Your go-to Subscription and SaaS marketing glossary

After having worked for years with subscription businesses we finally put together your go-to subscription and SaaS marketing glossary!

CLTV & LTV

Customer lifetime value or lifetime value. Measures the total revenue generated over the “lifetime” of a customer. The longer customers use the services or products and the more you can upsell, the greater the lifetime value. LTV is the key performance indicator (KPI) companies should use to make many of their key decisions, such as marketing budget, resources, profitability, and forecasting.

CAC

The average amount that a company spends to acquire a single customer. CAC is the sum of all customer acquisition costs, including sales and marketing expenses (and salaries), divided by the number of customers acquired during the same period.

CAC Payback Period

The CAC Payback Period is the length of time it takes for your subscription revenue to pay your customer acquisition costs (CAC)

How to count it: CAC Payback Period = CAC ÷ Avg. RevenuePer Month

Churn Rate

Churn rate is a measurement of the percentage of accounts that cancel or choose not to renew their subscriptions.
 

Negative Churn

Negative churn is when new revenue from existing customers is greater than the amount of revenue you lost from cancellations and downgrades. And obviously THIS IS A POSITIVE THING.

Freemium

Freemium is a business model in which the owner or service provider offers basic features to users at no cost and charges a premium for supplemental or advanced features.

 

Subscription growth ceiling

Average number of new members per month ÷ monthly churn rate
 

MLP

Minimum Lovable Product is an initial product version that customers will adore from the beginning. It includes an appealing look and well-thought value that delights the customers.

ARPC

Average revenue per customer. ARPC generates over a given period of time (usually monthly or quarterly) by the average length of the contract (ALC).

 

Involuntary Churn

Involuntary churn means customer churn is due to payment failure due to things like outdated information, for example an incorrect card expiration date, wrong billing address, insufficient funds, or some other reason not related to the business.

PLG

Product-Led Growth is a (go-to-market) growth model where product usage drives customer acquisition, retention, and expansion. The center of power has shifted from the buyer to the end user and is vastly used within SaaS companies such as Slack and Calendly.

 

ARR & MRR 

Annual recurring revenue (ARR) is a metric that shows the money that comes in a year for the life of a subscription. Monthly Recurring Revenue (MRR) is the predictable total revenue generated by your business from all the active subscriptions in a particular month. It includes recurring charges from discounts, coupons, and recurring add-ons, but excludes one-time fees. 

Onboarding process

Onboarding process is where new users are introduced to your product in a way that encourages them to adopt it. During this time, your goal is to show users how to use the most important parts of your product and hammer home the benefits that come with using it regularly.

 

TTFV

Time to First Value is the amount of time between the close of the sale and when the customer is Onboard.

 

Subscription fatigue
Subscription fatigue is the potential decline in the interest of consumers towards spending on subscriptions as the number of available subscription choices to them increases. Subscription fatigue management tactics include things like tiered memberships, community engagement, adding wow elements and creating FOMO (fear of missing out). 

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