SaaS Sales Fundamentals

01ARR vs. MRR

MRR (Monthly Recurring Revenue) is the normalized recurring revenue generated in a given month, excluding one-time fees. ARR (Annual Recurring Revenue) is MRR multiplied by 12 — a forward-looking annual view used for planning and reporting, while MRR is used for short-term, month-to-month tracking.

02Churn and ACV

Churn is the percentage of customers (logo churn) or revenue (revenue churn) lost in a period — the two can differ if the accounts that leave are small. ACV (Annual Contract Value) is the average one-year value of a single customer contract; a higher ACV isn't automatically healthier — it matters relative to CAC and churn.

03CAC and LTV

CAC (Customer Acquisition Cost) is the average cost to acquire one customer; LTV (Lifetime Value) is the revenue or profit a customer is expected to generate over their relationship with the company. A common SaaS health benchmark is an LTV:CAC ratio around 3:1.

04POC vs. pilot

A POC (proof of concept) is typically a shorter, narrower technical trial — often in a sandbox with the prospect's own data — just to prove feasibility. A pilot is a longer, more structured evaluation with agreed goals and success criteria, usually used for higher-value deals ahead of a broader rollout decision.

05MEDDIC qualification framework

MEDDIC stands for Metrics, Economic Buyer, Decision Criteria, Decision Process, Identify Pain, and Champion — six fields reps use to judge whether a deal is real and likely to close, rather than just tracking stage progress.

06Procurement: SOC 2, MSA, and Order Form

Enterprise procurement often requires a SOC 2 report to validate security controls, replacing a lengthy custom security questionnaire. Legally, the MSA (Master Services Agreement) sets the long-term terms of the relationship (liability, IP, confidentiality), while the Order Form specifies the deal-specific details — price, product, and term length.