Knowing how to measure your ROI is something everyone needs to do. For one thing, it helps you understand how well you or your business is doing. It will also shed light on the areas you need to improve on. But more importantly, it increases your chances of achieving financial success.
If you want to learn how to measure ROI on SEO, then you’ve come to the right place. Below is a guide that will teach you how to measure your SEO agency’s ROI, alongside other things you need to know. Let’s dive in!
What is ROI Anyway?
ROI stands for Return of Investment. Basically, it’s a key performance indicator used by businesses to check their profitability and success. Measuring it allows you to know how your business is growing and what areas have room for improvement.
But while ROIs are typically used to measure financial growth, its principles can also be applied to measure SEO stats. With most people going online in one way or another, investing in SEO has never been more important for businesses. In fact, organic search accounts for up to 50% of site traffic, with Google still reigning as the number one platform. By learning how to measure ROI on SEO, you’ll properly determine how your website is performing, as well as take the necessary steps to improve it if necessary.
How to Measure ROI on SEO?
Now you might be thinking, “Are there ways to calculate my website’s SEO’s ROI?” Yes, there are! In fact, you’ll only need to take five steps to do that! Check these steps out below:
Calculate Your SEO Expenses
To accurately measure the ROI of your website’s SEO, you first need to list how much you invested on it. This includes the money you invested on in-house SEO resources, agency resources, and the paid SEO tools you bought. Combine these SEO costs with those associated with the channel to get an estimated figure.
Now while you’re doing this, keep in mind that the total cost doesn’t always stay the same every month. That’s due to the variable costs you need to meet. So make sure you factor in these changes while you’re calculating the ROI of your business’ SEO.
Set Up Conversion Tracking
Next you need to establish a conversion tracking system for your website. That way, you can spot and monitor which conversions in your site actually earn revenue. The best tool for this step is Google Analytics.
But here’s the caveat: your conversion tracking system will depend on what kind of website you’re running. Conversion tracking is different for ecommerce websites (since they make sales directly) and lead-based websites (since they don’t). The former can be accomplished easily enough because they can rely on ecommerce tracking to accurately measure their revenue. Meanwhile, doing the latter is a bit trickier since there aren’t actual revenue-earning transactions going on in the website.
We’ll touch on this subject more below. But for now, better set up the right conversion tracking system for your business’ SEO. Afterward, wait for a month so it can gather enough data.
Sort Conversions By Channel
After a month or so, your conversion tracking system will have accumulated enough information to properly measure the ROI of your SEO efforts. But before you begin analyzing the data, you need to sort it out first. That way, you can filter out unnecessary data and focus on conversions based on the channels that drove them.
Again, the best way to do this is by using Google Analytics. You can view your site’s conversions report by going to the Assisted Conversions section (Conversions > Multi-Channel Funnels > Assisted Conversions). The report should include all the users who found your website using Google, Bing, and other major search engines. Aside from helping you measure ROI on SEO, this data will help you adjust your SEO strategy, too.
Analyze Your Conversion Tracking
Once you’ve sorted your conversions by channel, you can proceed with examining the data to measure the ROI you’re getting from SEO.
Aside from the conversions made from search engines, your conversion report should also include conversions from emails, social media, referrals, and more. You can view all these at the tab in the Conversions section, alongside how much revenue each search channel generates.
All that’s left then is to compare all these values with the total amount of money you’ve invested on SEO during the same timeframe. Make sure you include all conversions, particularly the ones listed above.
Calculate Your ROI Percentage
Finally, you can calculate the ROI by subtracting the total SEO cost from the revenue you made from your website traffic. For example, if you gained a revenue of $200,000 from organic traffic by hiring an SEO company to do keyword research and publish content for $80,000, then your ROI will be $120,000.
Then all that remains is getting the ROI percentage by dividing the ROI with the cost of investment and multiplying the result by 100. Using the same example above, dividing $120,000 by $80,000 gives you 1.5. And multiplying 1.5 by 100 gives you 150. In short, your ROI percentage is 150%.
As you can see, calculating the ROI of your website’s SEO isn’t rocket science, but you’ll still need to know the right figures to include. Again, there’s a difference between calculating ROI for ecommerce stores and lead-based businesses, so better choose the appropriate strategy.
Conversion Tracking for E-Commerce Vs Lead-Based Websites
As mentioned above, tracking conversions from e-commerce stores is different from tracking those from lead-based business. Depending on what kind of website you’re running, you need to use the appropriate conversion tracking strategy if you want to accurately get your SEO efforts’ ROI. For your convenience, we’ve listed steps that will help you get started with either.
