In today’s blog post we have Thomas Eder of Sawgrass Digital Marketing here to tell us about the types of businesses that benefit most from SEO, why SEO isn’t right for every business, and how you can predict if SEO will have a high ROI.
Thomas has also included a simple formula you can use to calculate the ROI of an SEO campaign.
All local businesses can benefit from a proactive SEO (search engine optimization) strategy. Customers are searching for local businesses at an ever increasing rate, and it pays to be a part of the conversation when a consumer is evaluating products or service providers in the local area. Even if you aren’t ready to invest in a full-scale SEO campaign that ranks your website for competitive keywords you can still engage in other tactics that ensure your brand is properly represented in a search.
If you are interested in launching a full-scale SEO campaign, there are factors to consider before making the investment. I’ll be exploring those factors in this article, and it’s my goal to give marketing managers, business owners, and entrepreneurs insight into the viability of a local SEO campaign. Because from an investment perspective SEO isn’t right for everyone but when it is right, it’s really right.
Good SEO is not cheap
Now this isn’t meant to discourage your from investing in SEO, but I do wish to create some awareness. Notice I used the word “investment”? This is a crucial distinction; SEO should not be treated as a cost. A cost is a simple and often necessary expenditure of money, time, or other resources. SEO is intended to produce a return in the form of increased exposure and new customer relationships. Therefore you need to be confident that your investment will generate a return. SEO is an investment in the success of your business, and it’s your duty to make sure it’s a prudent one.
There are more than enough agencies and freelancers out there willing to sell cheap SEO as an add-on to an existing marketing campaign to make more money on the back end. These happen to be the same agencies that have poor track records with SEO; this is not a coincidence. The mistake is in treating SEO like an afterthought. A good SEO agency will price their services depending on your location, industry, and the competitive landscape in your area. This increases the odds of success for your campaign and is just plain smart.
Good agencies approach the pricing situation in this manner because it’s important to know what level of resources will be required to achieve the desired ranking. This means that the business owner needs to weigh the pros and cons of the SEO campaign. They need to take into account the return on investment and determine if the campaign is worth it. Below are a few factors that will help you decide what sort of businesses can see high returns from an SEO campaign.
Population and Search Volume
If your local area is small, it’s obvious that you’re going to have fewer customers to sell too. It’s important to know for sure how many new customers you require per annum to evaluate the viability of an SEO campaign. A good indicator of the feasibility of the local market is search volume or the average number of monthly searches your desired keyword has. If the volume is high, it’s a good indicator that there is a healthy and thriving market available to support an SEO campaign.
High-Cost Per Customer
Also, known as LTV or lifetime value, a business should be acutely aware of the average lifetime value of their clients. Knowing the LTV allows you make informed decisions when it comes to investments in operations, marketing, and other crucial business activities. For example, industries like law, dentistry, or HVAC typically see significant returns from an SEO campaign. The average LTV for their customers can be in the tens of thousands of dollars, making the investment worth it.
In contrast, a high volume low margin business like a restaurant will benefit from an SEO campaign but will likely struggle to pay off their investment. It’s also important to note that a business that has customers with a high LTV will benefit more because they aren’t pressured to make as many sales as a lower margin operation, thereby increasing the success rate of the campaign on the whole.
When the furnace breaks in the middle of winter or when your tooth cracks on vacation you aren’t going to want to wait to get it fixed which means you’re probably going to make a quick decision based on availability. This is where SEO can shine for a business that offers emergency or on-call services. If you can be found online and rank higher than your competitors when a customer is in a moment of crisis, odds are you’ll be getting a phone call, and your competitors are going to be left out of the conversation.
So how can you know if SEO is right for your business?
Here’s a simple formula you can use to determine if SEO is right for your business.
First, determine the search volume for the particular keyword you wish to rank for. You can use an SEO tool like SEMRush to accomplish this. Alternatively, ask your SEO provider for their insight. Next, divide that monthly search volume by the average click-through-rate for that position. It’s typically somewhere in the neighborhood of 30% for a number one ranking. Now you should have a clear picture of the number of website visitors you can expect if you invest in SEO.
The remainder of the formula involves taking the expected traffic and dividing it by a reasonable conversion rate for your business and industry. You’ll likely have better insight into this than anyone else; it is your business after all. Once you know how many new customers that ranking will result in you can multiply that number by your average LTV (lifetime value) for that customer to get an accurate picture of an SEO campaigns ROI. If the return is greater than the investment, you’re good to go!
Remember, this is a practical, numbers only perspective and many other factors go into an SEO campaign. Always consult with your SEO provider to ensure maximum success, and don’t forget to ask for referrals or case studies. Past successes are the only accurate indicator of future success.
Thomas Eder is the Founder of Sawgrass Digital Marketing a traffic and conversions focused digital marketing agency. He posts resources and content for marketers on his Facebook page. You can also find him on Twitter @thom_eder and YouTube.