Measuring SEO ROI
Now that you’ve chosen your keywords and have your numbers ready to go, let’s get into how it all comes together.
1. Estimate Traffic from Keywords
Take the volume from each keyword in your list and add them all up to get your total keyword volume. From here it’s time to find the percentage of that traffic you’ll be receiving to your website from your keyword list.
Let’s say the total monthly volume of your keyword list was 3,000, which we’ll be using throughout our example.
According to stats from Smart Insights, here is a chart showing the share of clicks that each of the results in Google’s first page receive based on where they rank.
So if you rank #1 for a given keyword, you should be receiving approximately 34.2% of the keyword’s volume each month. Make sense?
Our SEO Our calculator uses 21%, which is the average percentage you would get from the top three search results based on the list above. We believe ranking in the top three is a great goal to achieve for any keyword and will be using the 21% average for our example.
With our earlier number of 3,000, the estimated visits we would receive to our website each month would be 630 people. Assuming we rank in the top 3 for our chosen keywords sticking to the 21% average.
Feel free to use the chart above to estimate your own averages, or put together calculations based your website ranking in a specific search position.
2. Estimate Conversions from Traffic
By now, we should have estimated the total number of monthly visits to our site based on our chosen keywords. Next, we need to estimate just how many customers or leads we will receive from this total.
According to a study by Smart Bug Media, roughly 16% of your organic traffic should be converting into leads. This number varies widely and there are a few factors you should take into account when it comes to your own conversion rate:
- You website design impacts your conversion rate
- Your content impacts your conversion rate
- Your online reputation impacts your conversion rate
- Conversion rate varies largely by industry
If we take the average of 16%, we end up with 100 leads per month from ranking in the top three for all of our chosen keywords. It’s all starting to come together now huh?
3. Estimate Revenue from Conversions
Now that we know we’ll receive approximately 100 leads each month, it’s time to figure in the estimated revenue. This part is pretty easy.
Take your total leads and narrow these down based on your average lead close rate. What percentage of leads do you turn into customers on average? If that number is 60%, then you’ll be left with 60 closed sales in a given month.
Next, take this number and multiply it by your average revenue per sale / customer. If you’re a plumber, that number is around $450.
When your SEO and rankings kick in, this means you’ll be looking at $27,000 per month in revenue coming from your website. Lastly, if your profit margin is 35%, SEO will be generating $9,450 in profit for you each month.
Let’s not forget to factor in is your SEO investment. Local SEO services can be anywhere from $500 – $5,000 per month. For our example, let’s just say $1,500 is your monthly spend. Your SEO ROI is $7,950 in monthly profit.
4. The Full Calculation Visualized
Here’s that calculation broken down:
Total Keyword Volume * Traffic Share from Top 3 Google Ranking = Estimated Monthly Traffic
3000 * 0.21 = 630 traffic
Estimated Monthly Traffic * Average Organic Conversion Rate = Estimated Monthly Leads
630 * 0.16 = 100 leads (rounded)
Estimated Monthly Leads * Your Lead Close Rate = Estimated Customers
100 * 0.60 = 60 customers
Estimated Customers * Your Average Revenue per Sale = Estimated Monthly Revenue
60 * $450 = $27,000 / month
Estimated Monthly Revenue * Your Profit Margin = Estimated Monthly Profit
$27,000 * 0.35 = $9,450
Estimated Monthly Profit – Monthly SEO Budget = Estimated Monthly ROI
$9,450 – $1,500 = $7,950 profit / mo