You may have heard that SEO is one of the best investments you can make in your business. Well, it’s true!

Okay sure, but why is that the case? To summarize it, SEO brings visitors, customers, phone calls and sales to your business by putting your website at the top of popular search engines like Google.

When done properly, SEO will continue to bring customers and brand awareness to your business for free…kind of. SEO takes work and a careful strategy. That in itself does take an investment of time and money to pull off, but how do you know that investment is worth it?

Why not predict SEO ROI with the following formula:

  • Organic Traffic * Conversion Rate = Leads
  • Leads * Close Rate = Customers
  • Customers * Average Revenue / Sale = Revenue
  • Revenue * Profit Margin = Profit
  • Profit – SEO Investment = SEO ROI

Keep reading, we’re going to break this down into detail so that you can predict SEO return on investment, even if you don’t have any website stats and aren’t currently running an SEO campaign for your business.

You can also download our free SEO ROI Calculator tool below that you can use for yourself or others.

Let’s dive in.

search engine screen

Items Needed To Calculate ROI from SEO

Before you calculate SEO, you’ll need to know a few pieces of information from your business, as well as perform a bit of research.

You should know your:

  • Average Revenue Per Sale / Customer
  • Your Profit Margin
  • Lead Close Rate Percentage
  • Keywords you want your business to be found for + their volume
  • Your monthly SEO investment

The more accurate you are with your numbers, the more accurate your predictions will be. When it comes to finding keywords, we’re going to explain how to find them in the next section.

Now it’s important to note that the estimations you’ll be calculating using this guide are based on the assumption that your website ranks on the first page of Google for your chosen keywords.

With our tool specifically, it gives you predictions based on your website ranking within the top 3 search results within the first page of Google. Another assumption is that it is going to take 4 – 6 months on average to see SEO results start to kick in.

With this in mind, let’s choose our keywords.

How to Choose Your Keywords

Keyword research can be very advanced, and you may want to consider hiring an SEO agency or SEO freelancer to perform more robust keyword research for your business and the following calculations.

That being said, we’re going to show you a fairly simple way to find keywords that are valuable in the industry of your choice.

While there are plenty of premium tools out there, we will be using a great free to use keyword research tool, UberSuggest to find our keywords for this section. Get a text document or pen and paper ready to capture keywords.

Start With Your Domain

Type your website’s domain into UberSuggest. After pressing “Search”, you’ll see the following stats on the next screen:

ubersuggest domain search for keyword research

Click on the box called “Organic Keywords” (circled above) to be taken to a list of keywords your website currently ranks for. From this list, choose all of the terms that you would want to rank higher for and write them into your list along with their volume (the “VOL” column):

ubersuggest keyword research

Check Out Competitor Websites

Now don’t just stop with the keywords from your website. UberSuggest lets you type in any domain to see keywords, including your competitors. You should type in at least 2 – 3 similar business websites and write down some of their keywords to put into your list.

Narrow Down Your List

Just because a keyword has a lot of volume doesn’t mean it’s a great keyword for your business. Take some time to think about the keywords in your list, and if your ideal customer would really type that into a search engine to find your business.

Sure, you may want your business to be found for a keyword such as “home remodel”, but it’s more likely you’ll get a customer by having your business rank for “home remodelers in kansas city” instead, even though “home remodel” is searched for by more people.

This is known as understanding search intent, and we’ll be writing a whole post on more in-depth keyword research soon.

Additionally, take a look at your current website. Ask yourself honestly if you believe your website really deserves a first page ranking for the keywords you are choosing. Compare your website to competing websites ranking on the first page, do you have a quality, easy to use website providing valuable information about your services to customers?

It makes a BIG difference.

search engine results page growth chart

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.

google organic ranking traffic share

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.

lady counting seo profits

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

SEO Takes Time, You Need to Factor This In

You know how to calculate SEO ROI, but the question remains…how long does it take to see results from SEO?

While no person or agency can say for sure, it’s widely accepted in the industry that the average amount of time it takes to start seeing results is 4 – 6 months of executing a solid SEO strategy consistently.

Here at Tekkii, we’ve seen our clients achieve a 2 – 4 month average that varies based on industry. When we have more data, we’ll release a chart of what industries see results sooner than others based on our own findings.

For now, you should expect to invest roughly 4 – 6 months of monthly SEO investment before you can start seeing a return.

However, if your ROI will ultimately be $7,950 per month after 6 months, you will make your return on investment by month 8, assuming you were spending $1,500 per month on your SEO investment.

Be sure to factor in the delay in ROI when accounting for SEO.

Use Our SEO ROI Calculator

seo roi calculator

We’ve put together an easy to use calculator that makes finding SEO ROI very easy. We’ll be updating it as well to factor in things like true conversion rates and estimating the time it will take to see a return based on industry.

Run as many calculations as you want! Get access to the calculator below:

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In Conclusion

SEO takes time, but we hope you can use this guide to see that it truly is one of the best investments you can make in your business. Not only will it continue to bring you leads and brand awareness, but your growth and returns continue far above your monthly investment.

Does your business rely on consistent leads and phone calls every month? SEO is the way to go for your business!

Published On: November 2nd, 2020 / Categories: Analysis /

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