Online Business Glossary – Terms & Definitions

A/B Testing

A method of controlled experimentation comparing two or more variants (A vs. B) to determine which performs better on a predefined metric (e.g., conversion, CTR, retention).

'Run an A/B test on the checkout button color to lift CVR'; 'We need 95% statistical significance before rolling out variant B'; 'Use a holdout group to prevent peeking bias'.

Addressable Market (TAM/SAM/SOM)

Framework to size opportunity: TAM (total market), SAM (serviceable available market), SOM (serviceable obtainable market).

'Our SAM is $6B within North America'; 'We plan to capture 5% SOM in three years'; 'Investors challenged our TAM assumptions'.

Ad Exchange

A programmatic marketplace where publishers (supply) and advertisers (demand) trade ad inventory, often via real-time bidding (RTB).

'We connected to multiple ad exchanges to improve fill rate'; 'Floor prices on the exchange were raised to protect CPMs'; 'DSPs are bidding via the open exchange'.

Affiliate Marketing

A performance-based channel where partners (affiliates) drive traffic or sales for a commission.

'Our affiliate program pays 10% per sale'; 'We onboarded content affiliates and coupon sites'; 'Last-click attribution overstates affiliate impact'.

API (Application Programming Interface)

Rules and endpoints enabling software-to-software communication (e.g., REST, GraphQL) for integrations, data exchange, or features.

'Expose a public API for third-party developers'; 'Rate limits prevent abuse'; 'We use OAuth 2.0 for API auth'.

ARPU (Average Revenue Per User)

Revenue per active user over a period; key for consumer internet and SaaS.

'ARPU rose from $7.20 to $8.05 QoQ'; 'Pricing changes improved ARPU without hurting conversion'; 'Segment ARPU by cohort and country'.

Attribution Model

A rule/algorithm that assigns conversion credit to touchpoints (e.g., first-click, last-click, linear, data-driven).

'Data-driven attribution reduced branded search credit'; 'We use MMM + MTA triangulation'; 'Switching from last-click changed our channel mix'.

Average Order Value (AOV)

Average revenue per transaction; used to assess merchandising and pricing.

'Bundles increased AOV by 12%'; 'Free shipping threshold nudged AOV up'; 'Track AOV by device and traffic source'.

Bounce Rate

Percent of sessions with a single page view or immediate exit; high rates can signal poor relevance or UX.

'Landing page tweaks cut bounce rate'; 'Engaged-view metrics matter more than raw bounce'; 'Organic traffic had the lowest bounce'.

Brand Safety

Practices to keep ads away from harmful or unsuitable content, protecting advertiser reputation.

'Enable brand-safety filters in the DSP'; 'We maintain blocklists and use third-party verification'; 'UGC requires stricter brand-safety controls'.

Burn Rate

Net cash outflow per month; indicates runway for startups.

'Our burn rate is $1.2M/month'; 'Reduce burn through hiring freeze and cloud savings'; 'Extend runway to 18 months before next raise'.

CAC (Customer Acquisition Cost)

All-in cost to acquire a new customer (marketing + sales) for a given period/channel.

'Paid social CAC is $54'; 'Blend CAC across paid and organic'; 'Exclude reactivation from new CAC'.

CAC Payback Period

Time to recoup CAC from gross profit (or contribution margin).

'Target payback < 12 months'; 'Raising prices shortened payback'; 'Cohort GP% assumptions drive payback math'.

Cart Abandonment

Shoppers add items but do not complete checkout; tracked as a rate.

'Send abandonment emails within 1 hour'; 'One-click checkout reduced abandonment by 8%'; 'Optimize mobile forms to lower friction'.

CDN (Content Delivery Network)

Distributed edge servers that cache and deliver content to reduce latency and improve reliability.

'Move images to the CDN'; 'Use CDN routing rules for A/B test assets'; 'Edge caching cut TTFB significantly'.

Chargeback

A reversed card transaction after a dispute; merchants pay fees and potential penalties.

'Chargeback rate exceeded network thresholds'; 'Use 3DS and risk scoring to prevent fraud'; 'Digital goods have higher chargeback risk'.

