Glossary

The percentage of renewal orders that are successfully converted with updated payment card information (e.g., expiration date, card number) through an automated process, typically when a new card is issued or details change. AUSR is a crucial metric for businesses that process recurring payments, as it helps reduce declined transactions and maintain a high customer experience.

Calculation: AUSR is calculated by dividing your paid renewal orders with updated card information by total orders with updated cards.

Holders of at least one subscription with a minimum of one paid subscription item per subscription. If a subscriber contracts a subscription that includes multiple subscription items, they are still registered as a single subscriber. In general, each unique email address is counted as a single subscriber and their value is impacted by subscription items being added or removed by the subscriber during the customer lifecycle.

Number of free subscription items at the end of a given period. Typically, trials either expire after the free period ends or are converted to active subscriptions.

An optional subscription item that, when added, is billed in the recurring invoice for the subscription. An add-on can be a stand-alone product or a product used to augment the functionality of a perpetual product or another subscription item in the same subscription.

Charges applied before the delivery of a product or service. These can be one-time or recurring fees, such as setup charges or prepaid service fees, and are invoiced prior to the applicable service period.

Billing method where charges are applied after the service has been delivered. Common in utilities and services where usage is measured post-delivery, with charges calculated at the end of a billing cycle.

A contract term that automatically renews a customer with a supplier through the next subscription period unless either notifies one another of their intent not to renew, typically within a 30-day notice period.

A subscription model where recurring payments are processed automatically, shortly before or on each renewal date of the subscription. Automatic subscriptions streamline the fulfillment process of the product or service the customer subscribed to. Once the subscription is automatically renewed, the payment is triggered.

Automated workflow of actions performed to achieve a specific outcome. Includes: tailoring customer segmentation, personalizing content, and automating renewal & winback emails. Automated processes aim to uplift conversion rates, drive growth, and increase customer lifetime value.

Refers to the designation given to an automation. It should ideally describe the content and aim for a quick identification of the automation. Example: "Winback_B2B" mentions the tactic and a pertinent specification.

The recurring interval at which a customer is billed, often aligned with calendar dates (e.g., monthly on the 1st), but can be customized based on customer attributes or agreements.

The specific timeframe that an invoice covers, representing the duration for which services were provided and charges incurred.

A contractual obligation where a customer agrees to a minimum spending or usage level, either prepaid at the contract's start or settled post-service delivery.

Monthly recurring revenue (MRR) lost because of customer churn (e.g., cancellations or downgrades). It's a key metric for businesses, especially those with subscription-based revenue, to understand and manage customer retention.

The percentage of customers who end their relationship with a company within a given period, whether voluntarily or involuntarily.

Decrease in monthly recurring revenue (MRR) resulting from existing customers downgrading their subscription plans.

A sales strategy where businesses target customers with related or complimentary products or services, when they are either active customers or in the process of making a transaction. Cross-sells are a key revenue driver in increasing average order value (AOV).

Contact information of the person or company that purchases a product or signs up for a subscription. Contact information is used for communication about payments (i.e., receiving an invoice or receipt email after purchase).

Replacement of a customer's current subscription product with a lower-priced, often feature-limited subscription product that is viewed as a substitute.

The specific start and end dates during which a particular pricing, discount, or contractual term is valid and enforceable.

The rights or access granted to a customer for specific products or services, often defined by the terms of a subscription or purchase agreement.

A predetermined fee that does not vary with usage or consumption, typically billed at regular intervals for consistent services or products.

Prearranged expiration of a subscription item at the end of a contract period (i.e., the subscription item has a hard-set expiration date or there are special circumstances for ending it, like the product getting discontinued).

A free trial allows a customer to use a product or subscription at zero cost for a specified interval. Typically, at the end of the interval, the subscription is either deactivated until the customer renews at a billed amount, or, if the subscription is set up as auto-renewal, access to the program is denied until payment is submitted.

A marketing tactic in which a user can access a basic product (or product feature) for an unlimited amount of time. However, if users want to access advanced or premium features (e.g., LinkedIn's InMail or Skype's group video chats), they must upgrade to a paid subscription.

A set timeframe after a payment due date during which a customer can make a payment without incurring penalties or service interruptions.

Additional charges incurred when a customer's usage exceeds the limits of their subscription plan or agreed-upon thresholds.

The adjustment of charges based on the actual usage period, especially when a service starts or ends mid-billing cycle, ensuring fair billing for partial periods.

