Sales & Marketing Metrics Glossary
The metrics by which sales and marketing teams measure progress and prove their work. Definitions vary across companies; the goal here is the canonical version and where it gets bent.
MQL (Marketing Qualified Lead)
An MQL is a lead that meets a defined set of criteria suggesting it's worth a sales conversation: company size, industry fit, role of the contact, behavioral signals (visited pricing page, downloaded a buyer-stage asset), or scoring above a defined threshold in a lead-scoring model. The exact criteria are negotiated between marketing and sales; they should be specific enough that a non-MQL clearly doesn't meet the bar.
The MQL handoff is the most argued-about metric in B2B GTM. Marketing wants the bar low (more MQLs, more credit); sales wants it high (less time wasted on bad-fit leads). Healthy organizations have a clear MQL-to-SQL conversion rate target (commonly 30-50%) and adjust the criteria when the rate drifts.
SQL (Sales Qualified Lead)
An SQL is a lead that sales has actually engaged with — typically a discovery call or qualification meeting — and confirmed is qualified to enter the active pipeline. The MQL-to-SQL step is where marketing's qualification claim meets sales's reality: a lead that scored highly but isn't actually the buyer, doesn't have budget, or has no real timing is disqualified at this step.
SQL conversion rates from MQL are a key health metric. Persistently low rates (under 30%) suggest marketing is generating volume at the cost of quality; persistently high rates (above 70%) suggest marketing's bar is too high and they're filtering out leads sales could close. The right band depends on the business model; the principle is to target a band and adjust the upstream definition when reality diverges.
Pipeline velocity
Pipeline velocity captures the four levers of sales productivity in one number: more opportunities, larger deals, higher win rate, or shorter cycle. Each lever moves velocity proportionally; comparing velocity across teams or quarters reveals which lever is shifting. A team with growing velocity but flat win rate is winning more deals at higher ACV; a team with shrinking velocity might have a narrowing pipeline that current win-rate masks.
Velocity is more useful than any single component because it ties them together. A 90% win rate is irrelevant if the cycle is 18 months and the deal is $5,000. A 22% win rate on $500K deals closing in 90 days is a different reality. Velocity makes them comparable.
ACV (Annual Contract Value)
ACV is the total contract value divided by the contract length in years. A three-year, $300,000 contract has an ACV of $100,000. Used to compare deals of different lengths on a like-for-like basis and to express new-business revenue without confusing it with multi-year billing.
Contrast with TCV (Total Contract Value), which is the full multi-year revenue, and ARR, which is the run-rate annualized revenue. These three numbers diverge meaningfully for businesses with varying contract terms; sales decks tend to feature whichever is largest. Internal reporting should standardize on one and use it consistently.
ARR (Annual Recurring Revenue)
ARR is the recurring portion of subscription revenue, annualized — what the business would earn from existing subscriptions over the next 12 months if no customer churned and no new customer was added. It excludes one-time revenue (setup fees, professional services), revenue from products that aren't recurring, and any usage-based component above a committed minimum.
ARR is the dominant metric for SaaS businesses because it represents the contracted revenue base. Investors and operators compare growth in ARR ("net new ARR"), components (new ARR, expansion ARR, contraction, churn), and unit economics relative to ARR (CAC payback in months, LTV/CAC ratio). For monthly-billing businesses, ARR is MRR × 12.
MRR (Monthly Recurring Revenue)
MRR is the monthly version of ARR. SMB-focused SaaS companies often report MRR (because contracts are monthly); enterprise-focused SaaS companies report ARR (because contracts are annual). MRR makes month-over-month motion visible; ARR smooths it. Both decompose into new MRR, expansion MRR, contraction MRR, and churned MRR — the components together explain how the recurring revenue base changed period over period.
NRR (Net Revenue Retention)
NRR measures how revenue from a cohort of existing customers evolves over a period (typically 12 months). It includes upgrades, downgrades, and churn. NRR above 100% means the existing customer base is growing on its own — expansion exceeds contraction plus churn — which is the signature of a high-quality SaaS business. Public SaaS leaders typically post NRR between 110% and 140%; the strongest sit above 130%.
NRR is one of the most predictive metrics for SaaS valuation because it captures retention, expansion, and the quality of the customer base in one number. A company with NRR above 120% can grow fast even with modest new-logo acquisition; a company with NRR below 90% has to acquire faster every year just to stay flat.
GRR (Gross Revenue Retention)
GRR is NRR without the expansion component. It captures only revenue lost to downgrades and churn, never exceeding 100%. GRR isolates the "leakiness" of the customer base; high NRR can hide weak GRR if expansion from a small subset of customers is masking heavy churn elsewhere.
Healthy GRR by segment: 90%+ for enterprise SaaS, 80-90% for mid-market, 70-85% for SMB SaaS. GRR below these thresholds usually indicates a product-fit or value-delivery problem. The pair (NRR, GRR) gives a fuller picture than either alone — a company at 130% NRR / 95% GRR is healthier than one at 130% NRR / 75% GRR, even though the headline number is identical.
Win rate
Win rate is a key sales productivity metric: of qualified opportunities entering the pipeline, what percentage close as won? Definitions vary; the most useful measure is closed-won divided by closed-won-plus-closed-lost, ignoring open opportunities. Including open opportunities depresses the rate and conflates timing with outcome.
Healthy win rates depend on segment and deal size: 25-35% is typical for inbound mid-market SaaS, 15-25% for outbound enterprise, 35-50% for renewal-adjacent expansion. Trending matters more than absolute level; a stable 22% is healthier than a swing from 35% to 18%. By-rep, by-segment, and by-source breakdowns surface where the rate is driven by mix vs. by competitive dynamics.
Sales cycle length
Sales cycle length measures how long it takes to convert a qualified opportunity to a closed deal. Distinct from the broader "buying cycle" (which begins when the customer first becomes aware of a problem); cycle length here is operational. Calculated as the median or mean days from opportunity creation to close, separately for won and lost — they often differ significantly.
Cycle length affects pipeline velocity directly and cash flow indirectly. A doubling of cycle length means the same deal volume requires twice the pipeline. Common drivers of lengthening cycles: deals moving upmarket (enterprise takes longer), procurement involvement, security review requirements, and macro-driven elongation in tougher economic conditions.
Magic number
The Magic Number measures the new ARR generated per dollar of sales and marketing spend, annualized. A magic number above 1.0 indicates the company is growing efficiently — each dollar of S&M is generating more than a dollar of new annualized revenue. Above 1.5 is excellent; below 0.5 indicates inefficient growth that probably can't be scaled.
Magic Number is a cleaner diagnostic than CAC payback for assessing GTM efficiency at the company level because it doesn't require separating new vs. expansion ARR or attributing spend to specific cohorts. Its weakness: it doesn't account for retention, so a company with high magic number but heavy churn isn't actually winning. Pair with NRR for a full read.