Churn Rate

Percent of customers or revenue lost over a period (logo or revenue churn).

'Gross churn was 3% monthly'; 'Annual plans reduced churn'; 'Measure churn by cohort and segment'.

CLV/LTV (Customer Lifetime Value)

The net present value of future gross margin from a customer, accounting for churn and discount rate.

'Our blended LTV is $420'; 'LTV varies widely by acquisition channel'; 'Use cohort-based LTV, not naïve averages'.

Cohort Analysis

Grouping users by a shared start event (e.g., signup month) to study performance over time.

'Cohort retention improved post-onboarding revamp'; 'Revenue per cohort stabilized by month 3'; 'Compare paid vs. organic cohorts'.

Content Moderation

Processes and tools to enforce policies on UGC to reduce harm and legal risk (human + automated).

'Scale up trust & safety moderators during peaks'; 'Deploy ML for proactive detection'; 'Document escalation for borderline content'.

Conversion Rate (CVR)

Percent of users who complete a desired action (purchase, signup, subscribe).

'Homepage CVR increased after simplifying hero'; 'Optimize CVR per device segment'; 'CVR dipped after adding extra consent steps'.

CPA (Cost per Acquisition)

Ad pricing or measurement of cost per desired action (sale, lead, install).

'We capped CPA at $40 in the bidding strategy'; 'CPA spiked after iOS privacy changes'; 'Compare CPA to LTV by channel'.

CPC (Cost per Click)

Price paid per ad click; common in search and social ads.

'Branded CPCs rose due to competitor bidding'; 'Lower CPC but worse CVR hurt CPA'; 'Use negative keywords to control CPC'.

CPM (Cost per Mille)

Price per 1,000 ad impressions; standard in display/video.

'Q4 CPMs are seasonally higher'; 'Viewability improvements justified higher CPMs'; 'pMP deals locked in floor CPMs'.

Cross-Sell

Encouraging customers to buy complementary products/services.

'Add accessories as cross-sells on PDPs'; 'Post-purchase cross-sell emails drive AOV'; 'ML recommends cross-sell bundles'.

DAU/WAU/MAU (Active Users)

Daily/Weekly/Monthly Active Users; core engagement metrics for consumer and prosumer products.

'DAU/MAU ratio indicates stickiness'; 'MAU dipped after policy change'; 'Normalize DAU by seasonality'.

Dark Patterns

Deceptive UX tactics that manipulate users (e.g., roach motel, disguised ads).

'Avoid pre-checked boxes for consent'; 'Regulators are cracking down on dark patterns'; 'Design for clarity, not coercion'.

Data Lake

Centralized storage for raw, unstructured/semistructured data (e.g., S3 + parquet) for future processing.

'Land clickstream in the data lake'; 'Schema-on-read with Delta/Iceberg'; 'ETL into the warehouse nightly'.

Data Warehouse

Structured, query-optimized analytics store (e.g., Snowflake, BigQuery) for BI and reporting.

'Model events into a star schema'; 'Use dbt for transformations'; 'BI dashboards pull from the warehouse'.

Disintermediation

Suppliers and buyers bypass a platform or intermediary to transact directly.

'Add escrow to reduce disintermediation'; 'Messaging within the app is monitored'; 'Introduce value-add to discourage off-platform deals'.

Engagement Rate

Measures depth/frequency of user interaction (e.g., time on site, likes, comments, DAU/MAU).

'Improve engagement with personalized feeds'; 'Engagement spikes before renewal correlate with retention'; 'Track session frequency per cohort'.

Escrow (Marketplace Escrow)

A third party holds funds until conditions are met, reducing counterparty risk.

'Release funds after delivery confirmation'; 'Escrow fees are part of take rate'; 'Escrow reduces scams in peer-to-peer markets'.

Freemium

Free tier to maximize reach with optional paid upgrades; relies on conversion and expansion.

'Improve PQLs via freemium onboarding'; 'Feature gating encourages upgrades'; 'Monitor free-to-paid conversion by cohort'.

