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.
- Customer Acquisition Cost
- Marketing Qualified Lead, a lead that has qualified by the marketing before handing them off to sales.
- 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.
- Annual Contract Value, annualized value of a single customer. If a customer signs up for a $50/m plan, the ACV is $600.
- Annual Recurring Revenue, which is MRR times 12 if no discounts are given for annual pre-payments.
- 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.
- Monthly Recurring Revenue, which is contracted, committed or predictable revenue for the month.
- Total Contract Value, the total monetary value of a multi-year contract.
- 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.
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