Done well, SEO requires an investment in time and financial resources that can sometimes be significant. It is important to make sure you are getting a return on that investment (ROI) so you know that it is working and paying a dividend.

Typically, SEO success is measured in three main areas — Increased traffic, increased inbound links and conversion. It is important however, to take the final step and calculate how much money you are making as a result of the investment. All the increased traffic and inbound links in the world are meaningless if they don’t convert into paying customers and if the customers don’t spend more than what you invested in the first place.

Fortunately, if you have a reputable SEO team or firm working with you, chances are you are seeing a solid ROI.

A simple ROI calculation for SEO might look something like this.

ROI = Lifetime Value of Customers Gained – Total Cost of the SEO Campaign/Total Cost of the SEO Campaign.

It is important to use the expected value of the customer over their lifetime to take into account future and repeat purchases. Only including the first purchase can distort the revenue they represent and give you a lower ROI than is really true.