When we talk with prospective clients, they mostly complain about how difficult it is for them to measure marketing effectiveness through the more relevant metric of actual revenues coming in, as opposed to just how much work is done.
Impressions, clicks, and keyword rankings can be relevant but should never be used as first-tier KPIs against which campaign performance is judged, only for analysis and improvement.
Keyword rankings may not yet mean much in weeks two and three of a partnership, but they’ll be here as an early mile marker. The most significant would, however, be very particular: the qualified visitor conversion rate and revenue from organic leads.
The preferred result of a marketing program should be before its actual launch. Clarifying these goals using an SEO SaaS calculator and determining the SEO SaaS ROI helps orient the right journey from the very start.
What is SEO SaaS ROI?
The global Software as a Service (SaaS) market was expected to grow to USD 1,228.87 billion by 2032, with a CAGR of 18.4% during the forecast period (2024-2032). Given this impressive growth, understanding SaaS SEO ROI is becoming important for businesses looking to tap into the expanding market.
SEO SaaS ROI means the return from SEO investment compared to the returns that would have been earned otherwise. It measures how well your SEO efforts drive your revenue growth.
Calculating ROI for SaaS is particularly difficult because the subscriptions generate revenue; the long sales cycle may hinder revenue performance, and it varies in ways that are hard to measure within the context of any other business. It is, however, one standard measure for justifying the expenses for the ongoing SEO effort and for modifying the measures to improve results.
What’s a Good ROI In SEO?
The calculation of proper ROI for an SEO strategy must necessarily factor in industry, domain authority, and other elements.
An ideal ROI, typically, is in the range of 400-500% (or 4-5 times), and thus, it necessitates that SEO efforts result in absolute values for the company’s bottom line.
A long-term evaluation metric is often disregarded in ROI estimates here. A well-implemented SEO strategy’s key aspects are short-term benefits and those that last up to 3-4 years and beyond.
This point is valid for an organic strategy that will eventually reach the right audience and continuously provide entries or demos- although most calculators measure ROI up to 1 year.
This allows focusing on short and, at times, middle returns while long-term returns are considered as bonus-along with their potential gains.
Expert opinion
In your marketing budget, you should already be differentiating between these two types of marketing (brand vs. performance). Sometimes, performance is also called demand gen or growth. As a rule of thumb, on average, e-companies invest 25% of their budget in the brand and, therefore, 75% in performance marketing tactics.
Co-Founder at Skale
If you’ve been investing in SEO for < 6 months
If you haven’t started investing in SEO or have been doing so for less than six months, measuring ROI is impossible. SEO takes time to show results due to content creation, link-building, and domain authority growth.
To successfully validate your SEO investment after six months, ensure you have a strong SEO strategy, high-quality content, scalable systems, and link-building efforts. Don’t underfund the effort, as this can delay your ability to decide whether to scale or abandon the channel.
Key steps to validate your SEO channel:
- Estimate potential output: how many signups or MRR can SEO drive each month?
- Understand the effort needed: number of pages, links, and resources (design, writing, marketing, etc.)
- Focus on building high-quality links to boost authority.
- Work with experienced SaaS growth experts and allocate enough budget to ensure success.
If you’ve been investing in SEO for > 6 months
If you’ve been working on your SEO for over six months, it’s time to measure the ROI and adjust your SEO budget accordingly. SEO typically takes around three months to show noticeable results, so factor in this delay when evaluating your performance.
You should also distinguish between brand SEO and performance SEO when measuring ROI. This helps fine-tune your strategy and optimize your budget for maximum impact.
How to Measure the ROI of Performance SEO?
1. Calculate Organic Traffic Revenue
Google Analytics is a tool that can be used to calculate organic traffic revenue based on the number of visitors that reach the website from a search engine. Monitoring conversions, sales, and subscriptions can present the direct impacts that your SEO initiatives have on your organization. Google Analytics> Acquisitions> All Traffic> Channels can filter out organic search traffic.
By following organic traffic’s conversion rate and link to revenue, you can assess the effectiveness of your SEO strategies in driving profitable results.