5 Steps to Set Up an Ecommerce Conversion Tracking System
Since they rely on ecommerce tracking to accurately measure their revenue, conversion tracking for ecommerce websites can be accomplished easily. In fact, all you need to do is click on a few buttons on Google Analytics.
- Click on the Admin button in your Google Analytics account, found in the bottom left corner.
- Go to the View column, click on the dropdown at the top, and change the view settings to the one you prefer. Just make sure you exclude internal traffic from your conversion reports.
- Click on the Ecommerce Settings button on the same View column.
- Enable Ecommerce by clicking on the on/off toggle on the Ecommerce Settings button. Then you can click on the Enable Enhanced Ecommerce Reporting to get additional insights and to create customized labels.
- Lastly, add code to your website to gather ecommerce data, before sending it to Google Analytics. If you don’t like coding in HTML or JavaScript, get assistance from a web developer.
To maximize conversion tracking in your ecommerce website, you need to make sure your report contains metrics like Product Revenue, Average QTY, Unique Purchases, and Average order value (AOV), among others.
3 Steps to Set Up a Lead Generation Conversion Tracking System
As touched on above, conversion tracking for lead-based websites is more challenging. That’s because leads don’t usually come with an associated value since it happens offline. Plus, not every generated lead becomes a paying customer.
Still, if you want to master how to measure ROI in SEO, then you need to learn how to set up a decent conversion tracking system for your lead-based website. Luckily, the following steps will help you do just that.
- Head again to the View column of the Admin button in your Google Analytics account.
- Then click on the Goals section (Admin > View > Goals) to set up a new goal. From there, you have the option of choosing a template, a smart goal, or a custom goal. Choose the third one.
- Go to the Goal Type section and choose “Destination.” Then turn on the “Value” option on the Goal Destination screen to assign a monetary value to every goal.
Through this setup, you’ll be able to calculate the ROI of your lead-based website’s SEO. Notable metrics you should be tracking must include Revenue Contribution, Opportunity Win Rates, and Average Opportunity Size, to name a few.
4 Conversion Rate Metrics You Need to Track
As you might have noticed, there are certain metrics you need to track if you want to get the ROI on your SEO efforts more effectively. Now with thousands of those to track, it’s highly recommended that you focus on the most important ones for the time being. According to Neil Patel, you should watch out for the metrics below:
Traffic Sources
Knowing where all your website’s traffic came from is important. According to Neil Patel,it comes from three main sources: direct visitors (those who typed your website’s URL directly), search visitors (those who found you via search engines), and referral visitors (those who got the link elsewhere).
These three traffic sources have varying degrees of engagement levels. You need to check each of them to see which one is performing best. At any rate, your website needs to have more than one traffic source if you want a higher ROI on your SEO.
New and Return Visitor Conversion Rate
Next you need to check how many visitors (new or returning) your website is converting into customers. To that end, you need to keep in mind that first-time visitors behave quite differently from returning ones. To boost your site’s first-time visitor conversions, you need to learn what made them interested in the first place, and build up on it.
At the same time, you should also determine why older visitors keep returning to your websites, as well as know the reason why they didn’t convert the first time. By figuring out this part, you can increase your conversion rates and your SEO’s ROI in the process.
Interactions and Value Per Visit
However, there’s no need to fret in case you didn’t convert visitors immediately. Building trust and a long-lasting relationship takes time, after all.
In any case, you can still monitor the way they interact with your website. To make this part easier, use tools like Crazy Egg to see how they behave while visiting your ages. Come up with ways to turn those interactions into more conversions.
Simultaneously, you should calculate the value of each visit. You can do this by dividing the total value created with the number of visits. For example, if your website’s average purchase is around $400 for every 100 visitors, then the value per visit will be $4.
Cost Per Conversion
Once you’ve calculated the value per visit, you need to proceed with getting the cost per conversion. Doin this is very important, as it will directly affect the ROI of your SEO efforts. For example, if you gain $100 per conversion and each conversion costs $150, you’ll end up spending more than you earn.
It doesn’t matter how high your conversion rate is. If it costs too much, then your business will eventually go bankrupt.
Aside from these, you should also check your website’s bounce rates and exit pages.
Learn How to Measure ROI on SEO
If you want your business to have a good online presence, then investing in SEO is a must. However, you need to make sure it has a good return of investment in the process. By learning how to measure ROI on SEO, you can ensure that and more.