A formal proposal outlining the pricing and terms of a sale, typically shared with a customer before finalizing a purchase. Quotes are often generated through a CPQ system and may include product configurations, discounts, and contract details.

A structured schedule within a contract that outlines incremental changes in pricing or volume over time. Ramps are commonly used to gradually increase spend commitments, usage limits, or subscription fees during the customer lifecycle.

The process of translating usage data into billable amounts based on pricing models and defined metrics. Rating allows businesses to apply correct charges for measured usage, often in real-time or at the end of a billing period.

Fees that are automatically applied on a consistent basis (typically monthly or annually) for ongoing access to a product or service. These charges continue until the subscription is canceled or changed.

The timeframe during which a customer receives access to a product or service as part of their subscription or contract. It typically aligns with the billing period, though it can be adjusted for mid-cycle changes or proration.

A predefined arrangement that governs how charges are applied over time, including start and end dates, frequencies, and amounts. Schedules are used for billing automation, pricing ramps, and promotional periods.

A pricing model in which the unit cost changes at defined usage thresholds. Customers pay different rates based on how much of a service they consume, with each tier representing a usage range and corresponding price.

A reconciliation process that adjusts billing to reflect actual usage at the end of a period, especially when prior charges were based on estimated or committed quantities. True-ups ensure customers are billed accurately for overages.

The amount of a service or product consumed by a customer within a billing period. Usage data is often used to calculate variable charges in metered or pay-as-you-go billing models.

A billing model where charges are determined by how much of a product or service a customer uses. This approach aligns pricing directly with consumption and is commonly used in SaaS, APIs, and cloud services.

A pricing structure where the per-unit rate decreases as the quantity purchased increases. Customers benefit from lower unit prices at higher usage volumes, encouraging greater consumption and longer-term commitments.

The total outstanding amount owed by customers for goods or services delivered. This figure can be aggregated at various levels, such as individual customer accounts, specific products, or the entire company.

The count of payment attempts recorded during a purchase process, specifically for card payments. Relevant purchase statuses include: "New", "Authorized", "Paid", "Payment Declined", and "Cancelled".

Orders that are submitted to and approved by a payment service provider and/or acquirer.

A billing approach where any unpaid amounts from previous invoices are carried over to the next billing cycle, consolidating outstanding balances into a single statement.

In ecommerce, the default currency set for transactions and reporting within a specific business or platform. It is the currency in which prices are initially set and transactions are settled.

Initial product price before any taxes or additional fees are applied.

A charge derived from the total of other charges, calculated either as a percentage adjustment or as a minimum threshold applied to a combination of usage-based, fixed, or percentage-based charges.

Percentage of credit card orders declined by card issuers.

Calculation: The decline rate is calculated by dividing the number of declined orders by the total number of submitted orders.

The level of detail at which credits are applied, allowing for precise allocation to specific charges, products, or service periods within a customer's account.

A document issued to a customer indicating a reduction in the amount owed, often due to returns, overpayments, or billing errors, effectively adjusting the customer's account balance.

A charge that is reversed by an issuing bank after a customer successfully disputes an item on their balance or transactions record. A chargeback is not necessarily a refund, which is typically paid by the supplying business due to customer dissatisfaction. A chargeback can be initiated due to product issues, as well as a billing error or suspected fraud.

A percentage of a business' total sales that result in customers requesting a refund or dispute through their credit card company. A high chargeback rate can lead to penalties, increased fees, and even the risk of your merchant account being closed.

A process through which a merchant contests a chargeback by providing evidence to the issuing bank that the transaction was valid and free of dispute. If successful, the chargeback is reversed, however, it does not retroactively lower the chargeback rate.

The potential for a customer to dispute a transaction with their bank or credit card company, potentially at the expense of the merchant.

A document issued to a customer indicating an increase in the amount owed, typically due to underbilling, additional charges, or corrections to previous invoices.

A custom-configured product that displays a unique price, alternative product information, and a specific currency at checkout, which can be customized or adjusted in real-time during the checkout process without permanently altering the original product listing.

The process of communicating with customers to collect overdue payments, often involving a series of reminders or escalating actions to recover outstanding debts.

Revenue or orders lost because of failed credit card authorizations. Failed authorizations may have valid reasons and may not be recoverable. They are categorized into two main types: "hard declines" and "soft declines."

