What is search engine positioning worth? Let's see how SEO might be considered from a return on investment basis.
Assuming you have your site or online store in good shape, leads and sales will be proportionate to the amount of traffic to your site. Let's say your average sale is $40, your conversion rate (the percentage of visitors who make a purchase) is 1%, and your gross profit is 15% of revenue. Here's my analysis of profit:
| Visitors per week |
Number of Sales |
Revenue | Gross Profit |
|---|---|---|---|
|
500 |
5 |
$200 |
$30 |
|
1000 |
10 |
400 |
60 |
|
5000 |
50 |
2,000 |
300 |
|
10,000 |
100 |
4,000 |
600 |
|
50,000 |
500 |
20,000 |
3,000 |
Of course, the parameters in this example are those of a consumer retail business. If your site targets customers who can be converted at a higher rate (i.e., better qualified), have substantially higher average purchases and a higher gross profit more typical of a B2B site, then the traffic required would be much less. In the example below, the rate is 5%, the average sale $500 and the gross profit 25%, then:
| Visitors per week |
Number of Sales |
Revenue | Gross Profit |
|---|---|---|---|
|
50 |
2.50 |
$1,250 |
$312.50 |
|
100 |
5.00 |
2,500 |
625.00 |
|
250 |
12.50 |
6,250 |
1,562.50 |
|
500 |
25.00 |
12,500 |
3,125.00 |
|
1,000 |
50.00 |
25,000 |
6,250.00 |
The question becomes, if you got into the top 5 or 10 in several of the major search engines, how much would it increase your visitor flow and sales? Make your own calculation of how much you want to increase your site's traffic, your conversion rate and gross profit (or contribution margin) on the average sale would be and that will provide a good basis to evaluate an SEO program to generate that traffic, improve your conversion rate and so on.
