As a contractor, you know that calculating your return on investment (ROI) is crucial. After all, you wouldn’t want to take on a remodeling job if you’d be spending more than you’d make in profit.
When you invest in search engine optimization (SEO), you must track its ROI as well. The thing is, measuring SEO ROI is a tad more challenging than what you might be used to — but it’s not rocket science.
In this guide, we’ll cover everything you need to know about measuring the return on your SEO investment: why it matters and how to calculate it.
Why You Should Track the ROI of SEO
Unlike paid ads, SEO generates traffic to your website through free organic searches. If someone searches “contractor near me” and your website pops up as the first result, that’s SEO paying off.
Creating, implementing, and continually adjusting your SEO strategy to keep up with the ever-changing search engine algorithms eat up a considerable amount of time, money, and resources — whether you’re doing it in-house or using a digital marketing service.
As with any investment, you want to ensure that your SEO activities are productive and cost-effective.
SEO is a long-term investment. Paid ads usually result in instant clicks to your website, but SEO can take weeks and sometimes months to bring a marked improvement in your website traffic.
Understanding how to track your SEO ROI over time is essential if you want to avoid wasting precious business hours and a significant chunk of your marketing budget on fruitless long-term initiatives.
Calculate Your SEO ROI in 3 Easy Steps
The formula for calculating return on SEO is the same as the one you’d use to measure almost any other type of ROI:
SEO ROI = (Value of Conversions – Investment Costs) / Investment Costs
The bottom line: You have a positive ROI if the revenue your SEO campaign generates is higher than your SEO costs.
Let’s break down this calculation step by step:
1. Calculate Your SEO Investment Costs
Your SEO costs are your total investment in search engine optimization, including:
- In-house resources: Big companies often employ in-house developers, content writers, and SEO experts, but if you run a small or medium-sized contractor business, you probably won’t have dedicated SEO staff. At most, you may have a single digital marketer working on SEO some of the time in addition to their other responsibilities. If so, track the time they spend on SEO tasks, multiply it by their hourly or daily pay rate, and add it to your SEO costs.
- Outsourced services: The vast majority of contractors outsource their SEO to external experts like digital marketing agencies. These costs should be easy to calculate, as most agencies work on a retainer with a fixed monthly fee.
- SEO tools: If your in-house team uses a paid SEO tool such as SEMRush, Moz Pro, Ahrefs, or KWFinder, be sure to add the subscription fee to your SEO costs.
Once you have these figures, add them up to arrive at your total SEO investment — but keep in mind that this number isn’t set in stone. Your SEO costs might change from time to time as you switch providers, try new services or tools, or rethink your marketing budget. Be sure to account for any changes and update the total number to ensure that your ROI is up to date.
2. Track and Measure Your Conversions
Now, this is the trickiest part of the calculation. Tracking and measuring the value of every conversion from organic search is fairly straightforward if you run an e-commerce business. All you need to do is pull up the sales data from your online transactions.
However, your contractor website probably doesn’t function like an e-commerce platform. Your site attracts visitors or leads, some of whom may book an appointment or a consultation. The monetary value of each conversion varies depending on the project, service type, and other factors — and may not be immediately apparent just by looking at your organic visitor count.
All this can make conversion tracking for contractor websites challenging (but not impossible). Google Analytics is a fantastic free tool you can use to keep tabs on your conversion rate in real-time.
To set up conversion tracking for lead generation in Google Analytics, you need to define goals, such as form submissions, page visits, or appointment bookings, and assign a monetary value to each goal.
Follow these steps to set up a conversion:
- Open your Google Analytics dashboard.
- Go to “Admin,” then “Events.”
- Click “Create event” to set up events for each conversion type you want to track.
- To create an event, give it a name and input the “Parameter,” “Operator,” and “Value.” Your conversion should be visible under “Existing events.”
- To complete the set-up, toggle the switch under “Mark as conversion.” You should now be able to see the event as a conversion in the “Conversions” tab.
To assign a dollar value to a conversion, here’s what you need to do:
- Head over to the event in Google Analytics.
- Click “Add modification” in the “Parameter configuration” section.
- Choose the currency and input the value in the “Parameter” field.
- Hit “Save,” and you’re done.
From now on, you’ll be able to track the value of this conversion type.
How To Determine the Value of Conversions
Assigning a value to each conversion type in Google Analytics is easy, but how do you determine the appropriate dollar amount in the first place?
It’s easy — simply use this formula:
Customer Lifetime Value x Lead Conversion Rate
Customer lifetime value (LTV) is the total amount you expect a customer to spend during your business relationship. Your lead conversion rate is the percentage of leads that convert into paying customers.
So, if the LTV of a customer is $20,000 and your lead conversion rate is 15%, the average conversion value would be $3,000.
3. Calculate Your SEO Return on Investment
If you’ve made it this far, you have all the numbers you need to calculate your SEO ROI. We’ll use the same formula we discussed earlier:
SEO ROI = (Value of Conversions – Investment Costs) / Investment Costs
To simplify things, let’s assume your SEO activities cost $10,000 and generated $100,000 in conversion value during the tracked period.
($100,000 – $10,000) / $10,000 = 9
So, for every $1 you invest in SEO, you had a return of $9. Your ROI is 9 x 100 = 900%. You see, it’s not that hard, is it?
The Challenges of Measuring SEO ROI
Here are a few things to keep in mind when calculating your SEO ROI to ensure that your calculations are as accurate as possible:
SEO Is a Marathon, Not a Sprint
Earlier, we touched upon the fact that SEO can take a lot of time to generate a robust return on investment. Sure, you can have the occasional quick win, but for the most part, SEO is all about consistency and patience.
Because of the potentially big gap between your investment and return periods, you need to be careful when choosing which periods to track.
Instead of comparing your ROI month over month, you can often get a more accurate picture if you start measuring the return at a more granular level, such as per keyword or page.
Attribution in Digital Marketing Is Inherently Flawed
Attributing conversions to specific marketing channels invariably relies on guesswork and assumptions. Buyer journeys and touchpoints are much more convoluted than attribution models may suggest.
For instance, imagine that a potential customer looking for plumbing services lands organically on your blog post about fixing clogged drains.
They remember your brand from a Google ad that popped up on their screen the day before. The customer then clicks out of your blog, browses a few competitor websites, watches a couple of YouTube DIY videos, and reads your reviews on Google My Business before coming back to your site to schedule an appointment.
Is this conversion attributable to the organic search, the Google ad, or your social credibility?
Sometimes, it can be hard to say, so it’s always a good idea to evaluate your SEO metrics in the bigger context of your overall digital marketing efforts.
SEO Testing Has Its Limits
One of the most effective ways to gauge the contribution of a marketing channel to your overall ROI is to switch it off for a while and see how you fare without it.
The thing with SEO is that you can’t just turn it off without, essentially, turning off your whole website. While there are alternative ways to test your SEO, you can never have 100% accuracy.
Supercharge Your SEO ROI With Contractor Growth Network
Developing, implementing, and tracking the success of SEO campaigns can be challenging without expert help.
At Contractor Growth Network, we only do marketing and SEO for contractors — it’s our specialty!
Let us handle your SEO strategy and track your ROI while you focus on your contractor business.
Call (980) 449-4384 or contact us online to schedule a call with our SEO experts.