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Finance and Marketing Acronyms 101

Definitions

WordDefinition
Average net revenue per order
Customer Acquisition Cost — marketing expense in a period divided by the number of newly acquired customers during the same period.
Customer Lifetime Value — Customer lifetime value is the total amount of money a customer is expected to spend with your business, or on your products, during the lifetime of an average business relationship.
Total discounted sum of all expected revenues / profits from a customer over their lifetime, before subtracting acquisition costs.
Total discounted sum of all expected revenues / profits, after CAC: CLV = (CLV before CAC) – CAC
Ratio of CLV after CAC to CAC
Revenue generated from repeat purchases
Sum of expected future discounted revenues / contribution profits expected to be generated from a customer
Average number of purchases made by active
The SaaS Magic Number is a widely used formula to measure sales efficiency. It measures the output of a year’s worth of revenue growth for every dollar spent on sales and marketing.
The Bessemer CAC Ratio is similar to the Magic Number, but the formula is more defined to new acquisition. A ratio of means 1.0 indicates that within one year you are completely break even on a customer.
This is similar to the Bessemer CAC Ratio, but it flips the numerator and denominator and uses MRR to convert this to monthly payback number.