Measuring the value of Shopify SEO

Figuring out if SEO would make sense for your store is a great idea. It makes no sense to spend time and money on things that don't return a better value than others.

The problem is that many things that fall under SEO can be difficult to really give a mathematical criteria for value.

It's like asking "what is the cost of a building" without knowing if the building is a house, a shed, or a skyscraper.

One valuation approach that avoids a lot of the complexity is to look at the per revenue metrics.

Per revenue

The per revenue metrics fill-in the blank "what is my __ per $1 of revenue?"

So to earn $1 of revenue, how much:

• product costs
• total costs
• time investment
• etc

To evaluate a marketing strategy like SEO, cost per revenue and time per revenue are the two you'll want to use.

Cost per Revenue

Cost per Revenue just means how much money you have to spend to earn $1 (or in your currency).

If your Cost per Revenue is under $1, you're doing good. Cost $0.50 to earn a $1, great! $0.10, even better. $0.0001, do you need an investor cause I could use some of those returns.

If you have to spend a dollar to make a dollar, eh... you'll right at break-even and risk becoming unprofitable.

If your costs are more than $1, you're spending more money than you're making. Like that joke:

What's the fastest way to make $1,000,000?

Start with $2,000,000 and spend half.

The calculation is simple: expenses divided by total revenue.

Since we're evaluating marketing channels, you'll want to only count direct costs.

Ads would have the cost of running the ads, consultant costs, cost of specific coupons, etc.

SEO would have fees to consultants, content development costs, cost of tools, etc.

For revenue, it's best if you can assign revenue for each channel. So if SEO brought in $15,000 and ads brought in $25,000 you'd use $15k in SEO's equation and $25k for ad's.

Time per Revenue

Time per Revenue is important to SEO and any other marketing strategy where your time is invested. This could be you DIY'ing parts yourself or even just taking meeting after meeting with consultants.

For this you will want to only look at time spent on specific marketing strategies. Exclude time that's not marketing-related, like pick and pack time, company-wide meetings, and product development.

Comparing results

With your average Cost per Revenue and Time per Revenue, you now know how much any activity "should" cost. This can be considered your averages.

An activity that is more can be considered less efficient. While one that takes less are more efficient.

Your focus should be on the more efficient ones, either by replacing or stopping the less-efficient ones.

Evaluating SEO and marketing channels

With these metrics in hand you can evaluate each marketing channel you perform to see how it stacks up.

Allocate the time spent in each channel and the direct costs to each. Then calculate their Cost and Time per Revenue.

Hours per $1 = hours / revenue Costs per $1 = costs / revenue

Below is an example that may help you to wrap your head around all this.

Marketing Per Month	Hours	Costs	Revenue	Hours per $1	Costs per $1
Effort 1	4	$400	$8,000	0.001	0.050
Effort 2	110	$60	$100	1.100	0.600
Effort 3	280	$20,000	$11,000	0.025	1.818

 

Efforts in this case may be writing blog posts, building backlinks, etc.

The first time you do this you might be surprised at how inefficient some channels are. Often some will suck down a lot of time without you noticing.

If there are ties or if one has a better Cost while another has a better Time metric, prefer the ones that have better Cost per Revenue. It's easier with practice to speed up or hire help, both which will lower time costs.

Using the three efforts from our table above, we can come to a few conclusions:

• Effort 1 has low hours and low costs per revenue.
• Effort 2 has high hours per revenue but low costs.
• Effort 3 has low hours but high costs per revenue.

If your thinking Effort 1 is the best option, you'd be right? You can then decide if Efforts 2 and 3 are worth their hours or costs investments. You may decide that your time or money is better spent elsewhere.

When you're starting with SEO, expect it to be twice as expensive as any other established channel you have. After six months or so of work, it should become more efficient (either less time or more revenue or both). It's not unheard of for SEO to become 4x or 10x as efficient as other channels, especially paid channels.

SEO's value is always subjective

As you might have noticed, how "valuable" SEO can be for your Shopify store will always vary from other stores.

That's how some shops can say SEO is their best channel while others fail to get SEO to work for them.

Both shops are correct, their experiences and results are subjective based on their unique circumstances.

That said, SEO can be a great way to pick up very inexpensive customers. It just requires long-term, persistent effort to build up to.