Funnel (Marketing/Sales Funnel)

Stages users move through from awareness to conversion and retention.

'Identify drop-off between add-to-cart and checkout'; 'Map the B2B funnel from MQL to closed-won'; 'Run experiments at each funnel stage'.

GDPR/CCPA (Data Privacy Regulations)

Laws governing personal data, consent, and user rights; require privacy-by-design and documentation.

'Honor DSARs within statutory timelines'; 'Implement CMP for consent'; 'Minimize data collection and use pseudonymization'.

GMV (Gross Merchandise Value)

Total value of transactions processed through a marketplace/platform before refunds/fees.

'GMV grew 35% YoY'; 'Take rate applied to GMV drives revenue'; 'Track GMV per category and region'.

Growth Hacking

Rapid, data-driven experimentation across product, marketing, and channels to find scalable growth.

'Launched referral loops to boost K-factor'; 'Onboarding tweaks improved activation'; 'Use North Star metrics to guide tests'.

In-App Purchase (IAP)

Purchases of digital goods/subscriptions within mobile or web apps; subject to platform policies/fees.

'Apple’s IAP fee impacts margins'; 'Offer IAP and web checkout options'; 'Localize IAP pricing tiers'.

Incrementality (Ad Measurement)

The causal lift attributable to a campaign vs. what would have happened anyway.

'Use geo experiments to measure incrementality'; 'Holdout tests showed zero incremental installs'; 'MMM cross-checks MTA for incremental impact'.

K-Factor (Viral Coefficient)

Average number of additional users each user brings; >1 implies exponential growth.

'Referral incentives improved K from 0.3 to 0.6'; 'Track invites sent, conversion, and activation'; 'Viral loops require low friction'.

KYC/AML

Know Your Customer/Anti-Money Laundering compliance for identity verification and risk monitoring.

'KYC checks at payout to prevent fraud'; 'Ongoing AML transaction monitoring'; 'Implement risk tiers and enhanced due diligence'.

Latency

Time delay between a request and response; affects UX, SEO, and conversion.

'Reduce TTFB with edge compute'; 'Optimize images to cut render-blocking'; 'P95 latency is our SLO focus'.

Liquidity (Marketplace Liquidity)

Probability and speed of a successful match between demand and supply.

'Time-to-match is our liquidity metric'; 'Subsidize supply to seed liquidity'; 'Prevent geographic cold-starts with targeted incentives'.

LTV:CAC Ratio

Relationship between lifetime value and acquisition cost; gauges efficiency and scalability.

'Aim for LTV:CAC of 3:1+'; 'Unsustainable channels show LTV:CAC < 2'; 'Segment LTV:CAC by cohort'.

Minimum Viable Product (MVP)

The simplest product that validates a core hypothesis with minimal time/cost.

'Ship an MVP to test demand'; 'Use no-code for the MVP backend'; 'Define success metrics before MVP launch'.

Monetization Strategy

The plan for generating revenue (ads, subscriptions, usage-based, transaction fees, IAP).

'We’re transitioning from ads to subscription'; 'Introduce tiered pricing to capture WTP'; 'Align monetization with user value moments'.

Monthly Recurring Revenue (MRR)

Normalized monthly subscription revenue, net of discounts/refunds; key SaaS metric.

'MRR expansion offset gross churn'; 'Track new, expansion, contraction, and churn MRR'; 'Cohort MRR curves inform payback'.

Multihoming

Users or suppliers participate on multiple platforms simultaneously; reduces switching costs and lock-in.

'Drivers multihome across ride-share apps'; 'Offer exclusive perks to reduce multihoming'; 'APIs make seller multihoming easier'.

Net Revenue Retention (NRR)

Revenue from existing customers after expansions, downgrades, and churn; >100% indicates net growth.

'NRR is 118% driven by seat expansion'; 'Target NRR by segment'; 'Upsells and price increases lift NRR'.

Network Effects

Product value increases as more users join (direct or cross-side), creating defensibility.

'Liquidity flywheel from more buyers and sellers'; 'Cold-start problem precedes network effects'; 'Beware negative congestion effects'.

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