ACV (Annual Contract Value)

The total predictable revenue your business expects to collect over the next twelve months from active subscriptions and contracts. ARR is the metric investors and boards care about most because it reflects the health and trajectory of your business. If ARR is growing but churn is hidden underneath, you're running on a treadmill — which is why ARR should always be paired with retention data.

The total cost of acquiring a new customer, including marketing spend, sales salaries, tools, and overhead divided by the number of new customers won. CAC is one of the most important metrics in B2B because it determines whether your growth is sustainable or just expensive. If your CAC is higher than your first-year revenue from a customer, you're losing money on every deal and hoping to make it up on renewals — a bet that only pays off if your retention is exceptional.

The total revenue you expect to earn from a customer over the entire duration of your relationship. CLV is the counterweight to CAC — together they tell you whether your business model works. A healthy B2B company has a CLV-to-CAC ratio of at least 3:1. If you don't know your CLV, you can't make rational decisions about how much to spend acquiring customers or which segments to prioritize.

Earnings Before Interest, Taxes, Depreciation, and Amortization — a measure of your company's core operating profitability. EBITDA strips out financing and accounting decisions to show how much money the business actually generates from operations. It matters to B2B executives because it's the metric most acquirers and investors use to value your company. A strong EBITDA margin signals operational efficiency; a declining one signals that growth is coming at too high a cost.

The ratio of how much revenue a customer generates over their lifetime (LTV) compared to how much it cost to acquire them (CAC). A healthy B2B SaaS business targets a 3:1 ratio or better, meaning every dollar spent on acquisition returns three dollars in customer value. This metric tells you whether your growth engine is sustainable or whether you're buying revenue at a loss. Below 1:1, you're literally paying customers to use your product.

The predictable revenue your business earns every month from active subscriptions, normalized to a monthly figure. MRR is the heartbeat metric for any subscription or SaaS business because it shows your baseline revenue before any new sales. Tracking MRR by component — new, expansion, contraction, and churn — tells you exactly where your growth is coming from and where you're leaking revenue.