2. Estimate Total SEO Costs
Total search engine optimization costs can be determined from basic calculations of all expenses associated with adopting SEO attributes: salaries of team members involved, including SEO managers, designers, developers, and sales staff, and costs for necessary tools such as Ahrefs, Screaming Frog, ClearScope, and many others. Do not forget to include outsourcing costs for link building/content creation.
If part-time employees contribute to SEO tasks, you can take a certain percentage of the salary as a contribution based on the time allocated for SEO tasks. For example, if a developer works 10 hours a week for SEO, assign 25% of the salary under the expense of SEO. Such checks will also be useful in knowing the different sources of overall SEO investment, thus giving an accurate ROI assessment.
3. Use the ROI Formula
ROI = (Revenue from SEO – Total SEO Costs) / Total SEO Costs x 100
This calculation will provide a percentage that shows the yield of your SEO investment. A positive ROI means your SEO efforts bring in more revenue than their cost, while a negative ROI signals that the SEO activities haven’t yet become profitable. Monitoring this metric allows you to assess the success of your SEO strategies and make data-driven decisions to improve your approach.
4. Following Long-Term SEO Metrics
When evaluating the long-term benefits of SEO, you should monitor metrics like Customer Lifetime Value (CLV) and Customer Acquisition Cost (CAC) in addition to direct revenue from organic traffic.
In SaaS, maintaining a 3:1 LTV: CAC ratio within a 12-month payback period is important for building a healthy business.
Why is this important? Because CAC involves marketing and sales costs, maintaining this ratio ensures that the remaining 2:1 revenue can be allocated to other critical business functions, such as product innovation, human resources, and operational costs. You can reinvest quickly by recuperating your investments within 12 months, fueling further growth.
This strategy also reduces the need for substantial capital investment to scale, as you’re effectively paying 1/3 of your customer’s lifetime value (LTV) to acquire them while ensuring that your CAC/ARPA ratio remains below or equal to 9.
If you’re unsure about the LTV of your SEO channel, you can use your company’s overall LTV as a baseline. However, if your company doesn’t track LTV, you’ll need to establish a maximum cost per signup, which I will discuss in the next section.
Once you have your LTV, divide it by 3 and check that the result, when divided by your ARPA, doesn’t exceed 9. This will help you keep acquisition costs in check while ensuring sustainable growth.
5. Understand Attribution Models
Before you render the tracking and measurement templates for SEO Performance, you should consider measuring multi-touch attribution models. These models would better elucidate how the customer moves from awareness to purchasing when using search engine optimization (SEO). This is essential for SaaS companies where customers interact with multiple touchpoints before such a conversion: websites, online ads, and social media platforms. With numerous touchpoints tracked, measure SEO better and optimize your strategy for better results.
6. Review and Adjust Regularly
SEO is an ongoing process, not a one-time task. It’s important to check how your strategies are performing regularly. Reviewing your efforts lets you see what’s working well and what needs improvement. This helps you adjust and stay updated with changes in search engine algorithms and market trends.
It’s important to reassess your return on investment (ROI) to ensure your SEO efforts still bring in profits. By looking at the results over time, you can make smart decisions about where to focus your resources. This way, you can keep improving your SEO and ensure it continues to bring value to your business.
Challenges of Calculating and Communicating SEO ROI
Measuring SEO ROI is hard because results take time to show. SEO changes, like higher rankings or more traffic, often need months to appear. This delay makes it tricky to know which efforts are working.
Another problem is that SEO data can be confusing. Numbers like rankings and traffic often change because of Google updates or market trends. Plus, SEO tools don’t always work well together, making it harder to see the full results.
To explain SEO ROI clearly, you need to use simple words and focus on the big picture. Show how SEO helps the business grow slowly over time, even if the results aren’t instant.
Conclusion
This guide explores crucial steps regarding measuring SaaS SEO ROI and communication in this guide, from the SEO metric to understanding long-term advantages. Although SEO takes time to show results, its performance may be determined by consistent evaluation through organic traffic, conversion rates, and customer acquisition costs. Short-term and long-term profit assessments will allow wise decisions about the maximum investment utilization in SEO for future growth.
Frequently Asked Questions
