The Software As A Service industry is pretty young, and it’s easy to get confused with all the acronyms floating around. Here’s a handy guide to make sense of it all, organized into the three stages of a customer’s life: acquisition, monetization and retention.

Acquisition

CAC

Customer Acquisition Cost

MQL

Marketing Qualified Lead, a lead that has qualified by the marketing before handing them off to sales.

SQL

Sales Qualified Lead, a lead that has been qualified by some criteria such as budget, authority, etc.

Channel Partner

An organization or person that sells your service or product on your behalf.

Monetization

ACV

Annual Contract Value, annualized value of a single customer. If a customer signs up for a $50/m plan, the ACV is $600.

ARR

Annual Recurring Revenue, which is MRR times 12 if no discounts are given for annual pre-payments.

Bookings

Refers to total value of accepted term contracts, usally split into new bookings and renewal bookings.

LTV / CLV

Life Time Value or Customer Lifetime Value, which an estimate of the lifetime revenues for a customer. This is simply a projection or an estimate and is the top-line revenue before costs are factored in.

MRR

Monthly Recurring Revenue, which is contracted, committed or predictable revenue for the month.

TCV

Total Contract Value, the total monetary value of a multi-year contract.

Retention

Churn

A family of metrics that measures attrition or less, usually described as a rate or ratio.

MRR Churn

A total of the MRR loss due to customer cancellations.

Customer Churn

A count of the number of customers lost.

Photo Credit: kenteegardin.