How to Calculate Your SEO ROI Using Google Analytics
It is difficult to determine the exact monetary value of SEO. A successful SEO marketing strategy usually leads to more search traffic and higher rankings, and those things lead to more money in sales. So how do you convince a company to hire you to provide SEO services without being able to promise them an accurate increase in dollar sales?
The answer is simple: you have to calculate ROI or return on investment. But before you can calculate your ROI, you need to get some conversion data from your leads.
Tracking Conversions for eCommerce Sites vs. Businesses
It’s important to understand that tracking conversions (and ultimately ROI) will look different if you are an e-commerce site (you sell a product) or run a business (you provide a service).
ECommerce sites have data on their online transactions that show exactly how much they are making from online sales, while lead-focused companies must determine the monetary value for their conversion types.
While tracking conversions for eCommerce is easier and more accurate, it is certainly possible for lead-based businesses.
It’s just a little more complicated and the setup itself looks different. No matter what type of business you run, the first step in determining your ROI is to set up conversion tracking.
1. Set up conversion tracking
ECommerce sites. For an eCommerce site, the first thing you want to do is to set up eCommerce tracking on Google. Even if you do not plan to launch an SEO campaign, you will need this data to determine the overall success (or failure) of your site.
Once you’ve set up tracking, you’ll have access to information such as your conversion rate, total transactions on your site, average order value, and total revenue. This way you can determine the exact amount of income generated by your website.
Lead-based companies. Setting up conversion tracking for a lead-based business is a bit tricky because there are no actual “transactions” on the website that lead to dollars.
BUT all you have to do is to figure out what actions your customers are taking on your site and figure out how much they cost.
For example, if someone visits your site and fills out a form to ask for more information, you can assign that value $ 100 (how to define this number will be explained later). If a lead signs up for your newsletter, it could cost $ 50. You can assign a value based on how much time they spend on your site or how many pages they go through. ‘
All of these actions are considered “goals” for your company and must be entered in the “goals” section in Google Analytics (Admin-View-Goals in Analytics). In the Goal Details section, you turn on a value marker and then enter a calculated numeric value.
How to determine the cost of a lead in dollars? Follow these steps.
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Determine the actual dollar value of your conversions
Let’s say for example you get 100 people every month who subscribe to your company newsletter. If 25 of those customers end up hiring you to provide their service, then the conversion rate is 25 percent.
If these 25 customers each spend approximately $ 500 on services, then your average cost per sale is $ 500.
Determine the value of each lead by dividing the total number of conversions by the original number of leads (people who signed up for your newsletter).
In this example, if you have 25 customers and each spends $ 500, you make $ 12,500. Divide that amount by your 100 initial leads, and you can determine that each potential customer (also known as a newsletter subscription) is worth an average of $ 125.
Do this for each of your “goals” and enter the dollar value so you have specific data to work with to calculate ROI.
2. Analyze conversion tracking
After you’ve tracked your conversions with the steps above for about a month or two, you can start exploring the data to see what type of ROI you’re getting from SEO.
If you run the conversion report through Google Analytics, you get data on all your website traffic (i.e. how many conversions are coming from paid search, organic search, emails, referrals, social media, etc.).
You will see a tab with the number of conversions listed, as well as their value. Value is essentially the amount of income generated from each search channel. Compare these values to the amount of money you spent on SEO over the same time period and you can estimate your ROI.
For example, organic traffic comes from customers entering keywords into Google or another search engine, so this is directly related to SEO.
If your organic traffic revenue is $ 100,000 per month and you paid an SEO company $ 20,000 to research keywords and publish new content over the same time frame, then your ROI is $ 80,000.
You can do the same with social media channels or paid ads – no matter what area you focus your SEO efforts on, you have to analyze.
3. Calculate the percentage of return on investment
If you want ROI percentage use this formula:
(Return on investment – Investment cost) / Investment cost.
Then multiply that number by 100 to get your ROI as a percentage.
In the above example, you would do:
100,000-20,000 / 20,000
80,000 / 20,000 equals 4
4 x 100 = 400
Your ROI is 400 percent.
Now let’s review how to calculate SEO ROI Using Google Analytics
Is it correct to calculate profitability, focusing only on the average margin of goods? If you have a large store with dozens of categories, this is not a good solution. A buyer can order several products at once with different margins and you will see a very approximate value of profitability in the report.
The solution to this problem is simple: import the cost of goods into Google Analytics and set up a metric to calculate the profitabilityю Нou will see more accurate ROMI in the reports in the context of advertising campaigns, ad groups, and keywords.
