First page of Google Local could be worth thousands of dollars a month

How valuable is it to appear in Google’s top results when someone searches for what you do? The short answer is it depends, but you can find out if you’re willing to do a little research.

The Google Local Listings included in search results are commonly referred to as the “7-pack” — Google lists seven (and occasionally 3 or 10)  top businesses for a particular location and query. The 7-pack takes up most of the first page of search results and is the best way for small business to get search traffic.

There are two questions you need to answer before you can estimate the value of having your business in Google’s “7 pack”.

1. On average, how many dollars is a new customer worth?
2. How many new customers will being in Google’s 7 pack bring you?

Estimating the dollar value of your average customer

Accurately estimating your average customers life time value (often called CLV), is business specific, and surprisingly math heavy. If you’re not intimidated by math, and are interested in things like Gompertz Distribtuion, then by all means break out your calculator and start number crunching. This Wikipedia article on customer lifetime value is a good starting place.

For the rest of us, it’s more practical to make an intuitive guess.

Here are a couple of simple exercises you can do to estimate how much a new customer is worth:

1. Imagine John Doe, the most average customer imaginable chooses to do business with you. How much does he spend, how much of that do you keep as profit? Does he return to do business with you again, if so, how many times? Take the total amount of profit you’d make from John Doe, and call that your dollar value for a new customer.

2. Imagine I said I would give you one new customer in exchange for cash. How much money would you be willing to give me, and why?

After these mental exercises you should have a dollar amount you attach to a new customer.

Estimating the number of new customers the 7-pack will bring you

We need to know how many people use Google to search for local businesses like yours. There’s a tool for estimating this: https://adwords.google.com/select/KeywordToolExternal

Google’s keyword tool gives traffic estimates for any keywords you enter. By adding your city to the keywords associated with your business, you can get an idea for how many local searches there are for your business type every month.

For example, a Massage Therapist in Seattle should enter ‘massage seattle’ to get an estimate for how many local searches there are for massage therapists in Seattle.

Some businesses will have multiple popular keywords to consider when estimating the number of searches for businesses like theirs. For example a Hair Stylist in Seattle would be interested in ‘hair salon seattle’, ‘hair cut seattle’ and ‘seattle hair stylists’.

As I write this (March 2012), there are about 20,000 searches for ‘massage seattle’, and related keywords every month. So a massage therapist in Seattle, should expect 20,000 Internet surfers to see their listing each month if they ranked at the top of google’s results.

If the massage therapist in Seattle could turn 10% percent of searches into website visits, and 5% of visits into new customers, they’d have about 100 new customers from Google every month!

The percentage of website visits is referred to as “Click Through Rate” or “CTR” the percentage of visitors that become new clients is termed the “Conversion Rate” or “CR”.

CTR varies by keyword and listing, but 10% is a reasonable expectation if you appear on the first page of results for a Google search: http://www.seomad.com/SEOBlog/google-organic-click-through-rate-ctr.html

Conversion rate varies by business, but 5% might be a good estimate. Remember, the person visiting your website is actively looking for business that can satisfy their needs right now.

So the number of new customers to expect per month is:

(Monthly searches on Google) X (0.10) X (0.05) = Number of new customers per month

Putting it all together

Once you know the dollar value of a new customer, and the number of new customers Google would bring per month, you can calculate exactly how much placement in the 7-pack is worth to you.

Let’s say you expect 100 new customers per month, and the average customer is worth $20 to you. Top placement in Google’s 7-pack is worth $20 X 100, or $2,000 / month (that’s $24,000 per year!).

If you’re interested in how to get your business to appear in Google’s 7-pack, we’ve written about that here.