Learn SEO: Lesson #2 - Find Your Most Profitable Keyword

In 2012 I started Francis Lofts & Bunks, a company that makes loft beds and bunk beds for adults. Since most bunk beds are designed for children, we developed a bed for adults that was modern, heavy-duty, and would look great in a big city apartment.

Francis Lofts & Bunks Queen over Queen Bunk Bed has a weight capacity of 2,000 pounds to support the weight of multiple adults.

Consider the following three keyword options for Francis Lofts with their corresponding monthly searches:

Bunk Beds (135,000)
Adult Bunk Beds (1,600)
Queen Bunk Beds (1,300)

Before we go further, take a moment and try to think of the one keyword you would recommend Francis Lofts & Bunks target in their SEO.

Remember that the only goal to this keyword analysis is to find the keyword that will maximize profit. We need to find the keyword that will drive lots of visitors to our site that are ready to buy our most profitable products. If you owned a music shop in Chicago that specialized in high-end guitars, your business would fail if the majority of your foot traffic were customers looking for the cheapest guitars in town. Your ideal customers are experienced guitarists looking for high-end guitars. Instead of targeting the keyword “guitars”, you should target “high-end guitars.” Or better yet: “high-end guitars Chicago”.

Learn The Metrics That Drive Profit

$ Keyword Profit = Number of visitors that buy profitable products

For the keyword “Bunk Beds”, what is the largest amount of profit Francis Lofts & Bunks could obtain via Google Organic results? Best case scenario, every person that searches “Bunk Beds” on Google ends up purchasing Francis Lofts & Bunks’ highest profit bunk bed. Why doesn’t this actually happen?

Number of Visitors

First, not all of the people that search “Bunk Beds” are going to click on our listing. In fact, depending on our rank we may not be able to get ANY of the searches. Let’s say we show up in the fourth position when someone searches “Bunk Beds”. According to research, the listing in the fourth position is clicked 4.8% of the time. This is known as the Click Through Rate (CTR). So if 4.8% of the 135,000 searches click our listing, we can estimate that 6,480 people will visit our site. This is known as Clicks.

That Buy

Second, of the people that do come to our site, the majority will be looking for a different product than we offer. Perhaps they want a wooden bunk bed (ours is metal), or maybe they want something in a cheaper price range. Regardless of the case, the percent of customers that end up buying what we have is known as the Conversion Rate.

Profitable Products

Lastly, customers searching “Bunk Beds” are likely seeking cheaper bunk beds than customers searching “Premium Bunk Beds”. As a result, these customers are likely buying a lower profit product from Francis Lofts & Bunks. This is known as Average Conversion Value, but it is more accurately described as Gross Profit Per Conversion.

# Searches = # of times keyword is searched in a period of time
% CTR (Click Through Rate) = how often your listing is clicked by the searcher
% Conversion = how often a visitor accomplishes something you want them to, like signing up, purchasing something, or submitting a question
$ Gross Profit Per Conversion = average gross profit per conversion for keyword, where gross profit is revenue – cost of sale

Find the keyword that excels in these metrics, and you will find the keyword that will bring you the highest profit.

Find The Metrics For Your Keywords

For each Keyword…

Step 1: Find Monthly Traffic Estimates

I recommend SEMRush to do this. Google Keyword Planner is also useful and completely free, but it doesn’t give straight away keyword metrics like the old Google Keyword Tool used to provide. SEMRush is free to use for a bit if you sign up with an account.

Step 2: Estimate Your Google Rank

To estimate your Google Rank for a certain keyword, type it into Google and have a look at the competition on the first page. Be realistic about where you think you can show up, and note whether or not it is possible to get into the #1 position. A great indicator of the level of competition is how closely the businesses showing up relate to the keyword searched. Google is outstanding at matching a search to relevant results, so if the results seem unrelated to the keyword, there is likely room for you to make your move to the top.

Step 3: Estimate your CTR

Based on the rank you just estimated, find your CTR in the right column of the following table:

Step 4: Estimate Your Conversion Rate

This is a tough metric to estimate if you have no online data yet. The main key here is that each keyword has a conversion rate that is relatively accurate compared to the other conversion rates. For instance, “high-end guitars Chicago” will have a higher conversion rate than “guitars” for our Chicago music shop selling high-end guitars. It would be reasonable to estimate that “high-end guitars Chicago” will have a 10% conversion rate while just “guitars” will have a 1.5% conversion rate.

Step 5: Estimate Your Gross Profit Per Conversion

If our cheapest guitar sells for $300 but costs us $200 to buy, then it has a gross profit of $100. If our most expensive guitar sells for $1000 but costs us $600, then its gross profit is $400. Since people searching for “high-end guitars” as opposed to just “guitars” are more likely buy the more expensive guitar, this keyword’s Gross Profit Per Conversion will likely be between $300 – $400. “Guitars”, on the other hand, will likely have a Gross Profit Per Conversion between $100 – $250 since the majority of visitors will be looking for your average run-of-the-mill guitar.

Crunch The Numbers To Calculate The Highest Profit Keyword

$ Keyword Profit = Number of visitors that buy profitable products

$ Keyword Profit = # Searches * % CTR * % Conversion * $ Gross Profit Per Conversion

I put together the following Google Rank predictions for Francis Lofts & Bunks keywords:

“Bunk Beds”: Position #25 (CTR: 0.1% or lower)
“Adult Bunk Beds”: Position #1 (CTR = 12.6%)
“Queen Bunk Beds”: Position #4 (CTR = 3.5%)

Using these estimations and the results of my own analysis described in the last section, I generated the table below. Feel free to download my simple SEO Keyword Analysis Tool that I used to generate this table.

It is clear from the table that “Adult Bunk Beds” is the best of the three keywords. Even though “Bunk Beds” has 83 times as many searches per month as “Adult Bunk Beds”, its CTR is only 0.1% due to a low estimated Google Rank. This low CTR causes “Adult Bunk Beds” to take the lead in traffic. Further, the conversion rate is highest for “Adult Bunk Beds,” meaning for every visitor that comes to our site, more of them are actually buying.

Understanding The Big Picture Strategy

You might be thinking that it seems like an over-simplification to target just ONE keyword. This is of course true. The whole purpose of this exercise is to find your most profitable keyword. Once you know your most profitable keyword, you can start slurping up the similar keywords. For instance, if Francis Lofts & Bunks can achieve the #1 position for the keyword “Adult Bunk Beds”, don’t you think they’d have a good shot at “Adult Bunk Bed”, or “Bunk Beds for Adults.”? These adjacent keywords will have very similar ranking, conversion, and profitability profiles, so it is virtually guaranteed that the clicks and profit will be higher than we estimated in the analysis above.

Knowing which keyword to attack is only the first step toward a comprehensive SEO attack. In my next blog post, I will teach you how to optimize your website with the right meta information and content to move quickly up the Google Ranks.

Additional Tools

References

Ryan Francis

Partner, President, & Head of Sales

As ambitious as he is tall, Ryan has a passion for creation. In 2012, he created Francis Lofts & Bunks, a company in Western Ohio that manufactures aluminum loft beds and bunk beds. Equipped with a burning desire to build things that are useful to others, Ryan has come into his own in web development, combining creativity, logic, and an empathy for others to help clients launch outstanding, easy-to-use products.