Business Metrics Glossary

Percentage of website visitors who leave after viewing only one page.

The percentage of people who click on an ad, link, or call-to-action out of the total number who view it. It matters because a higher CTR indicates that your marketing message is resonating with your audience, leads to lower advertising costs on many platforms, and serves as an early indicator of campaign effectiveness before customers even reach your website or landing page.

The percentage of potential customers who take a desired action, such as making a purchase, signing up for a service, or clicking a link, out of the total number who were exposed to the opportunity. It matters because even small improvements in conversion rate can dramatically increase revenue without additional marketing spend, making it a key metric for optimizing sales funnels, website performance, and overall marketing effectiveness.

The amount a business pays each time someone clicks on their online advertisement, typically in platforms like Google Ads or social media. It matters because CPC directly impacts the profitability of digital advertising campaigns—lower CPCs mean more traffic for the same budget, making it essential for businesses to monitor and optimize this metric to ensure their advertising spend generates positive returns.

The total amount spent on marketing divided by the number of qualified leads generated during a campaign or period. It matters because it helps businesses evaluate the efficiency of their lead generation efforts, compare the performance of different marketing channels, and ensure they're spending an appropriate amount to fill their sales pipeline with potential customers who can convert into revenue.

Also called cost per thousand, is the price a business pays for 1,000 impressions or views of their advertisement. It matters because it's a key metric for brand awareness campaigns where the goal is maximum exposure rather than immediate clicks or conversions, allowing businesses to compare the efficiency of different advertising channels and negotiate better rates for large-scale visibility.

Is the total cost of sales and marketing efforts divided by the number of new customers acquired during a specific period. It matters because businesses need to ensure their CAC is lower than their customer lifetime value to be profitable, and tracking this metric helps optimize marketing spend, evaluate which channels are most cost-effective, and assess the overall health and scalability of the business model.

The percentage of customers who stop doing business with a company over a specific period. It matters because it is a direct indicator of customer satisfaction and retention; a high churn rate signals potential issues with a product, service, or pricing, and directly impacts revenue, as it is often much more expensive to acquire a new customer than to keep an existing one

Customer Lifetime Value is the total revenue or profit a business can expect from a single customer throughout their entire relationship with the company. It matters because it helps businesses determine how much they should invest in acquiring and retaining customers, prioritize high-value customer segments, and make strategic decisions about marketing spend, product development, and customer service investments.

The amount of time it takes for a business to recover the cost of acquiring a customer through the revenue that customer generates. It matters because a shorter payback period means faster cash flow recovery and less financial risk, allowing businesses to reinvest in growth more quickly and ensuring they have sufficient working capital to scale sustainably without running out of funds.

Measures the revenue generated for every dollar spent on an advertising campaign. It matters because it directly quantifies the profitability and effectiveness of advertising efforts, allowing businesses to identify which campaigns are providing the best financial return and optimize their marketing budget accordingly.