SaaS glossary

SaaS Benchmarks are reference metrics used to compare a SaaS company's performance against peers or targets.

Sales Lead Follow-up is the process of responding to and nurturing leads after they enter the sales funnel.

Sales Styles for Different Market Segments are the sales motions matched to SMB, mid-market, and enterprise customer segments.

A CSM is a customer success manager — the post-sale owner of a book of customer accounts, responsible for onboarding, adoption, renewals, and expansion, and measured on the retention of the revenue they manage.

Customer Success is the function responsible for onboarding, retention, expansion, and customer outcomes after the sale.

NPS is Net Promoter Score, a customer loyalty metric based on how likely customers are to recommend the company.

User Onboarding is the process of helping new users or customers reach initial value and become successful with the product.

Funnel Conversion Rates measure how prospects move from one stage of the marketing and sales funnel to the next.

TAM is total addressable market, the total revenue opportunity available if a company could serve the full market.

Funnel Math models the volume and conversion rates needed across funnel stages to reach revenue goals.

A revenue multiple divides a stated company value by a stated revenue measure. This calculator uses ARR; comparisons using trailing revenue or a different valuation basis must be reconciled first.

A term sheet is the document outlining the key economic and control terms of an investment or financing round.

Valuation is the estimated enterprise or equity value of a SaaS company, often informed by revenue multiples, growth, efficiency, and market conditions.

Venture Capital is equity financing from investors seeking high-growth outcomes and large potential exits.

ABM is account-based marketing — a strategy that flips the funnel by selecting high-value target accounts first, then running coordinated, personalized marketing and sales plays against those specific companies.

Customer Marketing is marketing to existing customers to support retention, expansion, advocacy, and lifecycle engagement.

Email Marketing is the use of email campaigns and automation to nurture, convert, retain, or expand customers.

Growth Through Affiliate Partners uses affiliates and partners as a channel for generating customers or leads.

In-Funnel Marketing Automation uses automated messaging and workflows to move prospects through the funnel.

Inbound Growth is a demand generation motion based on attracting prospects through channels such as content, organic search, and marketing automation.

Marketing Automation uses software and workflows to nurture leads, manage campaigns, and move prospects through the funnel.

An MQL is a marketing qualified lead — a prospect whose profile and engagement (content downloads, pricing-page visits, webinar attendance) signal enough buying intent for marketing to pass them toward sales.

Offline Marketing Channels are non-digital acquisition channels such as events, direct mail, outdoor, or other offline campaigns.

Organic Search is customer acquisition from unpaid search engine visibility.

Outbound Vs. Paid Vs. Inbound Marketing compares the major demand generation motions available to a SaaS company.

SaaS Marketing Strategy defines the channels, funnel motions, and campaigns used to generate and convert demand.

Total Marketing Spend is the total amount a company invests in marketing over a period; it is a key input to CAC and growth-efficiency calculations.

17 Key SaaS Growth Levers is a framework identifying the main operational areas a SaaS company can improve to accelerate growth.

Account Retention measures the share of customer accounts that remain active over a period, separate from how much revenue those accounts expand or contract.

Activation is the point in the product journey when a user reaches meaningful initial value and becomes more likely to continue using the product.

ACV is annual contract value, the annualized revenue value of a customer contract.

Ad CAC measures customer acquisition cost specifically for customers acquired through paid advertising.

ARPU is average revenue per user, used to estimate customer value and revenue efficiency.

ARR is annual recurring revenue, the annualized subscription revenue base of a SaaS company.

Burn Multiple measures capital efficiency by comparing net burn against net new ARR over a period.

CAC is customer acquisition cost, the sales and marketing investment required to acquire customers.

CAC payback period estimates the number of months needed for a customer’s gross profit contribution to recover the cost of acquiring that customer.

Company Size by Annual Revenue segments SaaS companies by annual revenue bands for benchmarking and scaling decisions.

Conversion Rate Optimization is the discipline of improving the percentage of visitors, leads, trials, or demos that move to the next step in the funnel.

Customer Churn measures the percentage of customer accounts lost over a given period.

Exit refers to preparing for and completing a liquidity event such as an acquisition or M&A transaction.

Expansion Revenue is additional revenue from existing customers through upgrades, upsells, cross-sells, or increased usage.

Expected ARR is forecasted annual recurring revenue based on pipeline, sales capacity, or growth assumptions.

Free Cash Flow is the cash a company generates after operating expenses and capital expenditures — the cash actually available to fund growth, repay investors, or extend runway.

Gross Margin measures the percentage of revenue left after the direct costs of delivering the product or service.

GRR is gross revenue retention, the percentage of recurring revenue retained from existing customers over a period, counting downgrades and churn but excluding expansion revenue.

Affiliate Marketing is a partner channel where third parties promote the product and are compensated for referred leads, trials, or customers.

Ideal Ranges for SaaS Unit Economics are target ranges for metrics like CAC, LTV, churn, and payback that indicate healthier scaling economics.

Key Sales Metrics to Track are the sales KPIs used to manage pipeline, conversion, rep productivity, and revenue performance in a SaaS sales organization.

