Marketing and business terms, in plain English
TL;DR: A plain-English dictionary of the money and marketing terms we use across these guides. No jargon for its own sake. If a term in our writing links here, this is where it lands.
We try not to hide behind jargon. But some terms are genuinely useful shorthand, so here is what they mean, in language an owner can use. The money terms come with a quick example.
Gross margin
Gross margin is the share of a sale you keep after the direct cost of delivering it, before overhead. If you sell something for $100 and it costs you $40 in materials and labour to deliver, your gross profit is $60 and your gross margin is 60%.
It matters because it tells you what a sale is actually worth to you. Two businesses with the same revenue can be in completely different shape depending on margin. Every Hiilite calculation that asks “what is a client worth” uses margin, not just revenue, so the number reflects real profit. See what a client is actually worth.
Net profit (vs gross profit)
Gross profit is revenue minus the direct cost of delivery. Net profit is what is left after everything — overhead, rent, software, salaries, taxes. Gross profit tells you if the work itself pays; net profit tells you if the business does.
Customer lifetime value (LTV or CLV)
Lifetime value is the total gross profit you earn from one customer across the whole relationship, not just the first sale. A client worth $500 a year at 60% margin who stays three years is worth about $900 in lifetime gross profit, not $1,500 in revenue. Knowing it is the only way to know what you can afford to spend to win one. Work yours out with the LTV calculator.
Customer acquisition cost (CAC)
CAC is what it costs, all in, to win one new customer — ad spend, tools, and the time and commissions that go into closing them — divided by the number of customers that effort produced. Spend $3,000 in a month and win 6 clients, and your CAC is $500.
LTV:CAC ratio
The LTV:CAC ratio compares what a customer is worth to what they cost to acquire. A client worth $900 who costs $300 to win is a 3:1 ratio. Below 1:1 you lose money on every customer. Around 3:1 or better is healthy. Far above 5:1 usually means you could afford to grow faster.
Cost to serve
Cost to serve is what it actually costs you to deliver for a client over time — the hours, the rework, the support. Two clients paying the same can have very different cost to serve, which is why revenue alone is misleading. Binding cost to serve to revenue is what lets the Hiilite platform tell you which clients are truly profitable.
Churn
Churn is the rate at which customers leave over a period. If you start a year with 100 clients and 20 are gone by year end, that is 20% annual churn. Lowering churn compounds: every customer you keep is one you do not have to re-acquire. See retention beats acquisition.
Retention rate
Retention rate is the flip side of churn — the share of customers you keep over a period. 20% churn means an 80% retention rate. Small improvements here move profit more than almost anything else, because retained customers cost nothing to re-win.
Conversion rate
Conversion rate is the share of people who take the action you want, out of everyone who had the chance. If 200 people visit a booking page and 10 book, that is a 5% conversion rate. For service businesses the conversions that matter are usually the call booked or the quote requested, not raw clicks. See CRO for service businesses.
Return on investment (ROI)
ROI measures what you got back relative to what you put in, as a percentage. Spend $1,000 and earn $4,000 in profit from it, and your ROI is 300% — three dollars of profit for every dollar in. The honest version counts profit, not revenue.
Return on marketing spend (ROMI)
ROMI is ROI applied specifically to marketing: the profit attributable to marketing, minus what marketing cost, divided by what marketing cost. It is the number most dashboards quietly avoid. Check yours with the marketing-profitability calculator.
Funnel stages: TOFU, MOFU, BOFU
The funnel describes how close someone is to buying. TOFU (top of funnel) is awareness — they are learning. MOFU (middle) is consideration — they are comparing options. BOFU (bottom) is decision — they are ready to choose. Good marketing meets people at the right stage instead of pitching everyone the same way.
Attribution
Attribution is the work of figuring out which marketing actually caused a sale, when a customer touched several things before buying. It is hard, it is never perfect, and pretending otherwise is how money gets wasted. The goal is a clear-enough signal to make the next decision, not false precision.
Recurring revenue (MRR / ARR)
Recurring revenue is income you can count on repeating — monthly (MRR, monthly recurring revenue) or yearly (ARR, annual recurring revenue). It is more valuable than one-off revenue because it is predictable, which makes everything from hiring to ad spend easier to plan.
Average sale / average order value (AOV)
Average order value is your typical sale size — total revenue divided by number of orders. Raising it (through pricing, bundling, or upsells) grows revenue without needing a single new customer.
Payback period
The payback period is how long it takes a new customer to earn back what you spent to acquire them. A $500 CAC on a client who delivers $250 of gross profit a year has a two-year payback. Shorter is safer, because cash comes back faster to fund the next customer.
Growth Mapping
Growth Mapping is Hiilite’s framework for growing a business on purpose: read your real numbers, find the one constraint holding you back, run the right move, measure what changed, repeat. It is the spine of everything here. Read the framework.
The 3Rs
The 3Rs are the three engines of growth: Recruitment (winning customers), Retention (keeping them), and Revenue (what each is worth). You cannot out-recruit bad retention, and revenue is the scoreboard. See the 3Rs.
The 3Ps
The 3Ps are how we decide which move to run next: Profit (will it move the bottom line?), Potential (how much upside?), and People (can the team run it well?). See the 3Ps.
Sense, Seize, Transform
The Sense → Seize → Transform loop is how the platform works: Sense the gap in your live data, Seize it by running the right play, Transform by measuring what moved and feeding it back. It comes from dynamic-capabilities theory. See dynamic capabilities.
FAQ
What is gross margin in simple terms? Gross margin is the percentage of a sale you keep after the direct cost of delivering it. Sell for $100, spend $40 to deliver, and your gross margin is 60%. It tells you what a sale is really worth before overhead.
What is a good LTV:CAC ratio? Around 3:1 or better is generally healthy — a customer is worth about three times what it costs to win them. Below 1:1 you are losing money per customer; far above 5:1 often means you can afford to invest more in growth.
Why does Hiilite focus on margin and profit instead of revenue? Because revenue can hide a struggling business. Two companies with identical revenue can have completely different profit depending on margin and cost to serve. Decisions grounded in profit are the ones that keep a business healthy.
Looking for the bigger ideas instead of the terms? See the Growth Mapping glossary — the eight philosophies behind the platform.