G’day my name is David Krauter and I run the Web Design & SEO Agency of this blog called Websites That Sell.
So why in the world would I come out saying paying for SEO sucks when my wife & kids depend on me selling the very thing?
Well it’s because the traditional model of SEO does suck.
If you’ve ever received a cold call from agencies around the country or more likely from call centres in India or some other 3rd world country, you’d know that the traditional model and the costs involved with SEO look something like this…
- You pay anywhere from 1K+ per month for 6 months.
- Results are not Guaranteed.
- Return on Investment doesn’t kick in until a few months down the track.
- You won’t see any proof that things are actually working until 60-90 days into the campaign.
And the reason this sucks is because all the risk is on you… the buyer… and the benefits are all for the seller.
But the biggest problem with the traditional model is that SEO Is Not Understood.
In my experience, it’s because no one has really explained how it all works.
And I’m not talking about the technical stuff like H1 tags, link building, time on site and all that jargon.
I’m talking about explaining how SEO affects your bank account.
- How much money you’re missing out on by not being found on the first page.
- Why it’s actually profitable to wait for SEO results to kick in when you could just as easy pay for immediate traffic.
- And understanding how big your opportunity actually is!
So in this post I’m aiming to really open your eyes in terms of what’s possible with your business & SEO but more importantly…
I’m going to help you understand SEO exactly the way a business owner should.
So let’s get into it.
Breaking Down The Basic Numbers
If you’ve been in business for a period of time, no doubt you would have come across the Lifetime Value Of A Customer concept.
If not… in a nutshell here’s how it works.
THE FORMULA: (Average Value of a Sale) x (Number of Repeat Transactions) X (Average Retention Time in Months or Years for a Typical Customer)
Now you can work out at what rate you’re willing to buy customers with your marketing… you can scientifically and mathematically determine what you can spend in order to acquire new business.
I remember when I was first taught this concept… and then when it finally sunk in.
It totally changed the way I looked at buying media, doing promotions and investing into advertising.
It was one of those light bulb moments… And I think, today as you learn how to calculate & understand SEO – the same will happen for you.
So let’s move on to get to that light bulb moment 😉
As a starting point we need to gather some numbers & data.
(For ease of understanding and to give you some context in terms of the numbers and data, I’ve used a Plumber as an example business.)
Here’s the numbers you’ll have to gather:
1) Keyword Search Volume – this is the amount of people that are looking for your products or services. I’ve recorded a short video, which shows you exactly how to get these numbers for your business in a few easy steps:
Example Figures For A Plumber In Brisbane: 2,020 searches across 11 keywords.
2) Traffic Capture – based on various studies completed in the SEO space and info provided by AOL the industry standard for the amount of traffic captured by a website on the first page ranges anywhere from 2-37%.
For full report visit Chitika
When working with numbers & data I always like to be conservative, so in a new market a safe figure to go with would be around the 17-20% mark. This won’t blow up your numbers and create unrealistic expectations.
Example Figures For Plumber In Brisbane: 17% traffic capture.
3) Lead Conversion – this is the percentage of traffic that actually turns into phone calls, email form enquiries or opt ins.
Again… every time I talk to business owners they over-estimate this number, so I like to be super conservative here and apply no more than 10%.
Obviously if you apply all the marketing we teach at Websites That Sell(Strong Calls To Action, Incredible Offers, Testimonials, Proof and yes it’s that important STRONG CALLS TO ACTION) your conversions may be much higher than 10% – just keep this in mind 😉
Example Lead Conversion For Plumber In Brisbane: 10%
Once we have these real life figures for our business, we can accurately forecast what a ranking on the first page could be worth in terms of Lead Flow.
All you need to calculate is: (Total Traffic) X (Traffic Capture) X (Lead Conversion)
So in our example there was a total of 2,020 searches/month multiplied by 17% traffic capture, which gives us 343 visits to the website.
Now multiply this figure by your lead conversion rate (10% in our example) – which reveals, in our example, this kind of SEO traffic will yield an average of 34 new enquiries every month.
Now… knowing the amount of enquiries to expect (in our example 34) is great but that still doesn’t show me what ROI a first page ranking will give the business.
That’s why we’ve got to gather just a few more figures to get a full picture of the opportunity.
So here’s the rest of the figures you need to gather:
4) Client Conversion – this is the amount of clients/customers you convert from your enquiries. This figure is totally dependent on you, your sales skill level or closing procedures you may have in place.
Again, many business owners I talk to over-estimate this figure.
Just double-check yourself here, don’t get over excited… are you really going to convert EVERY lead or enquiry that comes through?
In my experience a conservative figure is 50%.
But for this example let’s work with 25% client conversion.
5) Average Sale Value – this is the easy one and the number you should know without any research 😉
In our example the average fee for a plumber (this is the bottom of the barrel, cheapest plumber I could find) starts at $50/hr and let’s say the average job would require 3 hours.
Example Average Sale Value For Plumber Brisbane: $150.00
6) Cost Of Paid Traffic – if you refer back to the search traffic video above, you’ll also find a column outlining the cost per click. This shows the costs per click Adwords charge for traffic.
In our example the average cost was anywhere from $16-$30 per click via Google Adwords.
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So Now That We Have All These Figures We Can Work Out The Precise ROI To Expect From SEO
First let’s work out what your SEO traffic would be worth on a monthly basis.
Sale Value Of SEO Traffic Per Month: (Client Conversions) X (Sale Value)
In our example we converted a total of 34 enquiries at an average sale value of $150. Which would make the search traffic worth $5,100/month.
A Brisbane campaign would require a fair bit of work, so in terms of SEO you would be looking at a realistic cost of $1,500 per month for a campaign like this.
So in this example you’d be looking at a profit (before any fulfilment expense etc.) of $3,600.
Not bad, considering when SEO is completed correctly after 3-6 months many times our clients simply go into maintenance mode, where the majority of SEO costs are eliminated…
But let’s move on and see what you’d be paying for this kind of traffic when utilising paid traffic methods (eg. Adwords).
Cost Of Equal Adwords Traffic: (Traffic Capture) X (Cost Per Click)
In our example we were working with 343 visits/clicks per month at an average click cost of $23.
So the cost of adwords to achieve this kind of traffic would come to $7,889.
Don’t get me wrong – we offer Adwords management services and we ourselves run Adwords campaigns for our business, but it’s important to work out the numbers to see how profitable a campaign would be.
In this example, the plumber would be silly not to invest into an SEO campaign, as the cost is dramatically lower than the potential sales made.
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You still with me?
If you’ve gotten this far well done… if you’ve followed along and plugged in your own numbers – double well done and credit to you.
That’s the kind of action that separates the business owners that actually reach success from those stuck at just wishing and sending out good thoughts…
But if you’re following this post or if you’re already one of our clients I know you’ve got nothing to worry about as we tend to only attract the action taking, self motivated and good looking 😉 clients and subscribers.
And with that being said… that’s all I’ve got for you today.
You now have a mathematically, based on real life figures way to forecast, predict and assess the value a SEO campaign could add to your business.
If all the numbers stack up for you, you may have just found a media breakthrough for your business.
But what’s most important is, you can now make educated decisions about your marketing budget and where to invest to grow your business.
And lastly I hope you now understand the factors of SEO most important to you as a business owner.
With that being said, if you have any further questions or if you’d like help with getting your business found on Google, reach out to me via email firstname.lastname@example.org or call us directly on 1300 188 662 or visit our website on www.WebsitesThatSell.com.au.
I look forward to talking to you and determining if the cost of SEO stacks up for your business to profit from FREE Google traffic long into the future.