Ever wondered how valuable a top Google spot is to your online business? Here’s a guide to help you find out…
1. Choose your top keyphrases
First you need to know which keywords you’re going to look at. Choose the top two or three key phrases that are relevant for your business. Then go and visit the Google Keyword Tool (Google it) and type in your keyphrase. For this example I will use ‘hedge trimming’.
Your match type should be set to ‘exact’. If it isn’t, select it and run the query again. The results is sorted by relevance, showing you other similar keyphrases. You may want to take note of some of these for future reference.
Click ‘Global Monthly Search Volume’ to sort the results by popularity. For ‘hedge trimming’ you can now see that the top two queries are ‘hedge trimming’ and ‘hedge trimming tools’, both with 2,400 searches globally per month. If you’re an international business, then this is the audience for the keyphrase in question.
If you’re a local business, based in the UK for example, then you need to look at the ‘Local Search Volume’ results (try sorting by these instead). The process is exactly the same, and for our query the top results are ‘hedge trimming’ with 590 local searches, and ‘hedge trim’ with 28 searches per month.
You want to focus on a phrase with a fair amount of traffic. Both the results mentioned have fairly low search volume. Anything less than 5,000 searches per month is fairly low, although if your business operates in a niche area this may be fine.
Ideally you should focus on keywords with over 5,000 searches per month, although as you get higher and higher you will notice competition becomes fiercer. Scroll a little further down the Google results page and you’ll see a list of ‘additional keywords to be considered’.
Consider whether any of these are relevant AND popular enough to offer you a good audience. Choose a few, and then decide which are also not so popular that they will be hugely competitive. For the sake of argument we will choose ‘long reach hedge trimmer’, which offers a global audience of 9,900 visitors per month. This is our keyphrase.
2. Work out the value of traffic to your site
This is fairly straightforward, but requires some attention to figures. First of all, you need your conversion rate. This is essentially the %age of your site visitors who turn into customers.
Let’s say you have an average of 10,500 visits per month, and you also know that you had 200 sales last month through the internet.
Conversion = (Sales / Visits) x 100%
Conversion = (10,500 / 200) x 100%
Conversion = 1.9% / For every 100 visits you will get 1.9 customers
Average order value – This is simply the total value of online sales divided by the number of online sales. Let’s say the 200 sales mentioned previously made you ￡18,000.
Average order value = http://www.shlady.com/2010/03/31/total sales revenue / number sales
Average order value = http://www.shlady.com/2010/03/31/￡18,000 / 200
Average order value (gross) = ￡90
Here you should also consider your margin. For the business in question we know that for every ￡100 of sales, 30% is our profit margin. The other 70% of the cost may be spent on delivery, premises, salaries and all the other business overheads.
Average order value (net) = ￡90 x 30%
Average order value (net) = ￡27
Value of traffic – As we have already discovered, for every 100 visits, you will get 1.9 customers. 1 customer is worth ￡27, so 1.9 customers is worth 1.9 x ￡27 which is ￡51.30.
100 visits is worth ￡51.30 to your business
3. Work out the value of each Google spot
This Cornell University Study shows the % of people who clicked on each google link on a typical results page. The results for Natural traffic are as follows…
- Position 1. 56.36%
- Position 2. 13.45%
- Position 3. 9.82%
- Position 4. 4.00%
- Position 5. 4.73%
- Position 6. 3.27%
You know that the total audience for your keyphrase is 9,900 visitors per month. Through your website one customer is worth ￡27, so 100% of the Google traffic is worth ￡267,300. And broken down spot by spot, Google search rankings are worth the following to your business (per month)
- Position 1. ￡150,650
- Position 2. ￡35,952
- Position 3. ￡26,249
- Position 4. ￡10,692
- Position 5. ￡12,643
- Position 6. ￡8,741
You should be in the habit of tracking all these metrics for your business. What you measure, you can control. Keep track of visitors, conversion and average order value and you will be better equipped to improve on past performance. Keep a list of the top keyphrases as relevant to your business, and use calculations like those above to decide what to optimise your site for.
To see this article WITH example images, see this blog entry.