Establishing the ROI in Search Engine Optimisation

As a wise man once said, if you donít know your numbers, you donít have a business. Everything is numbers.

Equally, before you make the decision to invest in search engine optimisation services, you need to know the numbers that will make that either a worthwhile and valuable exercise or a waste of money.

The types of numbers that you need to know are:

  1. How much does it currently cost you to acquire a client?
  2. What is the average lifetime value of a client for your business?

 

How much does it currently cost you to acquire a client?

Right now, your business will have a cost to acquire clients, whether you are aware of this or not. Let us say that at the minute that your main way of gaining new customers is running newspaper ads, and that youíre spending 1,000 euro a month, and gaining 2 new customers a month.

This means that it costs you 500 euro to acquire a new client at the moment. It also means that any other way that allows you to acquire a new client for less than 500 euro, has to be a good investment.

 

This exercise is very important in establishing the viability of scaling up your business.

What is the average lifetime value of a client for your business?

This is a critical question in assessing the long-term likelihood of success for your business. If we use the same example and say that while it currently costs your business 500 euro to acquire a client and that the lifetime value of that client is 400 euro then either you need to stop acquiring customers, or you need to significantly reduce the cost of acquiring those customers.

An easy way to illustrate lifetime value is by looking at a gym membership. If gym membership costs 50 euro a month and the typical client continues their subscription for 100 months, then that lifetime value is 5,000 euro.

On the other hand is members typically cancel their subscription within 6 months, then that lifetime value would only be approx. 300 euro.

Knowing the average lifetime value of your clients, and how much youíre currently spending to acquire a client will significantly influence the intelligence of your decision making around all digital marketing activity.

These simple metrics will help you to establish when you are winning at your digital marketing agency and when you are losing, and particularly when to ramp up search engine optimization activities that are working really well.

Again if a 1,000 euro a month SEO budget can acquire 20 to 50 new leads for your business, then this is usually money very well spent.