SaaS Terminology

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A SaaS dictionary, a place where all SaaS terminology is ordered, gathered and well defined is a must. A gazetteer that allows us to easily find the SaaS terminology we need to be able to talk with other workers and entrepreneurs of SaaS companies is something we always need to have on hand.

That’s why we intend in this post to have the most common SaaS terminology well ordered and defined.

A

·ACL

It is the acronym for Average Customer Life. Is the average time between the client becoming a client and ceasing to be a client.

·ACP

It is the acronym for Average Customer Pricing. Is the average price paid by a client.

 

·ARPU

It is the acronym for Average revenue per user. It is ACP minus CCA.

·ARR

It is the acronym for Anual Recurring Revenue. This is the money your SaaS company will receive within a year.

B

·BREAK EVEN

It is the point at which expenses begin to be offset by income.

 

C

·CCA

It is the acronym for Customer Acquisition. It is calculated as the sum of all expenses (including salaries) among the number of new customers.

·CHURN

This is the cancellation ratio of the subscription. In other words: 10% churn per month means that 10 out of every 100 subscribers have canceled their subscription in one month.

·CLOUD COMPUTING

Cloud computing means a computer in any other place. That is why its called ‘Cloud’: the kind of computer or where it is is irrelevant for the user. Although there are things that may be less irrelevant – for example, the greater the distance from the computer, the more latency there will be – it is a way of making the user only have to worry about working without considering any maintenance or fine-tuning of the hardware or software.

·CLOUD PORTABILITY

It means both the ability to move user data to the cloud and between programs in the cloud.

·COLD E-MAIL/CALL/DOOR

Is to approach somebody who never had previous contact with the company.

 

·CRC

It is the acronym for Customer Retention Cost.

·CTA

It is the acronym for Call to action. These are the messages that invite the user to perform an action. There is an example at the bottom of this post.

·CUSTOMER JOURNEY

A complete “journey log” of the relationship with the client, from the first contact until he ceases to be a client, including all his interactions with the page.

D

·DAAS

It is the acronym for Desktop as a Service. It is a service that allows using desktop operative systems hosted in virtual machines.

F

·FREEMIUM

It’s the mix of free, and Premium. It means that you can use a service for free but with trimmed features of the paid version.

I

·IAAS

It is the acronym for Infrastructure as a Service. It allows you to use infrastructure like servers, data storing, time of a processor, etc.

·ICP

It is the acronym for Ideal Customer Profile. It is a hypothetic profile of a client (could be a person or an organization) that has a lot of good interactions with our company.

·INBOUND MARKETING

It is marketing actions thought to attract clients instead of looking actively for them.

L

·LANDING PAGE

It is a unique page, different from the rest of the web and that has a unique purpose, such as inviting the download of a file, for example.

·LATENCY

The time it takes for a data packet from the transmitter to the receiver. The smaller the better.

·LEAD GENERATION

Is generate interest enough in potential customers to make them become Leads. It can be done through ads or other not paid methods, such as SEO or being referred.

·LIFETIME

It is 1/churn. If your business churn is 20%/year, your client lifetime is 1/0.20: 5 years.

·LIFETIME VALUE

This is the sum of revenue that a supplier can expect from a customer until the service is canceled. It should be at least three times larger than the CAC.

·LVR

Lead Velocity Rate. It is the growth of your business. Define the growth of your business in terms of qualified Leads. It is calculated with this month’s Leads minus last month’s Leads.

M

·MARKETING AUTOMATION

Refers to the procedures and technologies used so that repetitive marketing tasks (such as sending e-mails, for example) are done automatically.

·MIGRATION COST

It is the initial cost of implementing a SaaS. It depends on the size of the project. It is often nothing more than data migration.

·MRR

Monthly Recurring Revenue. One time expenses not included.

·MSP

Minimum Sellable Product. It means to build a product with enough features to be sold and no more.

N

·NPS

Net Promoter Score. Ask your customers: Would you recommend the company? Scored from 0 to 10. Detractors say 6 points or less, promoters 9 or 10 points. Subtract detractors from promoters and take a percentage, which can go from -100 (all of them are detractors) to -100 (all of them are detractors). If it is higher than 0 it is good and if it is higher than 50 it is excellent.

·NURTURING

Nurturing refers to the process of nurturing relationships with potential customers at every stage of the sales funnel. It focuses efforts on listening to the customer’s needs and giving them the information and answers they need.

O

·OUTBOUND

They are the marketing tactics that search the client actively. Advertising is an example of that.

P

·PAAS

Platform as a Service. Is a platform in the cloud. It allows installing programs without configuring or install anything.

·PQL

It means Product-Qualified Lead. Is a potential client who has shown that he wants to buy the product. It is a lead, a potential client, who has shown that he probably will buy the product.

·PRIVATE CLOUD

It is a cloud computing model that can be used only by a client. Is a private network, but it doesn´t need maintenance because it is in the cloud. It is different from a normal cloud because it offers fixed and exclusive resources to a client (exclusive use of RAM, by example, so they will never have it used by others) and is more secure than a normal cloud.

·PUBLICITY

Is advertising generated by having done something worthy of being published. Is not paid advertising. Is the advertising generated by the news that we have generated.

 

S

·SAAS

Software as a Service. It means that the user can use a software program over the Internet, maintained by a SaaS company, responsible for its creation and maintenance. The payment for use is usually monthly or annual and much cheaper than the purchase of the software, because the concept of purchase, by its very nature, is impossible: you do not buy, you rent.

·SALES FUNNEL

It is a way to measure and know the leads. It goes from attract visitors to generate sales.

·SEO/SEM

Search Engine Optimization and Search Engine Marketing. It is a serie of techniques used to stay in the first position of Google search pages or to pay to be in the Google Ads network.

·SERVICE LEVEL AGREEMENT

It is the contract that specifies what the duties of the service provider are and what the user can demand. It includes data such as guaranteed service availability, prices, and compensation.

V

·VALUE GAP

It is the difference between what a customer receives and what the customer expected. If he receives the same as he expects, he will be satisfied, if he receives more, he will be delighted, and if he receives less, he will be dissatisfied or disappointed.

 

·VPN

Virtual Private Network.Similar to a proxy, but a proxy is just to mask an IP and VPN changes the IP of your whole connection and also encrypts your connection.

This is our SaaS Terminology dictionary. If you think we’re missing a term, don’t hesitate to tell us.

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