Government-issued currency (e.g, USD) that is not backed by a physical commodity but rather by the issuing government's credit, commonly used in financial transactions.

A fee added to the final purchase price when a customer pays for a product in a currency different from the price specified by the client.

A formal document issued to a customer detailing the products or services provided, quantities, prices, and the total amount due for payment.

The date on which an invoice, statement, or billing document is officially generated and sent to the customer.

A specific entry within a billing document that details an individual charge, including information such as product or service description, quantity, and amount.

The total amount due from a customer after all deductions, discounts, credits, and taxes have been applied to the gross amount.

Credits issued in forms other than traditional government-issued currency, such as promotional credits, service credits, or loyalty points, used to offset charges.

A third-party service that handles transactions between merchants and customers, facilitating the authorization, processing, and settlement of payments.

Annual recurring revenue (ARR) growth rate is a year-over-year metric that measures the percentage change in a company's predictable revenue (based on subscriptions, contracts, and other anticipated revenue streams). It can also be measured by monthly recurring revenue (MRR).

Calculation: ARR growth rate is calculated by subtracting previous ARR from current ARR, dividing that figure by previous ARR, then multiplying by 100.

The percentage of credit card ecommerce payments, excluding fraudulent orders, approved by an issuing bank out of the total number of payments attempted.

Calculation: Authorization rate is calculated by dividing the number of approved transactions by the total number of attempted transactions, multiplied by 100.

The average lifespan of a given customer, typically measured from the first purchase to last (or subscription sign-up to cancellation).

Calculation: Average customer lifecycle is calculated by dividing the total years of all customer lifespans by the total numbers of customers.

Measures the average amount your customers are spending on non-renewal transactions (e.g., cross-sells, upsells) during a certain time frame.

Calculation: Average expansion value is calculated by dividing the total revenue from expansions over a time frame by the total customer base.

Average monthly recurring revenue across your active subscribers in a given time. ARPU is the chief indicator of the profitability of your products.

Calculation: ARPU is calculated by dividing your monthly recurring revenue by the number of active subscribers.

Metric used by subscription-based or recurring revenue businesses to measure the average amount of time it takes for a customer to increase their spending with a company after their initial purchase or subscription.

Across your customer base, this is the average time from initial purchase to a successful upsell (e.g., a customer signing up for a base plan, before eventually upgrading to a premium plan).

Calculation: Average time to upsell is calculated by dividing the total timespan of all successful upsells by the total number of upsold customers.

A key metric in ecommerce that represents the average amount customers spend per order over a specific period (e.g., month or quarter).

Calculation: AOV is calculated by dividing total revenue by the total number of orders.

The percentage of people who open an email and click on a link within the body.

Calculation: CTOR is calculated by dividing the number of unique link clicks by the number of unique email opens, then multiplying by 100.

While most ecommerce KPIs relate to sales and marketing, CPO is central to customer service, as it measures the number of times a customer contacts you over a singular purchase or order.

Calculation: CPO is calculated by dividing the total number of contacts by the total number of orders processed.

Timeframe for generating a clearing report. Typically, the clearing interval and payout interval are aligned, which can be monthly, biweekly, or weekly. However, you may have a daily clearing interval configuration, even though the actual payout occurs less frequently (monthly, biweekly, or weekly). Therefore, the clearing document is generated daily, but the payout rhythm extends over a longer period.

A metric that measures how effectively a website or marketing campaign converts visitors or users into desired actions (e.g., making a purchase, starting a subscription, filling out a newsletter, filling out a form).

Calculation: Conversion rate is calculated by dividing the total number of conversions by the total number of relevant interactions.

Measures the total monetary value of a customer to a business over the course of their relationship. LTV is pivotal for identifying the most valuable customers to allocate resources toward.

Calculation: CLV is calculated by dividing total revenue from all customers by total lifetime of all customers.

A centralized repository for storing and managing large volumes of structured data from various sources, facilitating reporting, analysis, and decision-making processes.

Income received in advance for services or products to be delivered in the future, recorded as a liability until the obligation is fulfilled.

Earning before Tax Financial metric that represents a company's profit or income before deducting income taxes and other tax types.

Expansion Monthly Recurring Revenue (MRR) is the additional monthly revenue generated from existing customers. It measures the increase in monthly recurring revenue attributable to expansion efforts within the existing customer base (e.g., cross-sells, upsells, add-ons, and price increases).

