Category: Glossary

What Is It? Cumulative Trials represents the total number of users who have started a trial of your product or service from the beginning of your business up to a specific point in time. It’s like a running tally of everyone who’s ever said, “Sure, I’ll give it a try!” The Formula 🧮 Cumulative Trials…

What Is It? “Months to Recover CAC” (also known as CAC Payback Period) is the number of months it takes for a company to earn back the cost of acquiring a new customer. It’s like figuring out how long it takes for a new customer to go from being an expense to becoming profitable. The…

What Is It? CAC, or Customer Acquisition Cost, represents the total cost of convincing a potential customer to buy your product or service. It’s like the price tag on each new customer you bring in. The Basic Formula 🧮 CAC = Total Sales and Marketing Costs / Number of New Customers Acquired 👆 By the…

What Is It? LTV, short for Customer Lifetime Value (CLV), represents the total amount of money a customer is expected to spend on your products or services throughout their entire relationship with your company. The Basic Formula 🧮 LTV = Average Purchase Value × Average Purchase Frequency × Average Customer Lifespan 👆 By the way,…

What Is It? Paid Marketing Leverage measures how efficiently your paid marketing spending translates into revenue. Simply put, it’s the ratio between your revenue growth and your marketing spend growth over a specific period. The Formula 🔢 Paid Marketing Leverage = Change in Revenue / Change in Marketing Spend 👆 By the way, an interesting…

What Is It? Fully Loaded S&M represents the complete cost picture of your sales and marketing efforts. It’s like looking at the total bill for getting your product into customers’ hands, including everything from salaries to software subscriptions. What’s Included? 💼 The fully loaded S&M typically includes: Direct costs: Sales team salaries and commissions Marketing…

What Is It? Marketing leverage is your ability to generate outsized marketing results relative to your resource investment. Think of it as getting maximum impact from minimum input – like using a lever to lift a heavy weight with less effort! Key Components Marketing leverage typically comes from: Organic Growth Channels Word-of-mouth marketing Content marketing…

Net Negative MRR Churn is when a company gains more money from its existing customers upgrading or buying more than it loses from customers canceling or downgrading their subscriptions. This means that even if some customers leave, the company’s overall monthly recurring revenue (MRR) still goes up. Why Net Negative MRR Churn is Important Having…

MRR Churn (Monthly Recurring Revenue Churn) is a metric that measures the amount of revenue a company loses in a given month due to customers canceling or downgrading their subscriptions. It’s an important indicator of customer retention and the overall health of a subscription-based business. How to Calculate MRR Churn Basic Formula for MRR Churn…

MRR Expansion % (Monthly Recurring Revenue Expansion percentage) measures how much more money a company is making from its existing customers over time. This increase usually comes from customers upgrading their subscriptions, buying additional services, or using more of what the company offers. It helps show how well the company is growing its revenue from…