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The ROI of SEO for small businesses

Author: Jeremy Rivera

A graphic of a generic bar graph, with generic search-related iconography near it. There's an image of author Jeremy Rivera on the left-hand side.

The time when a shop or local business could just open its doors, place a few local ads, have a grand opening event and call it a day are over. Search engines are ubiquitous and now they’re in people’s hands as they head out the door as part of every smartphone.


People now instinctually turn to their phones and search engines when looking for a local shop or service provider, like yourself. Search engines connect them to the products and services they’re looking for, and investing in proper search engine optimization (SEO) can mean the difference between appearing near the top of results and not showing up at all, leaving potential customers for your competitors.


“81% of retail shoppers conduct online research before buying. The overwhelming majority of retail consumers start their journey with online research.” — GE Capital Retail Bank

Even if you know investing in SEO is a smart choice for your business, there can be other considerations preventing you from committing (such as whether you should learn it yourself or partner with an agency, or even what agency to trust, for example). In this article, I’ll discuss what you can expect to invest, what you should know before pursuing SEO, and what you get in return for your investment.


Table of contents:


What you’re paying for when investing in SEO


Unlike paid advertising (PPC) campaigns or paid social media campaigns, you aren’t paying the platform (in this case, Google) directly for the visitors that arrive at your website. Instead, you’re competing with other small businesses and sites to appear in the top search results.


The better your SEO is, the more visible your brand is likely to be when potential customers search for relevant terms (like your industry, products, or services). In turn, that increases the chances that searchers will click on your listing from search results, get directions to you from Google Maps, or that your content will be read aloud as the response from a smart speaker.


So, if you’re not paying directly for that traffic from search engines, what are you paying for exactly?


  • Content: Someone needs to write the pages or articles that will appear in search results, familiarize audiences with your business, and ultimately nurture them towards becoming a customer.

  • Links: You need other sites to lend you relevance and authority by linking to you, and that usually means some type of outreach which needs to be managed.

  • Website design: Your site’s layout and visitor flow can contribute or hinder your ability to convert visitors into paying customers. You may need to pay for some help to optimize your site’s conversion rate.

  • Technical SEO: Ensuring Google and other search engines are properly crawling, indexing, and ranking your site, and resolving technical issues or schema code deployment takes time and expertise.

  • Analytics/strategy: It takes experience and skill to effectively review your site’s performance, your competitor’s performance, and establish a reasonable plan of action or relevant keywords to target with pages or posts.


These are the elements that come together to help you appear in search results and turn those online visitors into in-person visitors and/or potentially paying customers.


Separating SEO myths from facts

Unfortunately, as soon as a small business is registered, it starts getting cold calls and pitch emails from every corner of the world, promising seemingly overnight success for a small investment.


There are offshore companies that exist just to try and convince small business owners to pay for their services, and a number of them claim to “do SEO” for your business.


A black and white image of a man wearing glasses in a top hat holding a bottle that’s labeled “snake oil”

It is true that there are shady service providers, and one of the best ways to tell whether they are just trying to make a quick buck off of you (and not actual SEO experts) is because they are not using SEO to reach you—they’re cold-calling or emailing you! If they actually did have the skill needed to rank other businesses in search results, then the proof should be in their own search rankings for their website! Do THEY show up for a relevant search?


Beyond that litmus test, there are a number of other ways to evaluate whether an SEO agency or freelancer is the real deal:


  • They don’t guarantee rankings for specific keywords.

  • Their website actually ranks for keywords related to the services they provide.

  • They don’t promise instant results.

  • They don’t claim to be “Google Certified” for SEO services (no such certification currently exists).

  • They have testimonials from previous SEO clients.


The potential cost of ignoring SEO

If you don’t engage in SEO, then your business may not get found in search results, which limits the amount of people that can find and patronize your business. While this disadvantage alone is enough for most businesses to take SEO seriously, there are a number of other, related disadvantages for you to consider.


For example, when people are researching “What is the best [service/product] that [does what you do]?”, you will miss out on the opportunity to get in front of that audience since you’ll have no relevant content for them to consume. Instead, the search results will show them a list of competitors or content from your competitors.


There is an opportunity window when somebody is doing research before they commit (in SEO, this is referred to as “informational intent”). This is even more true the more expensive the purchase is. Optimizing your site enables you to attract searchers at this stage of the funnel, familiarize them with your brand, and, over time, instill trust and nudge them towards becoming a customer.


An example of a local knowledge panel for the business Caffe Reggio. It includes star ratings, popular times, business location, website, phone number, etc.

For local businesses, you also have the ability to claim your space directly on Google Search results, and show up in maps. If Google interprets the intent of the search to be local, then it may show a local knowledge panel (shown above)—businesses can claim their local knowledge panel, enabling them to showcase their location details, reviews, images, as well as post product, service, or business updates and promotions. There’s even an entire field of SEO for these local results, and extra steps that can increase a small shop’s ability to reach clients who a ready to buy and physically nearby.