Measures the increase or decrease in revenue generated from your existing customer base over a given timeframe.

Calculation: Expansion Rate is calculated by dividing the number of customers who have expanded by the total number of customers, multiplied by 100.

Percentage of customers who are lost due to reasons beyond their choosing or dissatisfaction (i.e, unintentional or accidental churn), over a given period.

Calculation: Involuntary churn rate is calculated by dividing the total number of customers lost due to involuntary churn by the total number of customers at the beginning of a given period, multiplied by 100.

A comprehensive record of all financial transactions for a business, organized by accounts, and used to prepare financial statements and track financial performance.

A lynchpin KPI, NRR measures how well a business retains revenue from customers over a period of time.

Calculation: NRR is calculated by adding ARR and expansion revenue, then subtracting contraction revenue and churned customers, then dividing by ARR.

A pending ecommerce payment, credit card or otherwise, will remain on hold until it's ultimately processed (i.e., funds are withdrawn from the customer's account and deposited into the merchant's account). Therefore, payment success rate measures the amount of transactions that have been successfully completed, accounting for all attempted transactions (including fraudulent attempts).

Calculation: Payment success rate is calculated by dividing the number of processed transactions by the total number of attempted transactions, then multiplying by 100.

The percentage of customers who stop using a product or service (e.g., cancel a subscription), but return as a paying customer, within a given timeframe.

Calculation: Reactivation rate is calculated by dividing the number of reactivated customers by the number of churned customers, then multiplying by 100.

Also known as return rate, a metric that measures the percentage of sales that are returned and/or refunded.

Calculation: Refund rate is calculated by dividing the total number of refunds by the total number of products sold, then multiplying by 100.

Measures the percentage of customers who renew their subscription or contract at or before the expiration date. The metric is often broken down between first-time renewals and subsequent/recurring renewals, as the rate is typically higher after the initial renewal due to increased customer satisfaction and loyalty.

Calculation: Renewal rate is calculated by dividing the total number of renewals by the total number of customers.

For ecommerce businesses, revenue per visitor (RPV) measures how much revenue a company generates per visitor (whether or not they make a purchase, attempt to make one, or take zero action) at its online store, typically tracked on a monthly basis.

Calculation: RPN is calculated by dividing total revenue by total number of visitors.

A key metric for converting non-paying customers into paying customers, trial-to-paid conversion rate measures the percentage of free-trial users who opt into a subscription fee model, which also includes freemium users who upgrade to premium.

Calculation: Trial-to-paid conversion rate is calculated by dividing the number of trial-to-paid users by the total number of users, then multiplying by 100.

A short product description providing detailed information about the essential features of a product. The description appears as an additional line below the product in the shopping cart, review page, confirmation page, or customer emails.

Extra features, enhancements, or benefits to offer your customers beyond the core product, such as technical support or extended downloads.

An individual or a company (also referred to as "publisher") that markets your product to potential customers. The affiliate typically receives a commission on a specific action or "event" (e.g., sale, lead, click, visit, etc.) that is previously agreed upon with the client.

Contact information of the person or company to whom a product or software is delivered. Contact information is used for physical shipments, electronic delivery, and communication concerning the delivery of licensing information.

Contact information of the person or company to whom the software license is registered to. Contact information is used for the generation of licensing information.

A system or strategy for managing a company's interactions with current and potential customers, utilizing data analysis to improve business relationships, retention, and sales growth.

A subgroup of customers, products, or usage types grouped based on shared attributes such as region, industry, usage behavior, or pricing tier. Segments enable targeted analysis, personalization, and pricing strategies.

The defined level of service expected by a customer from a service provider, via their customer support team.

A base product is a template containing data that is passed down to its children products. It's used to manage multiple products with similar characteristics. Changes made to a base product are automatically inherited by all its children products. Base products minimize catalog maintenance and provide data consistency. They are particularly useful when setting up one product for multiple languages.

Product set/marketing tactic that consists of a combination of two or more products sold together at a discounted price. Single products typically can't be deleted from a bundle during the order process.

A tool that assists sales teams in configuring products or services, determining pricing, and generating quotes, ensuring accuracy and consistency in the sales process.

An integrated software platform that manages a company's core business processes, including finance, supply chain, operations, reporting, and human resources.

The strategy and structure by which products or services are bundled and priced, aiming to align offerings with customer needs and market demand.