Why Asking for CPLs, Conversions, and KPIs Too Early Is the Wrong Question

• TDS Admin
• January 26, 2026
• Blog
• 0 Comments

One of the first questions we get from almost every new client sounds reasonable on the surface:

“How many leads will we get?”
“What CPL should we expect?”
“Can you set KPIs for this?”

These aren’t bad questions. In fact, they’re the right questions, just asked at the wrong time, and usually for the wrong reason.

The problem isn’t that business owners care about numbers.
The problem is which numbers they focus on, when they focus on them, and what they’re actually trying to optimise for.

Because when KPIs are set without financial context, historical data, or a clear understanding of the business model underneath, they don’t create clarity.

They create false confidence, and eventually, frustration.

This article is about why that happens, how KPIs should actually be set, and why the businesses that win long term think about advertising very differently from the ones that constantly chase the lowest possible cost.

Marketing Is Not a Creative Decision. It’s a Financial One.

Before we talk about ads, funnels, or optimisation, there’s a more important truth to understand:

Every marketing decision is a financial decision, whether you treat it like one or not.

When someone asks, “What CPL can we get?” what they’re really asking is:

“Is this going to be worth it for my business?”

But CPL on its own cannot answer that question.

A £10 lead can be incredibly expensive.
A £200 lead can be incredibly cheap.

The difference has nothing to do with the ad platform, and everything to do with the business model behind it.

Until that model is understood, KPIs are just numbers floating in isolation.

If this already feels confusing, that’s normal. Most businesses haven’t been taught to look at marketing through a financial lens. And if you ever want to talk this through properly using your own numbers instead of theory, you can do that here.

The Core Numbers That Actually Matter

(And Why Most Businesses Don’t Know Them)

Most businesses don’t have clean data. That’s normal.

What’s dangerous is pretending that doesn’t matter.

To build a sensible KPI framework, you need a working understanding of a few core numbers.

1. Average Transaction Price (ATP)

This is the value of the first sale.

Not the lifetime value.
Not the “best case client.”
The average initial transaction.

This tells us what the immediate return looks like, and whether the business survives on first sale economics or relies on repeat purchases.

2. Lifetime Value (LTV)

This is where most KPI conversations should start, and rarely do.

You do not scale advertising on ATP.
You scale advertising on LTV and gross profit.

A business with:

£100 upfront sale
£1,000 lifetime value

can afford to acquire customers very differently from a business that sells once and never again.

If LTV isn’t known, it needs to be estimated conservatively. Strategy still requires a working model. Guessing without one is worse.

This is usually the point where founders stop and think how this actually applies to their business. Mapping that out properly often answers more questions than running another campaign and hoping for better results.

3. Gross Margin (Not Revenue)

Revenue is not profit.

A business saying “We make £10,000 per sale” means nothing if it costs £7,000 to deliver.

What matters is:

Gross profit per customer = LTV × gross margin

That single number defines:

How much you can pay to acquire a customer
Whether advertising is even viable
How aggressively you can scale

4. One Off vs Recurring Revenue

Recurring revenue changes everything.

It increases LTV, improves cash flow, and raises your tolerance for acquisition costs.

A one off £100 sale at 60% gross margin gives you £60 to work with.
That’s before overhead, staff, and risk.

Trying to advertise profitably in that scenario is extremely difficult.

Now compare that to a £100 recurring product where the average customer stays long enough to generate £1,000 in revenue.

Same product price. Completely different game.

This is why some businesses scale effortlessly with ads, and others burn money no matter how “good” the campaigns look.

Why CPL First Thinking Is Backwards

Most KPI conversations start with:

“What’s a good CPL for our industry?”

This is where things quietly go wrong.

CPL is not a success metric.
It is a cost input, not a business outcome.

A cheap lead that never converts is expensive.
An expensive lead that converts profitably is cheap.

Yet many businesses obsess over getting CPL “as low as possible,” not because it makes financial sense, but because it feels safer.

