Glossary: SaaS Growth

Every key term from the course, in plain English. When a lesson says a word you don't know, it lives here.

The Churn Audit

The systematic review that finds exactly why customers leave: exit data categorized, churn plotted by cohort, reasons ranked by impact — so the biggest leak gets fixed first.

The 10-Minute Test

If a new user can't reach real value within ten minutes of signing up, the onboarding is broken. Fix the path — fewer steps, a checklist, no empty dashboards — not the user.

The Expansion Ladder

The planned path from entry tier to top tier: defined rungs, clear triggers, each upgrade tied to a value milestone the customer can feel.

MRR

Monthly recurring revenue: the sum of all subscription revenue normalized to one month. The headline number of a SaaS business. ARR is MRR × 12.

Churn rate

The percentage of customers or revenue lost in a period. Customer churn = lost customers ÷ starting customers; revenue churn = lost MRR ÷ starting MRR.

CAC

Customer acquisition cost: total sales and marketing spend in a period ÷ new customers acquired. Include everything — understated CAC is self-deception.

LTV

Lifetime value: total revenue a customer generates before churning. LTV = ARPA × gross margin ÷ revenue churn rate.

LTV:CAC

Lifetime value divided by acquisition cost. At 3:1 or better you're earning three dollars per dollar of acquisition; below it, you're buying growth at a loss.

CAC payback

Months to recover acquisition cost: CAC ÷ (ARPA × gross margin). Under 12 months is the common target.

NRR

Net revenue retention: (starting MRR + expansion − contraction − churned) ÷ starting MRR. Above 100% means existing customers grow the business on their own.

ARPA

Average revenue per account: MRR ÷ number of customers. The unit size of your revenue — the number every ratio is built on.

Freemium

A free tier designed to convert: enough value to build a habit, limited by usage so growing users naturally hit the paywall.

Activation

The moment a new user reaches first real value — the aha moment. Activation rate = activated users ÷ signups.

Dunning

Recovering failed payments through smart retries and card-update emails. Fixes involuntary churn with zero product changes.

Aha moment

The single action after which a user understands the product's value. Everything in onboarding and trials points at it.