SEO is simply the process of improving search engine rankings for keyphrases related to a business - ranking a site well for strong keyphrases will almost certainly increase relevant traffic to a website, but if you're only focused on rankings then you're not necessarily going to improve sales and conversions, which is the ultimate goal.
The real value lies in complete internet marketing campaigns, which encompasses a more holistic approach to growing a business online. If you're only focused on rankings (which far too many SEO companies are), then you're missing the bigger picture, and not only that but if you're focusing all your business solely on referrals from Google, then you can quickly find yourself losing your entire business overnight on the basis of an algorithm update.
The value should come from the combination of lots of internet marketing disciplines, including search engine optimisation, branding, conversion rate optimisation, analytics and insight, usability testing, web design, high quality linkbuilding, social media marketing, online customer services and brand management. A high quality company will look to improve your rankings, increase your referral traffic and improve online brand awareness and consideration amongst online shoppers. Then once the number of people to your website is consistently increasing, the focus will shift to ensuring usability and customer services are of a high quality and utilising CRO (conversion rate optimisation) to improve sales and profit.
Success should be measured ultimately by ROI (return on investment) and sales, but other metrics including traffic, links, domain authority, number of referring sites, bounce rate, conversion rates and search engine rankings will be tracked in order to inform campaign progress and impact, as well as informing future decisions.