Recently, we were trying to determine if it was worthwhile to do some search engine optimization for one of our websites focused on a new small business market that we decided to target.  We’re not big fans of spending money on marketing that you can’t measure directly and SEO can be very difficult to measure.  Specifically, we were trying to decide if it was worth it to spend $700 to promote the site in some of the major directories.  It seemed that we could get a better return by putting that money in a direct mail campaign or Pay-per-Click.

But Then I Stepped Back and Worked Through the Numbers

In this market, you can easily spend over $3 per click on some of the better terms in the market, and this number is key.  Even if we were conservative and assumed that we could get the cost per visitor down to $2, $700 spent on PPC would bring us 350 new visitors, or, 1 per day over a whole year. 

This isn’t a huge market but by running some PPC ads already, we knew that our top search term got at least 40 searches per day.  That doesn’t even count all the different variations.  But again, we wanted to be conservative.  The rankings aren’t overly competitive but I won’t get into how to determine that.  That’s for some totally different websites to get into.  Regardless, I knew that it wouldn’t be too difficult to get into the top 10.  In fact, I think that with these directory submissions, it might be able to do the trick.  I even think that with a little extra work, we could get the top position. 

By being in the top 10, I knew that we could attract at least 1 extra visitor per day.  If we got to the top 5, we should be able to attract 4 per day just from that keyword.  And I have a feeling that we would get at least 10 from all the other searches.  If that’s the case, we should get a better return on our investment in just over 2 months, once our site gets bumped up. 

It’s Better than Other Advertising but What About Prospects?

This site doesn’t have as much history as I would like but there’s enough there to tell me if spending $700 to get more website visitors would be a good investment.  Even if it’s a better return than direct mail or PPC, if these visitors don’t eventually pay us money for our product, it’s not worth the money. 

We had received at least 25 conversions on the website so I knew that was enough information to make a valid assumption about how often we could convert visitors into prospects.  This site could convert visitors into prospects at a rate a little bit above 7%.  I know I could approve that with a bit of work but I want to work with bad numbers. 

7% of 350 visitors would work out to about 25 prospects.  We assume that we can turn prospects into new leads at the rate of 1 in 10.  That works out to 2.5 new clients so let’s just go with 2 new clients. 

2 new clients are worth much more than $700. 

The Power of Small Changes

This has all been based on worst-case analysis.  Remember, I think that instead of just 1 visitor per day, we are more likely to get around 10 visitors per day.  That’s 20 new clients.  While they are worth more than this, let’s assume they are each worth $500.  That’s $10,000 per year for $700 in advertising.  If we have to pay that every year, I’ll do it over and over again.

Now let’s say we can make some small changes to improve each of the steps along the way:

• Instead of 10 visitors per day, we get 20 visitors per day by moving into the top spot of the rankings.  Again - not very difficult in this market
• Instead of a 7% conversion rate, we increase it to 10%
• We improve our sales conversion rate from 10% to 15%
• We double our client value by improving the service that we deliver so each one is worth $1,000.  This might even be low.  I like to have most client values be at least $2,000 but I want to keep this as small changes.

With these "small" changes at each step along the way, this 1 source of advertising has brought in $110,000 per year.  We can probably bring a similar amount in with some direct mail and PPC.   Now that makes it a $300,000 business per year.  Remember - this was just one niche, so you can do something very similar in 3 or 4 businesses.

This isn’t something that happens overnight or that anyone can do.  There are a lot of other issues to overcome.  But I just wanted you to really think about $700 of advertising and instead of thinking it’s a waste, start analyzing it and before you know it, that helps create a $300,000 per year business.