As an example, let’s compare SEO to Pay-Per-Click (PPC) Ads.
The Difference Between SEO and PPC Advertising
If we had a dollar for everytime a business owner said, “Can’t I just run Google Ads? Why do I need SEO?”
We would have a lot of dollars. 🤑
PPC or Pay-Per-Click: Google Ads campaign where your ads appear at the top of the search results on Google, that when clicked on, drives (paid) traffic to your website. Everytime someone clicks on your ad, you pay Google.
SEO: Helps your website show up higher in the search results on Google driving organic (non-paid) traffic to your website. When someone clicks on your website you aren’t charged a fee.
The quick answer is…
PPC = faster visibility, which typically generates faster results, and more expensive in the long run.
SEO = visibility takes longer, so slower to see results, but significantly higher ROI in the long run (i.e. cheaper in the long run).
When you need to drum up business fast in the short term, you can run a PPC campaign. But if you want results that last and grow overtime, then you need to invest in SEO.
When you spend your money on PPC (similar to other traditional advertising), you instantly gain visibility.
As soon as you stop investing, that visibility immediately disappears.
On the other hand, when you invest your money on SEO, it will take some time to gain visibility. But once your visibility starts to increase, so will the number of leads. And as it continues to increase your leads will increase.
If you were to stop investing in SEO, which we don’t recommend, your visibility would remain, not forever, but it won’t instantly disappear.
That’s why it’s important to at least continue to invest enough to maintain your current visibility.
What we tell our clients who don’t want to wait for the SEO to kick in is they can run a PPC campaign while we are implementing the SEO. Once the SEO starts to kick in, we will recommend turning off the PPC campaign and just rely on SEO to bring in leads.
How To Calculate the ROI of SEO Using Simple Math
Alright, here is the meat and potatoes of our article.
What you have been waiting for.
First, we will list out the different bits of information you will need to gather about your business.
Then, we will explain how to use these bits of info to calculate any marketing.
Lastly, we will show how to apply this to SEO using a real client example.
Bits of information you will need include:
- Leads – the number of qualified potential customers you received.
- Conversion Rate – the number of leads who converted into customers divided by the total number of leads generated.
- Average Value of Sale – the average cost/value of the products and/or services that you sell. And please don’t say “it varies” – it’s called an average for a reason!
- Investment – the amount of money you are spending on the marketing campaign.
Let’s apply this equation using real numbers. This is a snapshot of one month.
- Leads – 196
- Conversion Rate – 15%
- Average Value of Sale – $500
- Investment – $2,000
For every $1 they invested with us, they made over $7.
Let’s do another one – this time using a roofing client for one month during their peak time.
- Leads – 71
- Conversion Rate – 15%
- Average Value of Sale – $10,000
- Investment – $3,250
Pick up your jaw from the floor.
No joke, this is a real ROI from a real client.
For every $1 they invested with us, they made over $32.
In total, this client invested $39,000, but their potential revenue is over $1,000,000!!
If we were in their shoes, we would invest all our $1’s.
Let’s flip the coin.
What if the SEO campaign was considered a “failure”?
Well, even if it was, you could still come out of it with a profit.
Let us explain…
Let’s imagine you own a roofing company.
For every 10 phone calls, you close 2 deals, and generate $1,000 in revenue.
If you invest $1,500 a month, all you need is 15 calls per month to at least break even.
Let’s say at the end of 6-months, we’ve only generated 20 calls a month for you. Would you also consider that a failed campaign?
Most would say… Yes.
Okay, great. So, those 20 calls a month over the course of the campaign would be a total of 120 calls. Based on the numbers you’ve given us, those 120 calls will bring you $12,000 in revenue. That’s a $3,000 profit on a failed campaign.
But, just because you decided at the end of 6-months to stop working together, doesn’t mean everything we did is gone.
Let’s say for the next 3-months you still get those 20 calls a month, then another 3-months averages an extra 10 calls a month.
That’s 90 extra calls. 12-months after the campaign has started, you’ll have invested $9,000 and have gotten 210 calls. Based on the numbers you have us, that’s worth $21,000. So, even with what we agreed is a failed campaign, you were still able to more than double your money (with a profit of $12,000).
If we said, ‘give me $9,000 today and in 12-months I’ll give you $21,000’ would you take that deal?
Your answer should be “Yes!”
At What Point Can I Stop SEO?
Now hold your britches and let us clarify.
Some business owners think they can invest in SEO for a year or two then stop.
If you did stop SEO, the results do not disappear overnight like most other types of marketing. Instead, you will continue to see results for a while, then at some point down the road, results will begin to drop.
What we recommend instead is if at any point you’re thinking of stopping SEO or you have more than enough business at the moment, level out your spending.
Rather than increasing your budget (for even more results), just maintain your current investment (to keep getting the same level of results).
We have clients that end up getting more business than they can manage, so while they are not increasing their investment, they are still maintaining their existing results by maintaining their current level of investment.
For example, one of our clients leveled off their investment, but they are continuing to see a 56% growth year over year.
Even when you want to make it stop… you can’t.
SEO is just that good.
Let SEO Be Your New Best Friend
We don’t mean to sound overly confident, but SEO is THE greatest thing you can invest in for any business, but especially for home service companies.
If you know of something that works better for a trade service business, we are all ears.
Now we are not saying that all other marketing is bad and you should never try anything else.
That’s not the case at all!
For example, restaurants especially can really benefit from social media marketing as well.
But anything you try needs to be correctly tracked so you know what is and is not working and what your ROI is, so you can decide where to best invest your money.
If you want to give SEO a try or if we’ve completely confused you – schedule a FREE, no obligation strategy session with us.
You never know, this could be the “one thing” that could make your business soar.