GLOSSARY
Financial Metrics & Models
The Churn Tax
The Churn Tax is the total economic impact of revenue churn: lost revenue, forfeited expansion, and replacement cost. The true cost is 1.5-2.5x reported churn.
Net Revenue Retention
Net Revenue Retention (NRR) measures revenue growth from existing customers including expansion, contraction, and churn. NRR above 105% signals a compounding customer base.
Gross Revenue Retention
Gross Revenue Retention (GRR) measures recurring revenue kept from existing customers before expansion. GRR of 93-96% signals strong product-market fit and CS execution.
Net Dollar Retention
Net Dollar Retention measures the revenue retained and expanded from a specific dollar cohort over time. NDR above 110% means your existing revenue compounds without new logos.
Customer Success Maturity
Customer Success maturity measures how advanced a company's post-sale revenue operations are across seven dimensions, from reactive support to predictive revenue engine.
Expansion Revenue
Expansion revenue is additional recurring revenue from existing customers through upsells, cross-sells, and seat growth, the growth engine inside your installed base.
Post-Sale Revenue Engine
A post-sale revenue engine is an integrated system of people, process, data, and technology that retains, expands, and grows revenue from existing customers.
Logo Churn vs Revenue Churn
Logo churn counts lost customers. Revenue churn measures lost ARR. Tracking one without the other hides the real financial impact of customer attrition.
CS Operating Model
A CS operating model defines how a Customer Success organization is structured, staffed, measured, and aligned to drive retention and expansion revenue.
Time to Value
Time to Value (TTV) is how long it takes a new customer to realize measurable outcomes from your product. Shorter TTV directly reduces early-stage churn risk.
Revenue Leakage
Revenue leakage is recurring revenue lost through churn, downgrades, failed renewals, and missed expansion. Most SaaS companies undercount it by 40-60%.
Annual Recurring Revenue
Annual Recurring Revenue (ARR) is the annualized value of active subscription contracts. It's the baseline number the Churn Tax is calculated against.
Customer Lifetime value (LTV)
Customer Lifetime Value is the total revenue a customer generates over their entire relationship with your company. Higher LTV justifies higher CS investment per account.
CAC PAYBACK PERIOD
Customer Acquisition Cost (CAC) payback period is the number of months it takes to recover the cost of acquiring a customer. Churn before payback is a net financial loss on that account.
Operating Metrics & Models
Cs-Driven Expansion
CS-driven expansion is revenue growth from existing customers generated through Customer Success motions: upsells, cross-sells, and seat growth identified and influenced by CSMs.
Customer Health Score
A customer health score is a composite metric that predicts retention and expansion likelihood by weighting product usage, engagement, support, and commercial signals.
Churn Cohort Analysis
Churn cohort analysis segments customers by signup period, contract type, or segment to identify when and where churn concentrates. It reveals patterns aggregate churn hides.
Customer Success Segmentation
Customer Success segmentation groups customers by current spend and future revenue potential to align CS coverage, engagement models, and playbooks to actual commercial value.