How to set marketing KPIs
and SMART goals.

Skip the definitions ↓

What is a KPI?

A KPI (Key Performance Indicator) is like a scorecard or tracking tool used by businesses to see if they are actually hitting their most important goals.

If we use the academic system as an example, it would be easy through conversation to determine if someone is very bad or very good at mathematics. But with two good candidates, how do you determine it when there are an astronomical amount of data points? Instead we assign them a grade, so we can then know an 'A' student is better than a 'B' student on that topic.

In the same way, a business can set goals for itself. A business KPI takes a huge amount of daily data and boils it down into just a few vital scores, like total sales or customer satisfaction, so a team knows instantly if they are succeeding or if they need to change their game plan.

What is a SMART goal?

A SMART goal is a framework used to set clear, realistic, and trackable objectives by making sure they are Specific, Measurable, Achievable, Relevant, and Time-bound. The acronym was first proposed by George T. Doran in the November 1981 issue of Management Review, so this is not a new idea, and it has outlasted a great deal of management thinking that arrived after it.

This method takes a vague wish like "I want to get better at cooking" or "our business needs more sales" and turns it into an exact, actionable plan with a clear finish line.

The five parts of a SMART goal

• Specific: your goal must be clear and direct. It answers the questions of what you want to achieve, why it matters, and who is involved.
• Measurable: your goal must include numbers, scores, or milestones. You need a way to track your progress and know when you have crossed the finish line.
• Achievable: your goal must be realistic. It should challenge you or your team, but it must still be possible with the time and resources you have.
• Relevant: your goal must matter to your wider strategy or life plans. It should fit in with your other priorities instead of wasting time on things that do not help.
• Time-bound: your goal must have a strict deadline or target date. Without a calendar end-date, there is no urgency to start working on it today.

Using the SMART framework stops people from setting impossible targets or vague dreams. When combined with a Key Performance Indicator, you have both a goal you want to achieve and a clear way to measure your success.

Setting relevant marketing KPIs and SMART goals

Fortunately we do not have to reinvent the wheel here. Corporations have been using three Key Performance Indicators to measure the success of their marketing campaigns for decades.

• Customer Acquisition Cost (CAC): exactly how much money and resource it costs to secure a single paying customer.
• Average Lifetime Value (LTV): how much that customer spends over the entire course of their relationship with your business.
• Customer Retention Horizon: how long a customer stays active from their first purchase to their last.

What we are looking for is the CAC:LTV ratio with healthy customer retention, or 'churn rate'.

It is important when looking at this that we also monitor the quality of the data collection. How we measure our CAC is as important as what the CAC says. This is where modern tools such as GA4 can become exceedingly useful, and why a lot of businesses prefer to use advertising channels like Facebook ads, so that they can rely on the data's validity as well as the data itself.

If you need help tracking your CAC:LTV ratio, get in touch.

Once we have defined our CAC:LTV ratio, we can fold it into a SMART goal, such as "CAC:LTV value of 1:3 holding steady with £3,000 a month of executed ad spend by Q4 of 2028, with 10% monthly churn".

Now that you have a defined target and a way to measure it, you can clearly achieve your goals.