SaaS Growth Glossary

Churn rate is the percentage of customers or recurring revenue lost during a given period. Customer churn counts logos lost. Revenue churn counts dollars lost. They tell different stories, and confusing the two is one of the most common mistakes in SaaS reporting.

Net Revenue Retention measures the percentage of recurring revenue retained from existing customers over a period, including expansion (upsells, cross-sells) and contraction (downgrades, churn). An NRR above 100% means your existing customer base is growing without any new sales.

Unit economics measure the direct revenue and costs associated with a single customer or unit of your business. The core components are Customer Acquisition Cost (CAC), Customer Lifetime Value (LTV), and CAC payback period. Together, they tell you whether each customer you acquire is worth more than it costs to get them.

The LTV:CAC ratio compares the total value a customer generates over their lifetime (LTV) to what it costs to acquire them (CAC). A 3:1 ratio means every dollar spent on acquisition returns three dollars in customer value. It is the primary measure of SaaS business model efficiency.

A fractional CGO (Chief Growth Officer) is a senior growth executive who works with your company on a part-time or project basis — typically 2-4 days per week for 3-6 months. Unlike consultants who advise, a fractional CGO embeds with your team, owns outcomes, and builds systems that outlast the engagement.

Customer Lifetime Value (CLV or LTV) is the total revenue a customer is expected to generate over their entire relationship with your company, adjusted for gross margin. It is the numerator in the most important ratio in SaaS — LTV:CAC.

Gross Revenue Retention (GRR) measures the percentage of recurring revenue retained from existing customers, accounting only for downgrades and churn — not expansion. Unlike NRR, GRR can never exceed 100%. It tells you how much revenue you keep before any upselling effort.

Expansion revenue is additional recurring revenue generated from existing customers through upsells (higher-tier plans), cross-sells (additional products), price increases, and usage-based growth. It is the growth engine that lets companies achieve NRR above 100%.

Involuntary churn occurs when customers leave not because they chose to, but because of payment failures — expired credit cards, insufficient funds, bank declines, or billing system errors. These customers did not decide to cancel. They were lost to infrastructure gaps.

Voluntary churn occurs when a customer actively decides to cancel their subscription. Unlike involuntary churn (payment failures), voluntary churn is a deliberate choice — the customer evaluated your product and decided it was not worth continuing.

Negative churn (also called negative net revenue churn) occurs when expansion revenue from existing customers exceeds the revenue lost from downgrades and cancellations. It means your installed base grows in value every month without any new customer acquisition.

A customer health score is a composite metric that combines multiple signals — product usage, feature adoption, support interactions, payment history, and engagement — into a single indicator of account health. It helps you predict which customers are likely to churn before they cancel.

Cohort analysis groups customers by the time they signed up (or another shared characteristic) and tracks their behavior over subsequent periods. Instead of blending all customers together, it reveals how each group retains, expands, or churns independently — showing whether your business is actually improving.

Logo churn measures the percentage of customer accounts lost. Revenue churn measures the percentage of recurring revenue lost. They often diverge significantly — you can lose many small accounts (high logo churn) while retaining large ones (low revenue churn), or vice versa.

Churn intervention is the practice of identifying at-risk customers through early warning signals and deploying targeted actions — automated or human — to address their concerns before they cancel. It shifts retention from reactive (responding to cancellations) to proactive (preventing them).

Monthly Recurring Revenue (MRR) is the predictable revenue a SaaS business generates each month from active subscriptions. It is normalized to a monthly value — annual contracts are divided by 12, quarterly by 3. MRR is the foundational metric from which nearly every other SaaS metric is derived.

Annual Recurring Revenue (ARR) is your monthly recurring revenue (MRR) multiplied by 12. It represents the annualized value of your active subscriptions and is the primary metric used for SaaS company valuations. ARR is a run-rate, not actual trailing revenue.

CAC Payback Period is the number of months it takes for a customer to generate enough gross margin to recover the cost of acquiring them. It measures how quickly your acquisition investment pays for itself and directly impacts your cash flow and capital requirements.

The Rule of 40 states that a healthy SaaS company's revenue growth rate plus profit margin should equal or exceed 40%. A company growing 60% with -20% margins scores 40 (passing). A company growing 20% with 25% margins scores 45 (also passing). It balances growth against profitability.