KPIs for a B2B Marketing Org are the metrics used to manage demand generation, funnel performance, and marketing efficiency.

KPIs for B2B Sales are the metrics used to manage sales activity, pipeline, conversion, productivity, and quota attainment.

LTV is customer lifetime value, the estimated revenue value of a customer over their lifespan.

LTV to CAC Ratio compares customer lifetime value against customer acquisition cost to evaluate acquisition efficiency.

Max CAC is the highest customer acquisition cost a company can justify while staying within its target unit economics.

MRR is monthly recurring revenue, the normalized monthly subscription revenue base of a SaaS company.

Net New ARR is the increase in annual recurring revenue after accounting for new ARR, expansion, contraction, and churn over a period.

Normal SaaS Metrics are the recurring revenue, acquisition, retention, churn, and unit-economics KPIs used to manage a SaaS business.

NRR is net revenue retention, the percentage of recurring revenue retained from existing customers over a period, including expansion, downgrades, and churn. NRR above 100% means expansion outpaces losses.

Overall Marketing KPIs are the top-level metrics used to evaluate marketing spend, lead generation, conversion, CAC, and revenue contribution.

Revenue churn measures recurring revenue lost from an opening customer cohort through cancellations and downgrades. Gross revenue churn counts those losses; net revenue churn also offsets them with expansion from that same cohort.

Revenue-Based Financing is a form of funding repaid as a fixed percentage of ongoing revenue, providing capital without the equity dilution of venture funding or the fixed payments of traditional debt.

The Rule of 40 adds annual revenue growth percentage to a chosen profit margin. A combined score of 40% is a common reference point, whose usefulness depends on company stage and measurement conventions.

Runway is the number of months a company can keep operating before running out of cash, given its current cash balance and net burn rate.

The SaaS Magic Number measures sales efficiency by dividing annualized quarter-over-quarter recognized revenue growth by sales and marketing expense in the preceding quarter.

TCV is total contract value, the full revenue value of a customer contract over its entire term, including recurring fees for all years plus one-time charges.

Total Revenue is the total income generated over a period, including recurring and non-recurring revenue where applicable.

Cap Table is the ownership table showing shareholders, option holders, investment rounds, and equity percentages.

Scaling the Sales Process means turning sales into a repeatable, measurable system that can grow beyond founder-led selling.

Freemium is a pricing model that offers a permanently free product tier with meaningful but limited value, monetizing by converting a small share of free users to paid plans as their usage or needs grow.

A PQL is a product qualified lead — a user who has experienced meaningful value inside the product (hit a usage milestone, invited teammates, approached a plan limit) and is therefore primed for an upgrade or sales conversation.

Product Led Growth is a go-to-market motion where product usage and user experience drive acquisition, activation, conversion, and expansion.

Product-market fit describes how well a product satisfies demand in a specific market, evidenced by customer value, continued use, retention, and willingness to pay.

ARPA is average revenue per account, the average recurring revenue generated per customer account — total MRR divided by the number of active accounts, typically measured monthly. It is a core input to LTV and unit-economics calculations.

Growth Channels are the acquisition and expansion paths a SaaS company uses to generate demand and revenue.

Growth Hacking refers to experimental, low-friction tactics for finding and scaling growth opportunities.

Ideal Customer Profile defines the customer segment a SaaS company is best suited to serve and acquire efficiently.

Paid Growth is growth generated through paid acquisition channels such as advertising or sponsored campaigns.

An Account Executive is the closing sales role in a SaaS team — the AE runs discovery and demos, manages the deal cycle, negotiates terms, and signs new customers, usually working meetings booked by SDRs.

A Cross-sell adds a different, complementary product to an existing customer relationship — a second module, add-on, or adjacent product line — expanding account value beyond the original purchase.

Field Sales is a sales motion where reps engage prospects in person — through on-site meetings, demos, and events — typically for larger or more complex enterprise deals.

Founder-Led Sales is the early go-to-market stage where a founder personally runs every deal — prospecting, demos, pricing, and closing — to learn the market firsthand before hiring a sales team.

Landing & Expanding is a SaaS growth motion that starts with an initial customer win and grows revenue through expansion over time.

Outbound Marketing is proactive outreach to target prospects through channels such as email, calls, ads, or direct campaigns.

Outbound Sales is a sales motion where the company proactively prospects and reaches out to target customers.

Sales Process is the repeatable sequence a sales team uses to qualify, engage, close, and hand off customers.

Sales Rep Follow-up is the cadence and discipline sales reps use to continue engaging prospects after initial contact.

Sales Team Compensation is the structure of base pay, variable pay, quotas, and incentives for the sales organization.

An SDR is a sales development representative — a specialized sales role focused on outbound prospecting and inbound lead qualification, booking qualified meetings that account executives then run to close.

An SQL is a sales qualified lead — a prospect that sales has vetted as a real opportunity, typically confirming budget, authority, need, and timeline before it enters the pipeline as an opportunity.

Transitioning From Founder-Led Sales is the shift from founder-driven selling to a repeatable team-based sales process.

An Upsell moves an existing customer to a higher-value version of what they already buy — more seats, higher usage tiers, or a premium plan — and is a primary engine of expansion revenue and net revenue retention.