Financial Analyst
Tracks and projects the business's financial health.
Essential vocabulary
ROI
Return on Investment
How much money came back relative to what was invested, as a percentage.
ROI also shows up in
Used to justify investing in a new tool, hire, or sales campaign.
Used to prioritize which features are worth building first, comparing team effort against expected impact.
MRR
Monthly Recurring Revenue
The predictable revenue the company receives every month, coming from subscriptions or recurring contracts.
MRR also shows up in
Used to measure the impact of plan/price changes or new paid features.
Broken down into new, expansion, contraction, and lost (churned) MRR to understand where growth comes from.
LTV
Lifetime Value
How much revenue (or profit) a customer generates during the entire time they stay a customer.
LTV also shows up in
Used in recurring revenue projections and to justify investment in retention.
Guides retention decisions: features that increase usage time increase LTV.
CAC
Customer Acquisition Cost
How much it costs, on average, to win a new customer.
CAC also shows up in
Compared to LTV to find out whether the business model is sustainable in the long run.
Used to evaluate whether it's worth investing more in a specific prospecting channel.
Average ticket
The average amount spent per customer in each purchase or contract.
Average ticket also shows up in
A direct component of MRR calculation and revenue projections.
Used to decide whether it's worth investing more in winning new customers or in selling more to existing ones.
Good to know too
Churn
Cancellation / drop-off rate
The share of customers (or revenue) that leave the company in a given period.
Churn also shows up in
Analyzed through usage behavior to spot signs a customer is about to cancel before they actually do.
Used to project future revenue and to calculate the real LTV of the customer base.