How to convert ranking to ROI
For many agencies, somehow the metric conversion rate seems in the last few years to have taken the place of metrics like profit and ROI. That is why most of the agencies and consultants boasts of improving the conversion rate of their clients but at the same time shies away about the real impact of this on the business bottom line. However, the problem with this type of promotion is that the clients don’t know how this conversion rate increase will impact the ROI of the business and net profit.
It is difficult indeed to evaluate the effectiveness of the service provider who is selling the conversion rate metric. For a business owner, what matters in the end is the ROI and profit. For this reason, ranking and conversion rate should be always tied with the business bottom line and metrics such as cost, revenue, and profit. When SEO agencies boast the search engine rankings, this is not the only thing that matters for their clients.
In case of your SEO campaigns, it is not easy to calculate the ROI. Sometimes an increase in rankings and in the conversion rate may actually result in even a decline in gross profit. In the grand scheme of things, search engine rankings matter only if they translate in a better ROI. What is really important is improving the ROI and sales. Tests should be carried out with a focus on improving ROI and sales and not just rankings and conversion rate.
You’d rather optimize just a few ROI driven keywords rather than lots of ranking keywords, because while search rankings are just an indicator, ROI is the real measurement. Because it takes into account the real cost of an investment, ROI is a very important metric, more important than rankings or conversions. If an investment doesn’t bring a positive ROI, common business sense dictates that investment should be withdrawn.
Business owners have to calculate the ROI of their SEO campaign in order to evaluate if there are solid reasons and benefits to continue to invest in SEO. ROI should not be confused with rankings, organic conversions, raw organic traffic, number of links built etc. For a business owner ROI is what he gets in return in dollar value.
There are more types of ROI that are worth mentioning: Actual ROI and Anticipated ROI. Actual ROI is the one reported during the tenure and anticipated ROI is the one planned while implementing a new SEO campaign.
Instead of focusing on rankings it is better to focus on ROI when developing a SEO strategy. Rankings can deliver website visits, however they do not always guarantee revenue. In order to improve the ROI you need to think outside of the obvious keywords. With proper keyword research you can start driving revenue by discovering some real gems that you can rank for faster. This will increase the ROI as more return comes from the beginning. This way you’ll be able to remove the parts that are poor performers and scale the successful parts of the SEO campaign.
Instead of tracking conversion increases track ranking gains. It is important to find out how much gains a single position jump can bring to your business. You can improve your ROI by knowing what keywords you need to put the most effort into.