There are four types of companies that run SEO and/or PPC campaigns:
Which category are you in? If you said #4, congratulations — you are in a very, very, exclusive club.
The main reason companies miscalculate ROI on SEO and PPC (sorry about all the acronyms) is confusing sales leads and conversions.
Over the course of the last two-plus years, Straight North has analyzed more than 1 million conversions, and in the course of doing so discovered something astounding:
Half of all conversions are something other than sales leads.
Across our data set we found a few things. The majority of these conversions tend to be:
If a company’s ROI calculations are based on pure conversions figures rather than leads, or the lifetime value of actual customers they will grossly miscalulate the effectiveness of their campaigns.
Separating leads from conversions is a thorny problem. The first challenge is, Google Analytics and other online analytics tools do a good job of quantitative assessment of form conversions, but not such a good job with qualitative assessment. These tools can tell you how many forms were submitted, but not which ones are golden opportunities to make a big sale and which are worthless.
A second challenge is phone tracking. Many companies that do PPC and SEO lack the ability to track phone calls back to the marketing source — if this is the issue, then these companies may well be underestimating their campaign ROI. Phone inquiries are often the best inquiries of all, because the caller likely is in the market or has a complicated problem to solve. Implement a system like Google forwarding numbers or CallRail to mitigate some of this mystery on PPC ads.
Identifying sales leads is a matter of reading form submissions and listening to recordings of phone inquiries — this is called lead validation. Although time-consuming, it is worth the effort because it enables a company to understand how many leads its campaigns are producing — and, if these leads are properly tracked in CRM, the company will be able to track revenue generation from PPC and SEO leads whether the sale is made in a day or in a year.
In addition to tightening up the ROI calculation, lead validation also enables a company to IMPROVE ROI. The reason is simple, but it is easy to overlook: If PPC and SEO campaign adjustments are based on conversions rather than leads, those adjustments may be dead wrong.
For example, let’s say a given PPC keyword generated 30 conversions, and another one generated 15. The campaign manager will put more emphasis on the first one.
However, if lead generation is added to the process and it turns out the first keyword generated five leads and the second one generated 10, the campaign manager will put more emphasis on the second one.
Over time, as decisions like this are made over and over, it becomes easy to see how lead validation can make lead generation improve substantially. And, not doing lead validation sets the stage for continually declining ROI.
Lead validation is a labor-intensive process, although your sales team will save time if you implement it because the team will be spending less time chasing down poor quality inquiries. To further offset the validation investment, streamline marketing as much as possible with online tools for conversion tracking and other aspects of online marketing management. By adding a little human, qualitative analysis to your lead generation marketing process, you will run circles around your competition.
Brad Shorr is Director of Content Strategy at Straight North, a professional SEO services company in Chicago. With more than 25 years of sales and marketing experience, Brad has been featured in leading online publications including Forbes, Moz and Entrepreneur.
iD Marketing tools is devoted to helping marketers and business owners find the best tools and tactics with data driven insights and tutorials.