Must-Know Marketing Terminology & Jargon: A Glossary
Marketing conversations can feel like listening in on a foreign language when you’re not a marketer. Acronyms fly around conference rooms, and executives casually drop terms that leave everyone else nodding along – while mentally scrambling to decode what was just said.
This glossary breaks down essential marketing terminology that every business leader, founder, and team member should understand. Whether you’re evaluating marketing performance, working with an agency, or building your own marketing strategy, these terms form the foundation of data-driven business decisions.
Revenue Metrics: Understanding Your Bottom Line
MRR (Monthly Recurring Revenue)
What it is: The consistent monthly income your business generates from customers on subscription or recurring payment models.
Why it matters: MRR gives you a clear snapshot of predictable revenue, making it easier to forecast growth, plan budgets, and make strategic hiring decisions. For B2B companies and service-based businesses, tracking MRR helps identify trends before they become problems.
Example in action: If you have 50 clients paying $500/month, your MRR is $25,000. If five new clients sign on next month at the same rate, your MRR grows to $27,500.
ARPU (Average Revenue Per User)
What it is: The average income each customer generates, calculated by dividing total revenue by the number of customers.
Why it matters: ARPU reveals whether your pricing strategy aligns with your business goals. A declining ARPU might indicate you’re attracting lower-tier customers or need to revisit your pricing structure.
Example in action: If your monthly revenue is $50,000 from 100 customers, your ARPU is $500. Tracking this monthly helps you spot trends in customer spending behavior.
Customer Health Metrics: Measuring Relationships
Churn Rate
What it is: The percentage of customers who stop doing business with you during a specific time period.
Why it matters: High churn signals problems with your product, service, or customer experience. Even small improvements in churn rate can dramatically impact revenue. Reducing churn from 5% to 3% monthly means keeping an additional 24% of your customer base annually.
Example in action: If you start the month with 200 customers and lose 10, your monthly churn rate is 5%.
Retention Rate
What it is: The flip side of churn. This measures the percentage of customers who continue using your service over time.
Why it matters: Strong retention indicates customer satisfaction and creates a stable foundation for growth. It costs significantly less to keep existing customers than acquire new ones, making retention a key driver of profitability.
Example in action: If you start with 200 customers and 190 remain by month’s end, your retention rate is 95%.
Acquisition Metrics: The Cost of Growth
CAC (Customer Acquisition Cost)
What it is: The total amount you spend to acquire a single new customer, including marketing spend, sales team costs, software tools, and related overhead.
Why it matters: CAC helps you evaluate whether your marketing and sales investments are sustainable. If you’re spending $500 to acquire a customer who generates only $300 in revenue, your business model needs adjustment.
Example in action: If you spend $10,000 on marketing in a month and acquire 20 new customers, your CAC is $500.
LTV (Customer Lifetime Value)
What it is: The total revenue you can expect from a customer throughout their entire relationship with your company.
Why it matters: LTV puts CAC in perspective. You can afford a higher acquisition cost if customers stick around and generate substantial revenue over time. LTV helps justify marketing investments and informs decisions about customer segments worth pursuing.
Example in action: If a customer pays $200/month and typically stays for 24 months, their LTV is $4,800.
CLTV-to-CAC Ratio
What it is: The relationship between how much you earn from a customer (LTV) versus how much you spent to acquire them (CAC).
Why it matters: This ratio reveals whether your customer acquisition strategy is financially sound. A healthy ratio is generally 3:1 or higher, meaning customers generate three times what you spent to acquire them.
Example in action: If your LTV is $4,800 and CAC is $500, your ratio is 9.6:1, indicating strong unit economics.
Conversion Metrics
Free Trial Conversion Rate
What it is: The percentage of people who transition from a free trial to becoming paying customers.
Why it matters: This metric measures how effectively your product demonstrates value during the trial period. Low conversion rates might indicate onboarding issues, unclear value propositions, or mismatched customer expectations.
Example in action: If 100 people start a free trial and 15 become paying customers, your free trial conversion rate is 15%.
Conversion Rate
What it is: The percentage of people who complete a desired action, whether that’s filling out a form, downloading a resource, requesting a demo, or making a purchase.
Why it matters: Conversion rates help you identify where prospects drop off in your marketing funnel. This marketing terminology applies to multiple touchpoints: website visitors to leads, leads to sales calls, calls to closed deals.
Example in action: If 1,000 people visit your pricing page and 50 request demos, your conversion rate is 5%.
Lead Quality Metrics: Refining Your Pipeline
MQL (Marketing Qualified Lead)
What it is: A prospect who has shown interest through marketing activities (downloading content, attending webinars, engaging with emails) and meets your criteria for potential customers.
Why it matters: MQLs help marketing and sales teams align on which prospects deserve immediate sales attention versus continued nurturing. This marketing terminology clarifies handoff points between teams.
Example in action: Someone downloads your pricing guide, visits your website three times, and works at a company that fits your ideal customer profile. They’re an MQL.
SQL (Sales Qualified Lead)
What it is: A lead that sales has vetted and determined is ready for direct sales conversation. SQLs have expressed clear buying intent and match your target customer profile.
Why it matters: Distinguishing between MQLs and SQLs prevents sales teams from wasting time on leads that aren’t ready to buy, while ensuring marketing continues nurturing prospects who need more information.
Example in action: An MQL requests a demo and confirms they have budget and decision-making authority. They become an SQL.
Performance Indicators: Measuring Success
ROI (Return on Investment)
What it is: The ratio of profit to cost for an initiative. ROI shows whether your spend is generating positive returns.
Why it matters: ROI helps you allocate budget to the most effective channels and justify investments to stakeholders.
Example in action: You spend $5K on a campaign that nets $20K in new revenue. The ROI is 300% (($20K – $5K) / $5K × 100).
KPI (Key Performance Indicator)
What it is: Specific, measurable metrics that track progress toward an objective. KPIs should align to strategic priorities.
Why it matters: KPIs focus teams on what grows the business. Without them, efforts can be scattered and difficult to evaluate.
Example in action: Your KPIs might include 10% month-over-month MRR growth or CAC under $400.
Putting Marketing Terminology Into Practice
Understanding this marketing terminology creates a shared language across your organization. When everyone from finance to operations can discuss CAC, LTV, and conversion rates, your team makes better decisions faster.
Start by identifying which metrics matter most for your business stage and goals. Early-stage companies might focus heavily on CAC and conversion rates as they refine their go-to-market approach. More established businesses often prioritize retention, CLTV-to-CAC ratios, and MRR growth.
Track these metrics consistently, review them regularly with your team, and use them to guide strategy adjustments. Marketing terminology only becomes powerful when it translates into actionable insights that drive revenue and growth.
The language of marketing isn’t complicated once you understand the fundamentals. These terms represent the building blocks of customer acquisition, retention, and business growth. Master them, and you’ll navigate marketing conversations with confidence.