What is the ROI of SEO?
Wondering what is the ROI of SEO?
Are you thinking about using SEO to grow your local business, but you’re not sure if or how you’ll make a profit?
Or maybe you’re already using SEO, but you’re not sure if you’re getting the best return on investment?
In this article, we’re going to talk about the ROI of SEO (aka return on investment) for local businesses, including what kind of ROI is good, great and bad.
By the end, you’ll have all the information needed to properly assess what to expect from your SEO investment and ways to increase your returns.
What is the ROI of SEO?
A good SEO ROI is 3x-5x of your monthly spend.
For example, if you spend $1,000 a month, it should yield $3,000-$5,000 in revenue.
If you spend $5,000 a month, if should yield $15,000-$25,000 a month in revenue.
A great ROI would be above 5X, 10X, 15X, etc.
Will you hit a great SEO ROI in the first month?
It’s not likely. SEO is a long-term game, but you should be heading in that direction of profitability month over month.
For perspective, a bad SEO ROI would be less than 2x.
While you are not losing money (1X is breaking even), you’re not making big returns on your investment.
SEO ROI Compounds Over Time
This is a powerful aspect that’s unique to SEO. Your returns will compound over time.
That’s happening because of three main factors:
- The investment paid to an SEO agency is typically a fixed monthly dollar amount, whereas the cost to run ads fluctuates almost daily.
- The majority of the effort put into a piece of content is upfront (strategy, writing, launching). After that it requires much less effort to analyze and optimize once a month.
- Website pages that get visitors are like advertisements that are showing on search engines for months and years, whereas when you stop paying for ads, they turn off immediately.
Of course, I’m not saying that paying for ads is a bad idea, in fact, it’s the opposite.
Moat local businesses should do SEO and other digital marketing.
The point here is to understand the distinction between advertising and educating.
Advertising is interruption marketing that stops on a dime.
Educational website content is attraction marketing that snowballs up over time.
How Long Does it Take to See a Positive Return on Investment (Calculate SEO ROI)?
How long does it take to see profitability from SEO?
Generally speaking, about 3-6 months, but it can be quicker or slower.
The time it takes to see a return on investment from SEO depends on the following:
- The quality of your offer to your customers.
- How much you charge for your services.
- How much each customer is worth to your business (LTCV).
- The quality of your website’s sales pages.
- The strength of your competition when it comes to their own SEO efforts.
What happens once visitors come to your website is critical to your sales and profits.
If we send traffic to your website, but the offer is not compelling, the website will lose lead(s).
The percentage of visitors that turn in to leads is known as the website conversion rate and it has a direct effect on the ROI of SEO.
This measures how much revenue SEO activities generate for a business compared to their cost.
If your pricing is too low, it deteriorates your profits and undermines the value of what you offer to your customers no matter how awesome the SEO is.
Low pricing and profitability undermines all marketing efforts.
Thankfully, there are things you can do to increase your ROI from SEO right away.
Seven Things That Hurt SEO ROI and How to Fix Them
There are lots of things that can hurt the ROI for a business, but these are the most common.
Improving these areas will drastically improve your results.
1. The Offer is Not Compelling and Hurting Sales
Imagine opening a storefront business and spending tons of cash to get the word out.
Then on opening day, no one shows up.
Or some folks show up, but very few people buy what you’re selling.
That’s what a poor offer does to a business.
While we may think what we’re offering is awesome, our prospective customers will tell us the truth with their pocketbooks.
What you’re offering and how it’s being presented are at the heart of getting a higher ROI of SEO.
Is there an angle that your competitors do not occupy, but your customers care a lot about?
For example, being open 24/7 or super fast turn around times or a specific process/materials that produce a high-quality result?
Working on ways to make your business unique could be the difference between low profits and high returns.
2. Your Prices May Be Too Low
This is a very common issue that directly affects the ROI of SEO.
From our experience, local businesses struggle with finding the right pricing for their products and services.
This ties back to the offer.
The more value your offer has, the easier it is to charge the prices they are really worth and the more willing customers will be to pay.
Many businesses try lowering their prices to increase sales, but that’s a losing game. There’s always someone out there that will say it’s too expensive.
Instead, look at adding value.
Are there things your customers really need that you can add to the offer to make it more valuable?
Are your competitors offering the same things at a higher price?
It may be time to get aligned with your market’s prices.
3. The Lifetime Customer Value is Too Low
How much is your customer worth to you?
If you don’t know, you are at risk.
How much a customer is worth is known as lifetime customer value.
Knowing this number and looking for ways to increase it can improve the ROI of SEO.
The hardest and costliest part of marketing is acquiring the customer.
Yet few businesses look at their existing customers to see if they can help solve more of their problems.
If a prospect has chosen to do business with you, that means they trust you and that’s awesome.
While it’s definitely important to acquire new customers, are there other problems that you can solve for your existing customers?
Instead of coming up with completely new products or services that your company is not great at, stay in your area of expertise.
Is there a secondary service, or a monthly service, you can offer to your customers that they would gladly take?
Are your competitors offering something your company can do and maybe do better?
Going deeper with your existing customers makes your company more valuable to them, lowers expenses and increases SEO ROI.
4. Website Analytics Not Set Up With Conversion Tracking To Measure ROI (e.g. Ecommerce)
Knowing where your visitors and customers come from is super important to growing, yet so few businesses measure ROI (e.g. ecommerce).
If you’re not tracking SEO metrics and measuring SEO performance and session data, then set that up today.
While it’s impossible to source every single customer, it’s way better than the pre-Internet days.
A business is losing on their ROI of SEO if they don’t know where most of their customers are coming from.
It important to measure the ROI of SEO.
It is how you can calculate SEO investment.
Set up and integrate the following:
- Google Analytics
- Google Search Console
- Google My Business
- Website contact forms tracking (for conversion rate)
- Website phone number tracking (for conversion rate)
- Customer Relationship Management (CRM)
- Facebook Pixel
5. The SEO Investment is Not Enough
This sounds like a sales pitch, but it’s not.
Think of SEO ROI like a boxing match.
Let’s say a boxer accepts an offer to fight another boxer.
The amount of training he’d need to beat an out-of-shape boxer would be different than training to beat Mike Tyson in his prime.
That’s how SEO works.
If your competitors have not been doing much monthly SEO work, then beating them will take less time and money.
If most of your competitors have been doing monthly SEO for longer periods of time, then it will take more time and money.
Depending on your competition, you may simply need to invest more for longer to reach the high SEO ROI results.
What we find is that most businesses would grow more, if they invested in building more awareness, whether it’s SEO or digital ads or even billboards.
Most businesses suffer from anonymity.
6. Not Doing SEO Consistently
Going back to the boxing metaphor, occasionally working out isn’t going to cut it.
Like all other marketing, successful ROI of SEO is in the consistency.
Search engines reward websites that are actively creating new content every week and month.
Simply sticking to monthly SEO performance could increase your profits and ROI over time.
7. The SEO Agency is Not Very Good
Not every SEO agency is created equal.
If you’re doing everything above, then it may be the strategy of the agency you’re working with.
Before switching to another one, speak with them to make sure they are aligned with your business goals and have the capabilities to get you there. There may be a breakdown in communication and expectations.
In addition, ask for a way to measure the results in terms of leads and sales and the ROI of SEO.
Conclusion
Make a quick list of the points above and work them from top to bottom.
You’re sure to see an ROI increase that will help your business revenue stabilize so you can grow.
Want to see SEO in action? How we ranked a local business on Search in nine days.
Want to see if we can help? Local SEO services.