According to Investopedia, your return on investment (ROI) is a performance measure that lets you measure the efficiency from one investment compared to other investments.
The simplest way to calculate ROI is by subtracting the current value of your investment (CVI) by the cost of the investment (COI), then dividing by the COI (CVI – COI / COI), but calculating ROI from organic search marketing efforts can be a bit more tricky.
We recently developed a free marketing ROI calculator tool that lets you forecast how our search engine optimization (SEO) service can benefit your business. Keep reading below to learn how to use our ROI calculator tool.
How Do I Calculate ROI?
Here’s how to use our business ROI calculator tool:
1.) Yearly Website Sessions. In this section, you’ll input the number of Sessions (if using Google Analytics), or “Visits” your website has received within the past 12 months.
2.) Average Client/Customer Worth. Here, you’ll enter what the average client/customer is worth to your business. If you’re not sure, simply take your total yearly revenue and divide it by the total number of sales you had during that time period.
3.) Marketing Qualified Lead (MQL). An MQL is a website visitor to your website that’s shown interest in your product and/or service by performing a specific action like filling out a contact form, initiating a chat session, completing a survey, etc., and will likely become a future client/customer. If you’re not sure, leave it at the default value of 20% (conservative).
4.) Sales Qualified Lead (SQL). An SQL is an MQL lead that’s ready for the next stage of the sales process. They’ve been properly researched and vetted and meet all the criteria that determines whether a prospect is the right fit or not. Again, if you’re not sure, leave it at the default value of 2% (highly conservative).
5.) Monthly Marketing Budget. Your monthly marketing budget is the total monthly amount you’re willing to invest in our service. Our ROI calculator will automatically deduct the cost of our service to give you a more accurate ROI approximation.
What is a Good ROI Ratio?
Not sure what constitutes a good ROI ratio? Generally, an ROI ratio of 5:1 is strong for most businesses.
An ROI ratio of 10:1 and beyond is considered excellent, but isn’t realistic in most cases.
What is ROI Formula in Excel?
Here’s the simplest way to calculate ROI using Excel:
You’ll want to plug in the net profit of your investment into column A, then plug in the total amount invested amount into column B. Make sure the number format is set to ‘Accounting’ for cells A2 and B2.
In column C, enter the formula to divide column A by column B (=A2/B2), and make sure the number format for column C is set to ‘Percentage’.
The importance of knowing your ROI cannot be stressed enough. It lets you gauge whether an investment is helping or hurting your business.
Our free ROI calculator tool allows prospects to privately and securely enter their own data and get an accurate forecast on the ROI they can expect to see using our SEO services in a 12-month period.
If after using our tool you determine that it makes sense to work together, reach out to us!