SEO: Cost Per Conversion

One very important metric that is often overlooked during a search engine optimization engagement is the actual cost of conversions. Is your search engine optimization campaign adding to your client’s bottom line or is it bleeding Their budget?

Search Engine Optimization Or Pay Per Click?

Many online marketers are familiar with the term Pay Per Click (PPC). All the data is right there in your Pay Per Click management program such as Google’s Adwords, Bing Ads or on the social side with campaign management tools from Twitter, Facebook, LinkedIn and a host of others.

The cost of your campaigns, your clicks, your spend, your return on investment (ROI) are all in there in your campaign management tool.

However, most search engine optimization campaign management tools do not have this data available simply because the cost of search engine optimization campaigns is not provided to the analytics tools.

But Where Is This Cost Data In Your Analytics Accounts?

Well, some of it is there if you are running an online store, eCommerce shopping cart platform and have your eCommerce metrics configured correctly. You can see the dollar value of what was sold. Did I generate more income this month than last? How about this year over last year or first quarter versus second quarter? Did I have more orders this month from organic search?

You can also review your shopping cart data to determine your overall revenue generated, but these generally do not break down sales by visitor type.

Nor, does it factor in the cost of the management of the campaign.

And, where is this data if your client completes their sales offline?

How Can You Determine If Your Search Engine Optimization Campaign Is Paying For Itself And Generating A Positive Return On Investment?

Some Search Engine Optimization Consultants or Account Managers leave this important metric up to their clients to evaluate.

They focus solely on rankings and visitor traffic then wonder why they lose a client. The client gives a reason such as “I did not receive a positive return on investment for the money that I have spent”.

Blindsided! Why did I lose that client? What value was the client looking for? Did I set reasonable, attainable goals with my client at the onset of the campaign? Did I set any other goal other than an improvement in ranking results or visitor traffic?

What about the clients that do not have a revenue metric attached to their conversion data?

All questions that have to be answered.

What About Cost Per Sale?

Cost per sale is a metric that can be measured easily for only those clients that have a revenue metric attached to their analytics data such as an online retailer.

Clients that complete sales offline are not immune to needing some sort of revenue tracking. To put a value on these types of campaigns you need to apply a cost per conversion formula.

How To Figure Search Engine Optimization Cost Per Conversion

Search engine optimization cost per conversion data is generally simpler to create than the cost per sale. You are only breaking down the cost of the marketing budget to leads generated.

The basic formula looks like this:

#leads generated divided by the cost of the search engine optimization campaign. No fluctuating ad spend. No bidding for placement.

Please note: The examples below are based upon real-world experiences but are not actual client data.

For example:

Client A, an online merchant, spends $2,000.00 per month for their search engine optimization campaign management and receives 2000 unique visits per month and generates 150 conversions/transactions has a cost per conversion (or cost per transaction) of $13.34 each.

Client A is out to reach every consumer that is a fit for their product.

Remember, we are not discussing revenue generated as compared to search engine optimization campaign management spend. We will cover this metric in our cost per sale write up below.

Client B, a real estate developer whose homes start at $500,000.00, spends $4,000.00 per month for their search engine optimization campaign management and receives 70 qualified leads per month has a cost per conversion/lead of $57.15.

Client B is looking for a qualified new luxury home buyer and is a consultative sale that can take months to reach a transaction.

The value of reporting on this important metric can be, but not limited to:

How To Figure Search Engine Optimization Cost Per Sale

For this important metric, you will need to have revenue generated data available or a general idea of what the average amount of a completed sale is.

The basic formula looks like this:

Revenue generated divided by the cost of the search engine optimization campaign. No fluctuating ad spend. No bidding for placement. No other factors to figure in.

Client A, the online merchant as used in the above example, spends $2,000.00 per month for their search engine optimization campaign management and generates $11,000 as a monthly average has an average cost per sale of $5.00.

This metric does not factor in the number of transactions/conversion and is simply another way to put a value on the search engine optimization campaign.

For online merchant campaigns, it is up to the search engine optimization account manager to make the choice of either providing the cost per conversion or cost per sale…or, both!

Client B, the real estate developer as used in the example above, spends $4,000.00 per month for their search engine optimization campaign management. One (1) sale is generally assigned a value of $500,000.00 for valuation purposes.

Each sale generally takes, on average, six (6) months to complete, so for one (1) sale the client has a cost per sale of $24,000.00 in search engine campaign management fees ($4,000.00 x 6 months).

You can also present this data from a revenue standpoint. Each home sale averages $500,000.00. It took $24,000.00 in advertising spend leaving a gross profit of $476,000.00.

If we sell ten (10) homes per month directly related to organic search, our cost per sales decreases exponentially. Ten (10) homes per month sold with an average of a six (6) month sales cycle at $24,000.00 in search engine optimization account management spend drops the average cost per sale to $2,400.00.

These numbers can get pretty exciting to share with your client.

And, the great value in search engine optimization campaign management is that the budget amount does not fluctuate as it will with pay per click management. It is a set dollar amount per month in these examples.

There is no additional spend as click costs vary and actual click counts vary.

Why Is My Search Engine Optimization Consultant Not Providing Me This Information?

Well, this is a great question, is it not? Why do many search engine optimization account managers fail to put a monetary value on their efforts?

I do not actually know, but I would venture to say:

They may say, “I am improving ranking results and driving visitors to the site”. Yes, but are they the right visitors? Yes, you are driving visitors to the site, but are they converting and are the converting visitors really qualified? Just because someone fills out a form are they really qualified to buy a half-million dollar home?

Cost Per Conversion And Cost Per Sale Data Can Put You Ahead Of The Competition

Presenting these all too important metric results to your client can:

From my own personal experience, I have found that bringing this type of additional data to our clients has provided tremendous growth for our digital marketing agency.

For example, I have personally been involved with:

Here, at That Company, we strive to go above and beyond what most clients have become accustomed to. We do not rely solely on ranking results and visitor traffic. We strive for retention by providing real-world results for our clients.

We work to rank the best keywords that drive the right qualified visitors to your site that turn into solid leads, prospects, and transactions that add value to your bottom line.

The end results are that we keep our clients.