SaaS SEO Budget for 2023: Here’s how you can allocate funds to get the best returns on SEO
- Published On:September 8, 2022
In this article, we will discuss the importance of having a budget for SEO for your SaaS brand and provide tips on how to effectively allocate your resources and track your expenses.
Planning your SaaS SEO budget can seem daunting. How is anyone supposed to know the budget they’re likely to spend on SEO, before actually spending it?
That’s a valid question, and we are here to solve your dilemma.
Without proper plan allocation, one can never understand what to expect, so it’s very important to plan strategically for you to get the best ROI on your investment.
SaaS brands fail to allocate proper funds for their SEO, which leads to undesired results. You can either do SEO yourself or hire a professional to do that for you.
Either way, you need to reserve an SEO fund to match any expenses.
In this blog, we’ll help you with deciding on the SEO budget that will help you get the best results.
Ready? Let’s go!
With the barrier to entering the market decreasing day by day the only way you can stand out from the crowd is by positioning yourself well. In order to have an exceptional marketing strategy, you need to invest a significant portion of your total budget in your marketing spending.
“Not planning your SEO budget is like sailing without a sail”.
Investing your efforts in SEO not only gives you a great marketing strategy but also gives you valuable insights for growth.
It’s very common to see brands cutting their SEO budget in order to save money. These brands sometimes forget the importance of SEO and the impact it can have on their business growth.
Investing a significant portion of your total budget never meant mindlessly spending money and leading to a fruitless cash burn. That’s where the importance of budgeting comes into play.
“Companies on average spend 7 to 10% of their budget on marketing”
But how much money you decide to spend on SEO depends on which stage your company stands at. If you are a new company, you “might” want to focus a lot on rapid growth and allocate 20% of your budget to marketing.
Your SEO budget depends a lot on your goals and the current position of your company.” You need to decide what goals you want to achieve, what’s the time frame behind these goals, and what steps you need to take in order to meet those goals.
Deloitte’s annual CMO survey reports that they spend around 11.7% of the total budget on marketing.
While 57% of the companies prioritize their attention on digital marketing and marketing overall. This demands your focus and attention on your digital strategy and drives your satisfactory results.
Analyzing your competition not only gives you an idea about the average spending in your domain but also allows you to focus on ideas that nobody is working on.
Analyzing how much your competitors are spending on their SEO budget gives you a rough idea of what particular works in your related domain. Though it depends on your goal, target industry, and other factors, the industry average for B2B SaaS is 15% of the total marketing budget.
Different domains demand different investments in their SEO. The average spending of the established e-commerce giant on SEO is 10% whereas VC-funded companies spend around 20% of the total budget.
Source: Neil Patel
“SEO is a very important source for organic reach.” Investing a significant portion of your marketing budget in SEO is a must as you will see the growth compounding long term.
On average, SaaS brands spend around 30% of their marketing budget on SEO.
SEO is a long-term game, and it requires patience, whereas Google ads give you results quickly but for a shorter period. If you want to build a brand presence in your domain, then you should allocate a significant portion to SEO. On the other hand, if you are starting up and want to boost your campaign, then paid ads are the way for you.
30% of the budget allocated for SEO is often spent on Link building and for good reason. Link Building is an extensive job that needs to be done manually. But, you can save these costs by hiring a Link Building agency, like Saaslinko. We aim to provide our clients with the most relevant and highly authoritative links that are collected manually.
You can book a free 1:1 call with our experts by filling out this form here. We’ll get back to you within 24 hours.
Return on investment is the total profit on the amount you invested in order to acquire a customer and the gain you get from that customer in his lifetime. Return on investment has been low for SaaS brands due to the increase in competition and the high cost of attracting potential leads.
A good ROI is 2x or 3x the overall thing to keep in mind is that you’re growing annually by a significant percentage.
However, it’s very important to analyze your ROI from time to time.
Analyzing helps you understand whether you are heading in the right direction or not. If not, you can always pivot and change your course of direction.
ROI on paid ads is entirely predictable as it gives you quick short-term gain which is quite measurable. Whereas you won’t be able to notice ROI on SEO from the first month but within 6 months, you can see a shift in your ROI. You can reap the benefits of investing in SEO for a longer period as compared to paid ads.
Thinking of SEO as an opportunity is what makes sense because a well-optimized SEO makes you unbeatable.
You can easily calculate ROI calculated with the amount you invested for a particular time being and the return you got from the investment.
Source: sales glossary
Let’s say you invested $50000 to get 10 customers. That means it costs you $5000 to get a customer. Each customer pays you $7000 which makes your net return to be $70000($7000*10). If we calculate your ROI on the investment as 140% according to the formula.
If you want to learn more about getting higher ROI, then consider reading SaaS SEO ROI guide to learn more about return on investment from the SEO channel.
Customer acquisition cost is the amount you invested to make a customer aware of your product and finally convert them to your paid customer. Before taking CAC into consideration, you should also calculate LTV, which is the customer lifetime value.
LTV is nothing but repeated orders or the number of months a customer stays with you as a paying customer. It depends on the domain in which you are in but anything above a 3:1 ratio of LTV and CAC is considered healthy.
If CAC is high for higher LTV then it makes sense. Since CAC is like a fixed investment but once you have a delighted customer it pays month after month.
Unit economics basically means how a single unit of a business impacts your revenue and growth. It is defined as the gains you get while you attract a paying customer.
Unit economics doesn’t consider the fixed cost, it only considers the variable cost. Every new customer should add some value to your revenue.
Aiming for cumulative cash flow from your new customer gives a faster chance for your company to grow.
Additionally, another study conducted by Bain & Company found that a 5% increase in retention rate can lead to a rise in profit between 25% to 95%.
It’s really important to keep your existing customers satisfied in order to keep your CAC low. Happy customers help you get more customers. So customer retention plays a major factor in determining the budget.
In order to figure out your average customer lifespan, you can apply the above formula.
Sum of customer lifespan/ number of customers.
There are various methods by which you can create a budget for your needs. It certainly depends on what your goal is and what you are looking for specifically in a few months or years.
You can apply any of the above factors in order to define your budget but the only calculation to keep in mind is increased growth.
Investment – $500
Price of your product – $50
Then you need at least 10 customers or repeat orders in order to touch the breakeven point.
SEO is a long-term game and it requires patience and time. You can’t expect to get incremental growth on the same but consistently invest for 3 months or more then you start to get some results. The magnitude of the results starts increasing exponentially when investing in SEO.
SEO is like compounding growth: you reap the benefits of being consistent and more time you stay patient.
With SEO you can create your presence in a way that can’t be disrupted in the short term because it takes time to build that presence. So investing significant resources in SEO would reap you benefits in the long term exponentially. A perfect budget never exists; it all lies in trial and error and learning what works best for you.
We hope now you know what factors to consider while creating an SEO budget!
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