The list of potential SEO benefits is long, but when you think about passing on those benefits, remember also that you’re making the internet an easier place for your competitors to reach their audiences because you’re limiting your digital presence (that’s one less business that customers have to choose from). For some types of customers, that’s the same as not existing at all.


But, there are legitimate reasons not to invest in SEO


There are potentially real reasons why it might not make sense to invest in SEO right this minute. If you’re a small business, with no free time, no budget, and no knowledge of SEO to start with—and you have other successful marketing channel options—then perhaps now is not the best time to invest in SEO.


A four-panel graphic of AI-generated artwork, depicting robots amassing what appears to be coins

It could be that you’re in a small community, have an incredibly small, niche audience, provide hyperlocal services, and have very little budget to work with. In that case, hiring an SEO consultant or paying for an agency could be far more costly than the potential return.


As a business owner, you should also know your audience’s preferred channels. For example, if your target demographic is not very tech savvy, they may be more receptive to traditional marketing. Or, if a social media platform, like Instagram, is the go-to channel for your industry, your initial investment should go towards that.


And then, there may be reasons specific to your business: If you are looking for SEO to “save” your business, you may be setting yourself up for failure. If you can’t play the long game (and need a quick return on that investment) then other channels will likely benefit you more.


Investing in SEO: DIY vs. In-house vs. Outsourcing


Can just anyone do SEO? The short answer is that technically, yes, nearly anyone who can write an email can “do SEO.” But, that’s the same as saying anyone who can turn a wrench or use a screwdriver or watch a Youtube video can fix a car—I would call on someone who has experience and knows how to do it effectively before asking grandma to put down her tea and fix my Corolla.


A four-panel graphic of AI-generated artwork, depicting robots at what appears to be a scholarly setting

There is no Google University. There’s no “SEO certificate” that you get handed. There is no college degree in SEO and, with the pace of evolving search engine algorithms, it’s a good bet to say that there never will be.


You’re really paying for experience and expertise—for someone who has already read, learned, implemented, tested, and iterated on the areas that site owners can optimize to appear higher up in the search results for relevant terms.


So, your options include:


  • Investing your own time as a small business owner to learn SEO

  • Hiring an in-house employee to handle SEO for your business

  • Hiring a freelance SEO consultant to address your needs

  • Looking for a digital marketing agency to handle link building outreach, content marketing, and on-site optimization (or separate agencies that specialize in these sub-disciplines of SEO).


Each option has pros and cons. Learning SEO for yourself will take time that could otherwise be spent running your business. Hiring an in-house SEO needs to compliment or work with your current marketing strategy or team. It takes time to vet a freelancer or agency and determine if they’re the right fit with the right skills your particular business needs to succeed.


Naturally, that leaves us asking: “Is it all worth it?”


Can you really use PPC/CPC to project ROI?


It’s not unusual for digital marketing tools to provide rough estimates of search volume for a particular term or phrase that might be relevant to your business.


A four-panel graphic of AI-generated artwork, depicting robots using various devices that resemble an abacus

Several tool providers use a combination of monthly search volume numbers and simply multiply them by the cost-per-click data (typically provided by the Google Ads API) for that particular phrase. They suggest that you can calculate the “value” of your traffic by simply multiplying the ad cost for the term by its search volume. Does this give you a viable number?


No. It really falls short in several ways that can give you a false sense of value, which, in turn, leads to poor budget allocation and decision making.


First, this is because you will only ever get a portion of that monthly search volume. Even if you’re at the top of the results, you can only realistically expect to attract about 30% of that total search volume or so (depending on the type of query). So, multiplying the entire search volume number by CPC misses the mark there.


Second, just because it would cost you that much for a click via paid search, that’s not typically how much money that click would earn for you. No website gets 100% of its visitors to buy something. Usually, it’s between 2.5-7.5% of visitors (depending on the industry) and can vary depending on how familiar people already are with your brand. So, it’s not even an accurate representation of what that traffic is worth to you.


Useful ways to predict traffic and ROI from SEO

A four-panel graphic of AI-generated artwork, depicting robots interacting with various business-related items, like graphs, tables, and calendars

Let’s take a look at two potential methods to calculate your return on investment for SEO:


  • The first is by calculating the potential change in your site’s current organic traffic and comparing that to the potential expense for the SEO campaign. While simplistic, this could be a good place to start if your main question is “Will my SEO investment pay for itself?”

  • The second is looking at your target keywords and coming up with a potential outcome (if you ranked for those terms in search results) and comparing it to your expense. This method enables you to get more granular by identifying the value of certain keywords for your business.


Method #1: Predicting ROI via a projected change in traffic

Numerically, this is a fairly easy process: Get your last 30 days of revenue generated by organic traffic to your site. Multiply that revenue by the percentage increase in organic traffic that you’re confident you can achieve after the proposed SEO campaign and you have a rough estimate of how valuable that could be for your business. Then, you can compare that against the cost of the campaign. (Note: If seasonality affects your business, you may want to use average monthly for this calculation.)


