Mastering Search Analytics

Chapter 2. Establishing ROI

Follow the money.

Good businesses can project how much they expect to make in a quarter, and expect to report a positive profit, or return on investment (ROI), at the end of each quarter. You need to learn how to measure, estimate, and calculate ROI to be successful.

In simple terms, positive ROI is achieved in three different ways:

• By increasing revenue

• By decreasing costs

• By increasing customer loyalty

To see this positive growth, you must also assume that margins stay the same as revenue increases or as costs decrease. Increasing revenue can be done by driving more sales, increasing average order values, or upselling products. Decreasing costs can be achieved by driving more people to self-service venues such as online support forums or online research. So, even activities that may not have a direct cost, such as selling a product, may impact revenue by decreasing overhead if online support is offered. Increasing customer loyalty is really retaining value over a prolonged period. You can sell to a person once, or you can sell to them many times—increasing loyalty is about repeat business.

The SEMPO and Econsultancy survey we looked at in Chapter 1 showed that over 50% of search managers struggle to get budget, secure executive buy-in, or make their business case. Clearly they are not speaking the language of those controlling the flow of money. Establish the value of your department or your program early, and ensure that it aligns with the overall goals of ...