The words, explained.
Every term with a one-line definition, a worked example and why it matters when you're starting out.
- Activation Activation rate
Activation is the moment a new user first gets the value your product promised, and the activation rate is the share of new signups who reach that moment.
- ARPA Average revenue per account
ARPA is the average a paying customer pays you each month: your monthly recurring revenue divided by the number of paying customers.
- ARR Annual recurring revenue
ARR, annual recurring revenue, is the yearly value of the subscriptions you have right now, usually calculated as monthly recurring revenue multiplied by twelve.
- Attribution Marketing attribution
Attribution is how you decide which channel gets the credit for a signup or a payment, by linking it back to where the person came from.
- Bounce rate
Bounce rate is the share of visits that end on the first page without the visitor doing anything else, such as opening a second page or completing a goal.
- CAC Customer acquisition cost
CAC is what you spend, on average, to win one paying customer: the money put into a channel divided by the paying customers it brought.
- Churn Customer churn rate
Churn is the share of your paying customers who cancel in a period, usually counted per month: customers lost divided by customers at the start.
- Cohort Cohort analysis
A cohort is a group of users who share a starting point, usually the week or month they signed up or first paid, followed over time and compared with other groups.
- Conversion rate
A conversion rate is the share of people at one step who go on to the next: signups divided by visits, or paying customers divided by signups.
- Double opt-in
Double opt-in means a new subscriber is only added to your list after clicking a confirmation link sent to the address they entered, which proves they own it and wanted to join.
- Funnel Conversion funnel
A funnel is the ordered set of steps you want visitors to take, such as home, pricing and signup, with how many reach each step.
- LTV Lifetime value
LTV is the total a customer pays you over the time they stay: what they pay each month, multiplied by how long customers like them keep paying.
- LTV:CAC Lifetime value to acquisition cost ratio
LTV:CAC is a customer's lifetime value divided by what it cost to win them, so 3 means a customer brings in three times what they cost.
- MRR Monthly recurring revenue
MRR is the revenue your active subscriptions bring in each month, with yearly plans divided by twelve and one-off payments left out.
- Payback period CAC payback period
The payback period is how many months of a customer's payments it takes to cover what you spent to win them: CAC divided by what they pay each month.
- Product-market fit PMF
Product-market fit is the point where a specific group of people needs your product enough that they keep using it, pay for it and tell others, without you pushing each one.
- Referrer
The referrer is the address of the page a visitor came from, which the browser may send when someone follows a link to your site; analytics tools use it to tell where visits originate.
- Retention User retention rate
Retention is the share of users from a given start period who are still using, or still paying for, your product after a set amount of time.
- ROAS Return on ad spend
ROAS is the revenue that customers from an ad channel paid you, divided by what you spent on that channel.
- UTM parameters
UTM parameters are tags added to the end of a link (utm_source, utm_medium, utm_campaign) that tell your analytics where the visitor clicked it.