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Business terms, without the jargon.

Look up the language used in sales, customer relationships, finance, and day-to-day operations. Definitions are written for practical use; where a metric can be calculated in different ways, choose a consistent definition for your business.

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29 terms found

Average transaction value: The average amount spent each time a customer makes a purchase. Divide total sales by the number of transactions for the same period.
Booking utilization: The share of available appointment or service capacity that is booked. Define available capacity consistently before comparing periods.
Cash flow: The movement of money into and out of a business over time. A profitable business can still face cash-flow pressure if payments arrive later than bills are due.
Churn: The rate at which customers stop buying or using a service during a defined period. The definition should fit the business model and purchase cycle.
Close rate: The share of qualified opportunities that become customers or approved jobs. State which opportunities count and use the same rule each period.
Conversion rate: The percentage of a defined group that completes a desired action, such as requesting an estimate, booking an appointment, or making a purchase.
Cost of goods sold (COGS): The direct costs associated with goods sold during a period. The right treatment depends on the business and accounting method.
CRM: Customer relationship management: the practices and software used to organize customer details, interactions, opportunities, and follow-up.
Customer acquisition cost (CAC): The average cost of acquiring a new customer. A basic estimate divides relevant sales and marketing costs by new customers acquired over the same period.
Customer lifetime value (CLV): An estimate of the value a customer contributes over the relationship. Results depend on assumptions about margin, repeat purchases, retention, and service costs.
Customer retention: A business's ability to keep customers returning over time. Retention is most useful when the measurement period and eligible customer group are clearly defined.
Direct costs: Costs that can be directly associated with delivering a product or service, such as job-specific materials or labor, depending on the accounting method used.
Gross profit: Revenue minus the direct costs included in the gross-profit calculation. It is an amount, while gross margin expresses it as a percentage of revenue.
Gross profit margin: Gross profit divided by revenue, multiplied by 100. Businesses should apply a consistent definition of direct costs when comparing margins.
Job costing: Tracking the costs associated with a specific job or project, such as labor, materials, subcontractors, and other attributable expenses.
Lead: A person or business that may be interested in buying from you. A lead is not necessarily qualified or ready to purchase.
Lead qualification: The process of checking whether an inquiry fits the services, capacity, timing, and other criteria that matter to the business.
Lead source: The channel or referral through which a potential customer discovered the business, such as search, a referral, a sign, or an event.
No-show rate: The number of missed appointments divided by the number of appointments scheduled for the same defined period, multiplied by 100.
Operating procedure: A documented sequence of steps that helps a task or handoff be completed consistently. It should reflect actual practice and be reviewed when work changes.
Pipeline: A view of sales opportunities organized by stages, from initial inquiry through decisions and close. Stages should have clear meanings and entry or exit criteria.
Repeat-customer rate: The share of customers in a defined group who make another purchase or return for another service during a specified period.
Return on investment (ROI): A comparison of the benefit from an investment with its cost. The result depends on how benefits, costs, and the measurement period are defined.
Revenue: Income earned from selling goods or services before subtracting expenses. Revenue is not the same as profit or cash received.
Service recovery: The steps a business takes to address a service failure, resolve the customer's concern, and follow through on the agreed outcome.
SOP: A standard operating procedure: a written description of how a recurring task should be completed, including roles, checks, and escalation steps.
Task owner: The person responsible for moving a task forward and confirming completion. Other people may contribute, but one clear owner reduces ambiguity.
Utilization rate: The share of available capacity used for productive or billable work. The calculation should match the kind of capacity being measured.
Work in progress (WIP): Work that has started but is not yet complete. In a service business, a useful WIP view includes current status, blockers, owner, and next action.

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