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Marketing Acronyms

Net Promoter Score (NPS)

AKA:
Net Promoter

What does it mean:

It is a measure of customer satisfaction and customer loyalty. It has a range of -100 to +100 with companies scoring more than 50 considered to be great and companies above 70 to be exceptional. 

The Formula:

% of Promoters – % of Detractors = Net Promoter Score (NPS)

NPS - Net Promoter Score Formula

Use it in a sentence:

To colleagues:

“We should be checking our Net Promoter Score every 30 days to track customer satisfaction.”

To investors:

“We have a Net Promoter Score of 75, our customers love us as much as they love Apple products.”


At a party:

“This party sucks. I’m extremely unlikely to recommend it to a friend.”

Categories
Marketing Acronyms

Gross Merchandise Value (GMV)

AKA:
Gross Merchandise Volume, Gross Sales, Gross Revenue, Top Line Revenue

What does it mean:

Used in marketplaces it’s the total value of all goods sold during a given period. This means the total value of the consumer’s spending but not necessarily the revenue the marketplace generated from these sales. True revenue is usually a small percentage of total GMV.

The formula:

Total Sales Volume = Gross Merchandise Value (GMV)

The formula (annualized GMV):

Last month’s GMV * 12 = Annualized GMV
Last quarter’s GMV * 4 = Annualized GMV

Use it in a sentence:

To colleagues:

“We need to increase our GMV this month. Let’s run a campaign to help vendors list more products.”

To investors:

“We’re seeking a valuation based on a 2x multiple of our annualized GMV.”

At a party:

“That guy/girl is really cute but I could never be into someone who mixes up revenue and GMV in their investor pitch.” 

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Marketing Acronyms

Average Revenue Per User (ARPU)

AKA:
Average Revenue Per Paying User (ARPPU), Average Revenue Per Unit (ARPU)

What does it mean:
As the name suggests, it’s the average revenue each user gives you. This revenue could be generated in several ways such as subscription payments, advertising revenue, or other transaction fees. ARPU offers insights into the profitability and revenue-generation capability of a company.

The Formula:

Total Revenue / Users or Customers = ARPU

The Formula (Subscription Business):

Monthly Recurring Revenue (MRR) ÷ Active Subscribers = ARPU

Use it in a sentence:

To colleagues:

“We’re never going to build a big business on $1 ARPU, let’s reconsider our business model.”

To investors:

“We doubled our ARPU by adding a new team’s plan to our product offering.”


At a party:

“Oh, man do you know where the bathroom is? I’ve really got to ARPU”

Example of Facebook’s ARPU

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Marketing Acronyms

Annual Recurring Revenue (ARR)

AKA:
Annual revenue

What does it mean:
Used in subscription-based businesses it’s your current expected annual revenue based on current Monthly Recurring Revenue (MRR).

The Formula:

Monthly Recurring Revenue (MRR) x 12 months = ARR

Use it in a sentence:

To colleagues:

“If we can just get to $5M ARR we are almost at break-even.”

To investors:

“We are doubling our ARR year-over-year thanks to our large distribution partners.”


At a party:
“Did you hear about that startup that hired an actual pirate on the marketing team? They thought it might increase their ARR.” 

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Marketing Acronyms

Average Order Value (AOV)

AKA:
Average Cart Size

What does it mean:
Used mainly in e-commerce businesses it’s the average size of all the orders for a given period. It’s an important metric because larger AOV means more ability to spend money to acquire users. 

The Formula:

Total Revenue / Total Orders = AOV

Use it in a sentence:

To colleagues:

“Let’s try to increase AOV this month with a promotion for free shipping for 5 items or more.”

To investors:

“We increased our AOV by upselling users a bobblehead during checkout. Everyone loves bobbleheads.”


At a party:

“You don’t even want to know my AOV on Wish.com. I’m pretty sure it violates several international trade deals.”

aov meaning - average order value

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Marketing Acronyms

Customer Acquisition Cost (CAC)

AKA:
Acquisition (ACQ), Cost-per-action (CPA)

What does it mean:

The cost takes to acquire 1 user to your service. Typically this would just factor paid media spend but can sometimes include other costs. 

The Formula:

Media spend / Users acquired = CAC

Use it in a sentence:

To colleagues:

“We need to optimize our media spend around the channels with lower CAC.”

To investors:

“Today our CAC is $50 and steady. We have been testing new channels that may bring this down to as little as $30.”


At a party:

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“So I say to the guy in the bathroom at the marketing conference, excuse me but your zipper is down and your CAC is showing.”

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Marketing Acronyms

Conversion Rate Optimization (CRO)

AKA:
A/B Testing, Funnel Optimization

What does it mean:

The practice of making improvements to key parts of your website or service such as user signup and purchase funnels.  

The toolset to do it:

Optimizely, Google Optimize, Visual Website Optimizer, Hotjar, Crazyegg, Mixpanel

Use it in a sentence:

To colleagues:

“Only 1% of users who enter our signup funnel complete the process. We need to put some time into CRO.”

To investors:

“We have been doing CRO on our payment flow and dramatically improved conversion rates. We are ready to scale our top of funnel”


At a party:

“I’ve been doing some serious CRO on my Tinder profile and as a result have several dates next week”

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Marketing Acronyms

Cost Per Click (CPC)

AKA:
Paid Per Click (PPC), Search Engine Marketing (SEM)

What does it mean:

How much you pay for each click to your website on a paid channel such as Google Adwords.

The formula:

Total Ad Spend / Total Clicks = CPC

Use it in a sentence:

To colleagues:

“Let’s try to find some cheaper CPCs in other regions for our marketing campaigns.”

To investors:

“We are seeking funding now as the CPCs in our industries are expensive and competitive.”


At a party:

“Sometimes when I’m bored I search for my competitor’s high-cost CPCs and click on their ads repeatedly.”

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Marketing Acronyms

Cost Per Lead (CPL)

AKA:
Cost Per Action (CPA)

What does it mean:

How much you pay for each lead generated on your website or service. Typically this would mean a visitor successfully filled in a form and provided their contact information. Primarily used when talking about generating leads for sales teams. 

The formula:

Total Ad Spend / Total Leads Generated = CPL

Use it in a sentence:

To colleagues:

“I have found that LinkedIn generates the best quality leads but the CPL is typically higher than other platforms.”

To investors:

“Across all of our marketing channels we have an average CPL of $10.”


At a party:
“I spent $200 on this dress and only two guys have flirted with me tonight. That’s an expensive $100 CPL if you ask me.” 

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Marketing Acronyms

Cost Per Mille (CPM)

AKA:
Cost Per Thousand, Cost Per 1000, Cost Per 1000 Impressions, Effective CPM (eCPM)

What does it mean:

Used in media buying, especially banner advertising, this is the cost of 1000 impressions of your advertisement.  

The formula:

Total Media Cost / (Impressions x 1000) = CPM

Use it in a sentence:

To colleagues:

“For our rebrand campaign let’s buy some premium CPMs on awesome media sites.”

To investors:

“We make money from our users showing them ads and on a CPM model”


At a party:

“Remember the good ol’ days when CPMs were low and banner ad Click Through Rates (CTR) were high? Good times, good times.”

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