One of the most confusing, and most written about areas in selling SEO is the challenge of explaining the return-on-investment (ROI) of an SEO campaign. It should be simple. You know that you increase traffic. Increased traffic buys more. More buys = more profits!
Half the trick is knowing how to measure this, the other half of the trick is how to explain it to your clients. Many of them understand the ROI that PPC generates. They pay $X per click, and get Y number of purchases. With a good landing page and Google Analytics, you can even calculate, to the dollar, how much income is generated.
So the PPC math is simple and easy to communicate. Client spends $X and gets back $Z. SEO, on the other hand, has at least 1 extra level of computation, and that's where so many clients (and some consultants) get lost. Web traffic is a nice metric, but it means nothing to the CFO of the company you are dealing with unless it comes with dollars.
Preparing ROI numbers can be incredibly easy to calculate, or it can be incredibly complex. Different strategies will give you different numbers. Some models will deal with only the value of a one-time purchase. Other models will include the "life time value" (LTV) of a customer. Also, you often have to use incomplete data, so having more than one method of calculating ROI is defnitely a good skill to have.
"You want my... You want my... LTV..."
Below you'll find a list of some of the resources available to you. Look at them all and decide which ones make sense to you, but more importantly, which ones will help you communicate ROI to your customers.
Basic ROI for SEO
SEO ROI Calculators
SEO ROI Calculator by SEOROICalculator - ROI tool which calculates cumulative effects of SEO over 2 years. Assumes 1-time sales and costs.
ROI for SEO - Excel Sheets and Tools
SEO ROI Calculator – 4 Chart Analysis To Estimate ROI Over Time by Mark Rushworth - Interesting chart to blend seasonal traffic into ROI prediction
Free SEO ROI Tool: How to Convince Your Boss to Spend Money on a Link-Bait Idea by Bryant Jaquez - Very good spreadsheet for determining positional ROI
ROI on SEO - Formulas and Guides
Simple formula for calculating ROI and google Marketing, SEO by CPA Empire - Basic ROI guide, but includes a chart from Searchlight on organix CTR
Using NPV and Forecasting to Calculate Future Returns on SEO by Webster Jorgensen - Applying SEO ROI to mutliple income periods to calculate total impact
Assessing the Value of SEO by Steve Wade - A decent guide of alternate methods of valuing clients, and adding to ROI figures
Calculate the ROI of your SEO Campaign and Get Rid of the Guesswork by StomperMom - Basic guide, and alternative method of calculating ROI, could use better description
A Simple Way to Calculate Return on Investment for SEO by ClickFinders - OK article, but most useful for its eye-tracking chart
Improving Web ROI: SEO / eMarketing cost comparison to direct mail by Mark Reichard - Rare these days, but a guide for calculating ROI when a client is developing a web presence for the first time