Return. On. Investment. Those three words should be forged into the walls of your business, imprinted on the monitors of your employees and tossed around your office on a regular basis. Without a solid ROI you could find yourself investing too much and getting very little in return, not exactly a solid business plan. While the idea itself may be an easy one to grasp ROI can often turn into a bunch of convoluted numbers, which, if you’re like me, can be a little difficult to understand. So, in order to break ROI down into a simpler form I figured it might be easier to think about ROI in terms of relationships (because that’s what it’s all about). Let’s say your single and you just met this wonderful person that you, at that current moment, believe is the best thing that could have possibly happened to you. You’re twitterpated. You decide to shun your typical three-date rule and you decide to immediately ask this person if they will be your significant other, which they reply to with a resounding yes! Oh boy! After the first few months you couldn’t be happier but unbeknownst to you, a few of their “cute’ habits have begun to plant the seeds of irritation. While earlier on you might not have enjoyed treating them to dinner or surprising them with some cute little gifts you start to notice that your relationship has become a one-way street. You read this e-Harmony article and realize that, hey, maybe this persons not the one for you. One messy break up later and you find yourself in a bar, humming some horrible song and wondering if you’ll ever find the one. Finding the right customers can work much the same way because you want great and loyal customers (not just average ones). If you find yourself investing too much then it may be time for a change in tactics. Here’s where a little bit of basic math can help you determine whether or not your investment is paying off. You can calculate ROI by subtracting the Cost Per Acquisition or CAC (how much you spend on SEO) from the Lifetime Value of a Customer. With a low CAC and a high Lifetime Value you’re going to set yourself up for a solid business-customer relationship. Check out this infographic from Neil Patel on how to calculate the ROI of your SEO campaign and, as always, if you have any further questions please don’t hesitate to give us a call at 516-535-5353 or e-mail us at sales@fatguymedia.com.