Of course, you need to have your Google Analytics configured properly to capture not just your site’s visitors, but also to identify search engines as the source of traffic that sent the visitors who made a purchase on your site. That’s assuming you can track the actual sale and sale amount. Usually, this is easiest for eCommerce sites, because transactions are typically recorded and designed to get that data into your analytics program.


Method #2: Predicting ROI via search volume, CTR, conversion rate, and revenue per sale

A four-panel graphic of AI-generated artwork, depicting robots interacting with a crystal ball

The second way to calculate your SEO ROI requires access to a tool like Semrush, DataForSEO, or Ahrefs, where you can build a list of relevant keywords for your business (to eventually identify their associated search volumes). Talk to your salesperson, your receptionist, look over support emails, and gather a list of likely terms and phrases people will use to discover businesses like yours.


You’re then going to go through a process to predict your potential organic traffic. Here’s a nifty graphic outlining your next few steps:


A black graphic with the following procedure to forecast SEO traffic: “1. Gather the keyword list. 2. Get search volumes. 3. Multiply by organic CTR equals potential traffic. 4. Find conversion rate. 5. Multiply traffic by that conversion rate to get conversions. 6. Find lead close rate. 7. Multiply by conversions to get potential sales. 8. Find revenue per sale. 9. Multiply sales by revenue. That’s your SEO Forecast!”

You will need to take your list of relevant keywords and plug it into your SEO tool of choice to get the associated monthly search volumes. Next, add each keyword and its search volume to a Google or Excel Sheet (you may be able to download this data in a spreadsheet directly from some SEO tools). Remember, that value represents the approximate amount of total searches for that phrase in the previous month.


In the next column, you’re going to enter a value representing the organic click-through rate of your site. Because there is more than one choice available on the search results, total search volume will be split up between all the URLs that are displayed. The lion’s share will go to the top position. Here’s a typical breakdown of organic CTR from Advanced Web Ranking’s ongoing case study:


A chart showing click-through rate according to search result position for informational and commercial queries. The CTR for position #1 for commercial queries is 28.49%, while the CTR for informational queries in position #1 is 21.36%

So, let’s say that we want to estimate our traffic if we were to rank #1 for a commercial search query. Our Organic CTR would be 28.49% (according to the chart above). So, create a simple formula in the next cell of your spreadsheet to multiply your search volume number by that percentage and you’ve got an estimated amount of traffic for that particular search term (if you ranked #1).


Repeat the process by applying that formula all the way down your sheet for each of your terms to project your traffic if you were to rank in a given position on the search results.


Calculating potential conversions, sales, and revenue

You’re likely aware that not every visitor becomes a customer. Actually, on average most sites convert just 2.5-5% of their visitors into paying clients. You can use this number as a stand-in if you haven’t yet configured your analytics system to track your actual conversion rate. However, if you do have it handy, use your own conversion rate and add it to the next column and then add a simple formula multiplying your traffic (from the previous step) by your conversion rate.

If you have a sales team involved, taking leads from the site, then you need to know what percentage of leads from the site they turn into customers. I call this the “sale rate”—add that to the next column and multiply your leads by it. If you’re an eCommerce business, then you can likely skip this step.


Lastly, you will add a revenue per sale for the given keyword. It can be an average value or even a projection of lifetime value for acquiring this kind of customer—it’s up to you, but make sure to stay consistent with your measure of value. Multiply the number of sales you get from your conversions and you have your potential monthly revenue.


A screenshot of a spreadsheet showing the following columns: keywords, search volume, cost per click, #1 traffic, #1 conversions, #1 sales, #1 revenue.

Of course, SEO is not magic. You cannot possibly rank #1 for every target phrase, no matter how much content you have or backlinks you get. So how can we make a reasonable estimate? Get the sum of all of these values for your set of keywords and make a chart based on the following concepts:


  • If I ranked #1 for 50% of these keywords

  • If I ranked #1 for 25% of these keywords

  • If I ranked #1 for 12.5% of these keywords


Now, you have a reasonable SEO ROI projection based on relevant data showing your market potential, which should be used to help you decide what to invest in for your business.


A google sheet with projections associated with ranking #1 for half of keywords, for 25% of keywords, and for 12.5% of keywords, with the associated monthly and annual revenue projections.

SEO is almost always worth it, but you should still know your potential ROI before you buy


Keeping in mind that SEO isn’t implemented overnight and its ROI comes over time, you now have some rough, but reasonable numbers to determine how much your organization can benefit from your SEO investment.


You can take that SEO forecast from above and use it as a starting point for your in-house candidate, or your prospective SEO consultant or agency. Or, if money is tight but you have plenty of time, there are tons of resources available to learn more about SEO and how to implement it for yourself to reap those rewards in additional traffic and revenue.


 

Jeremy Rivera

Jeremy Rivera - Founder of SEO Arcade

Over 16 years in SEO, Jeremy has worked with literally hundreds of sites, small businesses, and enterprise level companies in dozens of industries. His focus is on ensuring companies get the best return on investment for their SEO campaign. Twitter | Linkedin

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