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Word | Definition |
|---|---|
AOV | Average net revenue per order |
CAC | Customer Acquisition Cost — marketing expense in a period divided by the number of newly acquired customers during the same period. |
CLV | 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. |
CLV before CAC | Total discounted sum of all expected revenues / profits from a customer over their lifetime, before subtracting acquisition costs. |
CLV after CAC | Total discounted sum of all expected revenues / profits, after CAC: CLV = (CLV before CAC) – CAC |
CLV to CAC | Ratio of CLV after CAC to CAC |
Repeat Venue | Revenue generated from repeat purchases |
RLV | Sum of expected future discounted revenues / contribution profits expected to be generated from a customer |
Purchase Frequency | Average number of purchases made by active |
SaaS Magic Number | 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. |
Bessemer CAC Ratio | 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. |
CAC Payback Period | 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. |