans and strategy, holler at us for a free consultation and strategy outline tailored to your business or organization's goals.




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