Low numbers feel controlled.
High numbers feel risky.

But marketing doesn’t reward emotional comfort.
It rewards financial logic.

When businesses start asking what they can afford to pay instead of how cheap they can go, the entire conversation changes. That shift is usually where clarity appears.

The Greedy Trap: Optimising for the Lowest Possible Cost

There’s another dynamic we see often, but rarely spoken about honestly.

Many KPI conversations are driven by a desire to extract the lowest possible cost, rather than to build a scalable system.

The thinking goes:

“If we can just get CPL really low, everything else will work.”

In reality, this usually does the opposite.

Optimising purely for cheap leads tends to:

Attract low intent prospects
Reduce lead quality
Increase sales friction
Lower close rates
Cap scalability

The irony is that businesses who focus only on “cheap” often end up paying more per customer, just hidden later in the funnel.

The businesses that win take a different approach:

They ask, “What can we afford to pay to acquire a customer profitably, and then scale?”

That’s a fundamentally different mindset.

The Truth Most Founders Miss: The Business That Can Pay the Most Wins

In competitive markets, this is the rule that matters most:

The business that can afford to pay the most to acquire a customer wins.

Not because they’re reckless, but because their unit economics support it.

If two competitors are bidding for the same attention:

One can only afford £50 per lead
The other can afford £200 per lead

Guess who gets scale, data, learning speed, and market share?

This is why advertising success is often decided before campaigns launch, at the business model level.

Marketing doesn’t fix weak economics.
It exposes them.

How KPIs Should Actually Be Set (When Done Properly)

The correct order is not:

CPL → Leads → Hope

It’s this:

Understand or estimate LTV and gross margin
Agree on a target CAC that makes business sense
Understand conversion rates in the sales process
Work backwards to CPQL and CPL
Then design the funnel and budget

This is strategy.

Everything else is noise.

When There’s No Historical Data

(The Most Common Case)

In new markets, locations, or offers, we don’t “guess KPIs.”

We build assumptions and validate them with data.

That means:

Conservative LTV estimates
Conservative margin assumptions
Clear agreement on what a customer is worth in profit

Then we ask the only question that matters:

“If a customer is worth X, what are you comfortable paying to acquire one?”

That number becomes the anchor, not CPL.

From there, we estimate conversion rates and work backwards.

These are not promises.
They are starting hypotheses.

The first 30 to 90 days exist to validate or correct them.

If you want help stress testing those assumptions before money is spent, that’s something best done in a proper conversation rather than guesswork.

Why KPIs Without Context Are Dangerous

Asking for CPLs, conversions, or ROAS upfront without understanding the business is like building a house starting with the roof.

KPIs should be:

Derived
Justified
Anchored to financial reality

Not pulled out of thin air to make someone feel comfortable.

When KPIs are set emotionally, they create:

Pressure to optimise vanity metrics
Short term decision making
Constant strategy resets
Broken trust between client and delivery teams

When KPIs are set financially, they create:

Alignment
Patience
Scalability
Rational optimisation

Advertising as a Viability Test, Not Just a Growth Channel

There’s another uncomfortable truth worth addressing:

Sometimes, advertising reveals that a business model simply doesn’t work at scale.

That’s not a failure of marketing.
That’s clarity.

If the numbers don’t support paid acquisition, the solution isn’t “better ads.”

It’s:

Pricing
Retention
Offer structure
LTV expansion
Business model changes

Advertising is often the fastest way to find this out, which is exactly why it should be treated seriously.

The Real Role of Numbers in Marketing

Numbers are not there to make you feel safe.
They’re there to tell you the truth.

Our job, and the job of any serious marketing partner, is not to generate leads at any cost.

It’s to help businesses acquire customers profitably and predictably.

If we can’t explain:

Why a KPI exists
What business outcome it supports
How it connects to profit

Then it’s not a KPI.

It’s just a number someone is hoping will be low.

And hope is not a strategy.