The SaaS Magic Number measures how efficiently your sales and marketing investment generates new recurring revenue. It divides the change in quarterly ARR by the previous quarter's sales and marketing spend. A magic number above 0.75 suggests efficient growth; below 0.5 signals you are burning cash faster than you are growing.

Burn Multiple measures how much cash a company burns to generate each dollar of net new ARR. It is calculated by dividing net cash burned by net new ARR in the same period. A burn multiple of 1.5x means you spend $1.50 to generate $1 of new ARR. Lower is better.

The SaaS Quick Ratio measures the efficiency of revenue growth by dividing revenue added (new + expansion MRR) by revenue lost (churned + contraction MRR). A quick ratio of 4 means you add $4 of revenue for every $1 lost. Higher is better — it means your growth engine is outpacing your leakage.

Average Revenue Per Account (ARPA) is total MRR divided by the number of active accounts. It tells you how much the typical customer pays and serves as a proxy for pricing health, customer segment mix, and expansion effectiveness.

Gross margin is revenue minus Cost of Goods Sold (COGS) divided by revenue, expressed as a percentage. For SaaS companies, COGS includes hosting, infrastructure, customer support, and professional services costs directly tied to delivering the product. A 75% gross margin means $0.75 of every revenue dollar is available for sales, marketing, R&D, and profit.

Revenue run rate annualizes your current period revenue to project what you would earn in a full year at the current pace. Monthly run rate: multiply one month's revenue by 12. Quarterly run rate: multiply by 4. It is a forward-looking projection, not a measure of actual earned revenue.

Revenue leakage is recurring revenue that should be collected but is not — due to billing errors, failed payments, pricing gaps, untracked usage, discount abuse, or process breakdowns. It is money flowing out of your business through cracks in your revenue infrastructure.

Revenue infrastructure is the collection of systems, processes, and automation that captures, retains, and grows recurring revenue. It includes billing and payment processing, pricing architecture, churn prevention workflows, expansion triggers, analytics, and the integrations connecting them.

Revenue Operations (RevOps) is the strategic alignment of sales, marketing, and customer success operations under a unified framework. It eliminates silos between these teams by standardizing processes, data, and technology to create a single, efficient revenue engine.

Quote-to-Cash (QTC) is the end-to-end business process from the moment a sales rep creates a quote to when payment is collected and revenue is recognized. It includes pricing configuration, quote generation, contract negotiation, order processing, invoicing, payment collection, and revenue recognition.

Sales pipeline velocity measures how quickly revenue moves through your sales funnel. It combines four factors: number of opportunities, average deal size, win rate, and sales cycle length. Higher velocity means more revenue generated per unit of time.

Sales efficiency measures how effectively your sales and marketing investment converts into new revenue. It encompasses multiple metrics — magic number, CAC payback, quota attainment, and pipeline conversion rates — that together describe how much revenue each dollar of sales investment produces.

Revenue recognition is the accounting principle that determines when revenue is officially recorded. Under ASC 606, SaaS companies recognize revenue as the service is delivered — not when payment is received. A $12,000 annual contract paid upfront is recognized as $1,000/month over 12 months, with the undelivered portion as deferred revenue.

Lead scoring assigns numerical values to prospects based on characteristics (firmographic fit, budget, company size) and behaviors (website visits, content downloads, product signups) to predict which leads are most likely to convert to paying customers. Higher scores get priority attention from sales.

Value-based pricing sets prices according to the perceived or measured value your product delivers to customers — not based on your costs, competitors' prices, or arbitrary round numbers. If your product saves a customer $100K annually, pricing at $10K (10% of value) is a value-based approach.

Usage-based pricing charges customers based on their consumption of your product — API calls, data processed, users added, transactions completed, or storage used. Revenue scales directly with the value each customer extracts, making it inherently fair and expansion-friendly.

Pricing power is the ability to increase prices without a proportional loss of customers. Strong pricing power means customers value your product enough to absorb price increases. It is a direct measure of how essential your product is to your customers' operations.

Annual Contract Value (ACV) is the average annualized revenue per customer contract. For monthly contracts, ACV = monthly price x 12. For multi-year deals, ACV = total contract value / number of years. It indicates the size of your typical deal and determines which sales model you can afford.

