Glossary
SaaS & churn glossary
Key terms and metrics every SaaS founder should know. From churn rate to dunning, here's what the jargon actually means.
A
Account Updater
A card network service that automatically updates stored payment credentials when a cardholder's card is reissued, renewed, or replaced.
Annual Contract Value (ACV)
The average annualised revenue per customer contract, normalising multi-year and variable-length deals to a yearly figure.
Annual Recurring Revenue (ARR)
The annualised value of recurring subscription revenue, calculated as MRR multiplied by 12.
Annual Run Rate
An annualised revenue projection calculated by multiplying a shorter period's revenue by the number of periods in a year.
Attrition Rate
The rate at which customers or employees leave over a given period, expressed as a percentage.
Average Revenue Per User (ARPU)
The average monthly or annual revenue generated per active user or account, calculated by dividing total revenue by the number of active subscribers.
C
Churn Rate
The percentage of customers or subscribers who cancel or stop paying during a given time period.
Committed MRR (CMRR)
A forward-looking MRR metric that accounts for known upcoming changes like signed contracts, confirmed cancellations, and pending upgrades.
Contraction MRR
The monthly recurring revenue lost when existing customers downgrade to a lower plan or reduce their usage.
Customer Acquisition Cost (CAC)
The total cost of acquiring a new customer, calculated by dividing sales and marketing spend by the number of new customers gained in a given period.
Customer Attrition
The gradual loss of customers over time, whether through cancellation, non-renewal, or failed payments.
Customer Effort Score (CES)
A survey-based metric that measures how much effort a customer had to expend to complete a specific interaction with your product or support team.
Customer Engagement Score
A metric that quantifies how actively a customer interacts with your product, based on usage frequency, feature breadth, and depth of activity.
Customer Health Score
A composite metric that combines usage, engagement, and satisfaction signals to predict how likely a customer is to renew or churn.
Customer Lifetime Value (LTV)
The total revenue a single customer is expected to generate over the entire duration of their subscription.
Customer Success Metrics
The metrics used by customer success teams to measure customer satisfaction, engagement, health, and likelihood of retention.
E
Exit Survey
A short survey presented to customers at the point of cancellation to capture their reasons for leaving.
Expansion MRR
The additional monthly recurring revenue generated when existing customers upgrade, add seats, or purchase add-ons.
Expansion Revenue
Revenue generated from existing customers through upgrades, upsells, cross-sells, and increased usage beyond their original purchase.
F
G
Gross Churn
The total percentage of recurring revenue lost to cancellations, downgrades, and failed payments in a given period, before any expansion offsets.
Gross Revenue Retention (GRR)
The percentage of recurring revenue retained from existing customers, excluding any expansion revenue from upgrades or cross-sells.
I
L
Lapsed Customer
A former customer whose subscription has ended, either through cancellation or payment failure, and who is no longer actively using the product.
Logo Retention
The percentage of customers (logos) retained over a given period, counting each account equally regardless of contract value.
M
Merchant of Record
The legal entity that processes a customer's payment and assumes liability for the transaction, including tax collection, chargebacks, and compliance.
Monthly Recurring Revenue (MRR)
The predictable, recurring revenue a SaaS business earns from active subscriptions each month.
N
Negative Churn
A state where expansion revenue from existing customers exceeds revenue lost to cancellations and downgrades, causing net revenue to grow without new sign-ups.
Net Churn
Revenue lost to cancellations and downgrades minus expansion revenue gained from upgrades and add-ons, showing whether the existing customer base is growing or shrinking.
Net Dollar Retention (NDR)
A revenue retention metric identical to NRR, measuring how much recurring revenue existing customers generate over time including expansion and churn.
Net New MRR
The net change in monthly recurring revenue after accounting for new subscriptions, expansion, contraction, and churned revenue.
Net Promoter Score (NPS)
A customer loyalty metric that measures how likely customers are to recommend your product, scored from -100 to +100.
Net Revenue Retention (NRR)
The percentage of recurring revenue retained from existing customers after accounting for expansion, contraction, and churn.
P
R
Re-Engagement Email
An email sent to an active subscriber who has stopped engaging with the product, aimed at reigniting usage before they cancel.
Renewal Rate
The percentage of customers or revenue that renews at the end of a subscription period rather than churning.
Retention Rate
The percentage of customers who remain subscribed over a given time period, and the inverse of churn rate.
Revenue Churn
The percentage of monthly recurring revenue (MRR) lost due to cancellations, downgrades, and failed payments.
Revenue Leakage
Revenue that a business has earned or expects to collect but loses due to process failures, billing errors, or uncollected payments.
S
SaaS KPIs
The key performance indicators used to measure growth, retention, revenue health, and operational efficiency of a SaaS business.
SaaS Unit Economics
The per-customer financial metrics that determine whether a SaaS business can profitably acquire, retain, and grow its customer base.
Soft Decline
A temporary payment failure where the card is valid but the transaction was rejected for a transient reason, and can be retried.
Subscriber Churn
The rate at which subscribers cancel or lapse from a subscription service, whether by choice or due to payment failure.
Subscription Churn Rate
The percentage of active subscriptions that end during a given period, typically measured monthly.
Subscription KPIs
The key performance indicators used to measure the financial health, growth, and retention of a subscription business.
Subscription Metrics
The financial and operational metrics used to measure the health and growth of a subscription-based business model.
Subscription Revenue
The recurring income a business earns from customers who pay on a regular billing cycle for ongoing access to a product or service.