There are two most popular ways that will allow you to transfer the cost of each product to the Google analytics system:
- manual data import;
- using Google Tag Manager.
How to Import Product Cost Data Manually
What is necessary?
- Your site must be configured for Enhanced Ecommerce Tracking.
- Unloading from CRM with data on the cost of each item.
For the data on the cost of goods to be imported correctly, you need to adjust the information from the CRM to the template in Google Analytics. Let’s take a closer look at how to do this.
1. Create a custom metric in Google Analytics
The cost of goods is not included in the standard Google Analytics metrics, which means you need to create it manually.
1.1. In Google Analytics, in the Admin panel, go to the property settings and select Custom Definitions – Custom Metrics.
1.2. Click “+ Special Metric”. Specify in the indicator settings:
“Scope” – “Product”;
“Formatting type” – “Currency”
2. Create a template for importing data
Next, you need to create a template by which the data will be imported into Google Analytics.
2.1. In the “Resource” column, go to the “Data Import” section.
Create a new template and select the “Product Data” set type.
Name the schema clearly and select the Google Analytics view to import the information for.
2.2. Let’s move on to the settings for the content of the dataset. To import cost data, you need two parameters:
- “Product identifier” – a key specified by the system by default based on the selected scheme type;
- The custom parameter “Cost”, must be ticked in the drop-down list “Select a key”.
2.3. Click on the created template and download the dataset schema.
A dataset schema is a template for a CSV file that will load cost data from a client CRM.
Click “Download Schematic Template” – “Finish”.
3. Create a CSV file with data for import
3.1. The “ga: product SKU” column will contain product IDs that match the “product_id” value in enhanced e-commerce;
3.2. Column “ga: metric1” should contain data on the cost of the corresponding item. Please note that there should be no currency sign or other data other than numbers.
4. Upload data to Google Analytics
4.1. Upload your CSV data file to Google Analytics. To do this, in the “Data import” section, click “Manage downloads” – “Upload file”.
The data will be sent for processing and will be available in custom reports within 24 hours.
How to Import Cost Price Using DataLayer
This method is suitable for those who have advanced e-commerce configured using Google Tag Manager, and the sales data is transmitted through the dataLayer. You will also need the help of a programmer.
The first step is exactly the same as in the first method: create a custom measure “Cost”.
Make up a technical task for a programmer
It is necessary that the programmer set up the transfer of data on the cost of goods to a new variable in the JS array dataLayer.
You should not pass the cost price at every step of the ordering process, it is enough to do it on the “Thank you for order” page.
The variable name for the data transfer must match the custom metric index that you created earlier. For example, for the indicator with the index “1” – “metric1”, for the indicator with the index “2” – “metric2”.
Important: the data passed to the dataLayer can be viewed by anyone using the console in the browser. I think that you will not really like it if competitors can see the cost of goods. This problem can be solved using the simplest way of data encoding – for example, loading the cost data multiplied by N into the dataLayer. Then competitors, instead of real data, will see a set of numbers that will not give them any useful information.
Set up Google Tag Manager
Make sure that you have both Enable Advanced Ecommerce Features and Use Data Layer checked in your Enhanced Ecommerce Tag in Google Tag Manager.
Create a calculated indicator with ROMI formula
- Once you’ve loaded your data into Google Analytics, all that’s left is to set up a simple formula that will calculate your ROI.
- Go to resource settings and create a calculated indicator.
- Set the formatting type to Floating-Point number and enter the formula.
If you transferred data using dataLayer and encoded it, then in the ROMI formula divide the cost price by N. This is because one calculated indicator cannot be used to create another.
Cost data will allow you to more accurately calculate the return on investment in advertising. To add such data to Google Analytics:
1. Create a custom measure “Cost” in Google Analytics.
2. Importing data manually is an easier way, but it will add another routine task to your work.
To download cost data, you need:
- create and download a template in CSV format;
- import information about the cost of each product from CRM;
- upload the spreadsheet to Google Analytics.
Setting up data import via dataLayer is more complicated, but it will allow you to automate the process as much as possible.
- Configure the passing of the new variable in the code for enhanced eСommerce;
- encrypt the cost value so that competitors do not know this information;
- Customize your advanced eCommerce tag in Google Tag Manager.
Create a calculated indicator with the ROMI formula and add it to custom reports.
Using the proposed methods, you can import almost any product information into Google Analytics: size, color, and anything that will help you evaluate the effectiveness of advertising campaigns.