Willingness to Pay (WTP) is the maximum amount a customer would spend for your product or service. It is determined through research — surveys, interviews, and behavioral analysis — and varies by customer segment, use case, and perceived value. Understanding WTP is the foundation of effective pricing strategy.

Freemium offers a permanently free tier with limited features, encouraging users to upgrade for more. Free trial offers full product access for a limited period (typically 7-30 days), requiring conversion to paid at trial end. Both are product-led acquisition strategies with fundamentally different conversion dynamics.

Price anchoring is a cognitive bias where people rely heavily on the first piece of information they see (the anchor) when making decisions. In SaaS pricing, strategic use of anchors — a high-priced enterprise tier, a competitor comparison, or a value-delivered figure — makes your target tier feel more reasonable.

Net Revenue Per Employee divides your ARR by total headcount. It measures how efficiently your team generates revenue. A company with $5M ARR and 25 employees has $200K revenue per employee. It is increasingly used by investors as a proxy for operational efficiency.

Dunning management is the automated process of recovering revenue from failed payments. It includes smart payment retry logic (re-attempting charges at optimal times), customer communication sequences (emails and SMS notifying customers of payment issues), and escalation workflows that progressively increase urgency before an account is cancelled.

Failed payment recovery encompasses all methods used to collect revenue after a payment attempt fails. This includes smart retry logic (re-attempting charges at optimal times), account updater services (automatically updating expired card details), customer communication (emails/SMS requesting payment update), and fallback payment methods.

Subscription billing is the system that manages recurring charges, plan changes, prorations, invoicing, payment collection, and subscription lifecycle events. It is the critical infrastructure that converts product usage into collected revenue — automatically and accurately.

Configure-Price-Quote (CPQ) software automates the process of configuring product options, calculating accurate pricing (including discounts, bundles, and custom terms), and generating professional quotes. It connects your sales process to your billing system, eliminating manual pricing errors.

Payment retry logic determines when and how often to re-attempt a failed payment charge. Smart retry logic goes beyond simple time-based retries by analyzing failure reason codes, customer payment patterns, and optimal retry windows to maximize recovery rates.

Programmatic SEO is the strategy of creating large numbers of search-optimized pages using templates and data rather than writing each page individually. A single template combined with a dataset can generate hundreds or thousands of unique, valuable pages targeting specific keyword patterns.

Technical SEO is the practice of optimizing your website's infrastructure so search engines can efficiently crawl, index, and rank your pages. It includes site architecture, page speed, mobile optimization, structured data, XML sitemaps, canonical tags, and crawl budget management.

Topical authority is the degree to which search engines consider your website a credible, comprehensive source on a particular subject. It is built by consistently publishing high-quality, interconnected content that covers a topic thoroughly — not just targeting individual keywords but demonstrating expertise across an entire subject area.

Content velocity is the rate at which you publish new, quality content — measured in pieces per week or month. Higher velocity means faster topical authority building, more keyword coverage, and more opportunities for organic traffic. But velocity without quality is counterproductive.

Search intent is the underlying goal a user has when typing a query into a search engine. The four primary types are: informational (learning something), navigational (finding a specific page), commercial investigation (comparing options), and transactional (ready to buy or act). Matching your content to search intent is the most important on-page SEO factor.

A fractional executive is a senior C-level leader who works with a company on a part-time basis — typically 1-4 days per week. Common fractional roles include CGO, CMO, CFO, CTO, and CRO. They bring full executive capability at a fraction of the cost and time-to-impact of a full-time hire.

A fractional CRO (Chief Revenue Officer) is a part-time revenue leader who aligns sales, marketing, and customer success under a unified revenue strategy. While a CGO focuses broadly on growth (including product, operations, and infrastructure), a CRO typically focuses specifically on the revenue engine — pipeline generation, sales effectiveness, and customer retention.

A growth operator is a senior growth professional who combines strategic thinking with hands-on execution. Unlike advisors who recommend strategies or agencies that run campaigns, a growth operator embeds with your team, builds the systems, and personally ensures they work — strategy and implementation in one person.

A 90-day revenue sprint is a time-boxed engagement where a growth operator or fractional executive focuses on delivering specific, measurable revenue outcomes within a 3-month window. It includes diagnostic (weeks 1-2), infrastructure building (weeks 3-8), and optimization (weeks 9-12) — with a clear handoff at the end.