What are SMART Goals, and Why Are They Important for Businesses?

Defining objectives is as important as making them realistic and achievable for companies. Otherwise, the strategies may seem ineffective and sometimes even demotivate the teams. The SMART goals are a system that establishes a series of criteria that determine the priorities for the company and the teams. This system allows the results to be measurable and serve as a guide for the company's growth. Do you want to know how this methodology works and how you can apply it? Read on! 

What are SMART Goals?

SMART goals are specific, measurable, attainable, relevant and time-bound. They are concrete goals that allow us to analyse the performance of our efforts. SMART goals allow you to create “specific goals” that answer the 5 most important questions:

1. Who: Who or who are involved?
2. What: What do you want to achieve?
3. Where: Where is it going to be achieved?
4. When: When do you want to achieve it?
5. Why: Why do you want to achieve it?

George T. Doran coined this term in his article “There's a S.M.A.R.T. Way to Write Management's Goals and Objectives,” published in 1981.

This methodology establishes the guidelines and essential elements to implement effective objectives.  

Full Form of SMART Goals

The full form of SMART goals is:

• Specific
• Measurable  
• Achievable
• Relevant
• Time-bound

Let's look at each of these characteristics separately.

Specific

A specific objective is limited to a specific aspect, task or action of a company. For example, a specific goal in marketing could be to increase the monthly generation of MQLs (Marketing Qualified Leads) by 20% (from 600 to 720). This specific goal tells us exactly what we hope to achieve.

Measurable

To be measurable, a goal has to be specific. Otherwise, it is not possible to interpret whether the results are within what was expected. In addition, it is necessary to have the means to measure it, whether software tools or an analysis methodology that makes it possible to know to what extent the expected result was achieved. Following the previous example, we would need to record the number of leads generated by our marketing actions.

Achievable

By achievable, we mean setting an objective that is perfectly achievable under the conditions available. For example, according to the characteristics of the company and the market, aiming to increase the monthly generation of MQLs by 75% could be too much. It is essential to set realistic goals so that after achieving them, you can aim to achieve something higher. 

Related Read - How Business Process Management Helps You Meet Goals The Smart Way

Relevant

A relevant goal is one that is in line with the general objectives of the business. It makes no sense to consider actions whose results are different from any of the company’s business objectives.  For example, aiming to increase monthly Marketing Qualified Leads (MQLs) by 20% is relevant if the company wants to boost sales and if those MQLs can turn into actual sales. However, if lead generation is already good but sales are not closing, then focusing on increasing MQLs wouldn't be as important as improving the later stages of the sales process.

Time-Bound

A SMART goal should be time-bound, meaning it should have a start and end date. If the goal does not have a time limit, there will be no sense of urgency and, therefore, less motivation to achieve the goal. So, when we set a goal of this type, we must always consider the period. 

Let us understand this in continuation of the previous marketing example, where the objective was to increase the monthly generation of MQLs by 20% (from 600 to 720). The team can achieve this by creating six downloadable offers on the website within three months. This way, their marketing plan for achieving the set goal will be time-bound. 

SMART objectives have several functions and advantages within business goal planning. They aim to optimise resources, personnel, and time as an ultimate goal. Setting specific and achievable goals facilitates the organisation and the achievement of objectives.

These objectives must be easy to understand to serve as a guide, allow you to identify goals, organise resources and finally know when an objective has been achieved.

Some advantages of the SMART methodology are:

1. Increase business vision: A SMART goal setting allows you to have a broad vision of your business. The greater the visibility of the factors, the easier it is to achieve the goals.
2. Improve planning: The SMART methodology is all about ordering, planning, anticipating, and verifying progress, allowing you to establish order in your business (processes, systems, activities, etc.
3. Focus on what is important: Knowing where you are going is essential to determine what you have to do, how and with what to get to that point. Establish priorities and prioritise from the most important to the least relevant.
4. Greater control: Better distribution of your resources, leading to savings.
5. Optimize communication: This helps to accurately communicate what the company intends. It allows team members to identify the goal and contribute towards achieving it.
6. Boost time management: SMART objectives help delegate activities and manage time in your company.
7. Streamline the sales force: Sales teams require vision and tangible goals so that they can act agilely. Thanks to SMART objectives, the sales teams can guide themselves and direct their efforts aligned with the business strategy.
8. Establish continuous improvement processes: Establishing continuous improvement processes is very easy when you have a broad business vision, control of your resources, and planning and strategy.

Examples of SMART goals

The examples mentioned in the following lines are specific, measurable, achievable, relevant and time-bound for a better interpretation of it:

‍Example 1: "Increase sales in the 2-star products by 25% in 2024-25."

• Specific: Increase sales
• Achievable: Star products
• Measurable: By 25%
• Relevance: Improves profitability
• Time: In 2024-25

Example 2: "Increase CTR by 1.5% in March 2025."

• Specific: Increase CTR
• Achievable: It is a reasonable percentage compared to the current
• Measurable: Within 1.5%
• Relevance: Marketing ad performance will be improved
• Time: In March 2025

Example 3: "Reduce staff turnover from 20 to 10 employees during the next 6 months in the operations area through continuous training."

• Specific: Reduce staff turnover
• Achievable: Through continuous training in the area of ​​operations
• Measurable: From 20 to 10 collaborators
• Relevance: Time and money will be saved in the recruitment processes
• Time: 6 months

Example 4: "Expand our database from 450 to 700 references for the next quarter."

• Specific: Expand the database
• Achievable: May feel farfetched, but is achievable with a little push
• Measurable: 700 references
• Relevance: Necessary for a subsequent sales or remarketing strategy
• Time: Next quarter

Conclusion

Setting goals is imperative for teams to stay on track and cultivate productive work habits. A SMART metric can be applied to weekly or monthly tasks to identify which key performance indicators require attention, allowing the team to allocate energy and time to more impactful work results.