What are the Different Theories of Growth? 1. Classical Growth Theory The Classical Growth Theory postulates that a country’s economic growth will decrease with an increasing population and limited resources. Such a postulation is an implication of the belief of classical growth theory economists who think that a temporary increase in real GDP per person…
What is Secular Stagnation? The term “secular stagnation” refers to a state of little or no economic growth – in other words, an environment where the economy is essentially stagnant. “Secular” in this context simply means “long term.” The term was coined by Alvin Hansen in the 1930s, during the Great Depression, and was revived…
What is Net Promoter Score (NPS)? Net promoter score (NPS), also known as net promoter, is a metric that assesses the willingness of customers to recommend a company’s products or services to other people. Essentially, the net promoter score can be viewed as an indicator of customer loyalty and satisfaction. The metric aims to identify…
What is Annual Recurring Revenue (ARR)? Annual Recurring Revenue (ARR) is the total predictable subscription-based revenue a company expects to earn each calendar year. ARR is a key metric for companies that operate on a subscription or contract model, such as SaaS businesses. Unlike one-time payments or short-term deals, ARR reflects ongoing contracts and subscriptions…
What is Monthly Recurring Revenue (MRR)? Monthly recurring revenue (MRR) is a financial metric that shows the revenue that a company expects to receive monthly from customers for providing them with products or services. Essentially, MRR measures the company’s normalized monthly revenue. Revenue normalization is critical for companies that offer various pricing plans for their…
What is Lead-to-Customer Conversion Rate? The lead-to-customer conversion rate, also known as sales conversion rate or lead conversion rate, is the proportion of qualified leads of a company that result in actual sales. The metric is critical to evaluating the performance of a company’s sales funnel. Note that in the lead-to-customer conversion rate, we use…
What is Sell-Through Rate? Sell-through rate measures the amount of inventory that is sold within a given period relative to the amount of inventory received within the same period. Strictly speaking, sell-through rate estimates how quickly a company can sell its inventory, converting it to revenue. Essentially, it is among the most important key performance…
What is SaaS Quick Ratio? SaaS quick ratio is a metric that assesses a company’s ability to grow its recurring revenue despite the churn incurred. Essentially, the ratio compares the company’s revenue inflows (new and expansion MRR) and its revenue outflows (churned MRR and contraction MRR) to show net revenue growth. SaaS quick ratio is…
What is Viral Coefficient? The viral coefficient is a metric that determines the number of new users generated by referrals from existing customers. The metric is merely an estimate of a company’s virality, which describes the exponential referral cycle. Products or services with a viral coefficient greater than 1 are considered viral. Viral products promote…
What is Months to Recover CAC? Months to recover CAC, also known as CAC payback period, is a metric that shows the amount of time (measured in months) required to recover investments in customer acquisition. In other words, it indicates how quickly the company’s investment in customer acquisition reaches a break-even point. SaaS companies and…
