What is Cash Flow?
Cash flow is a term within business and accounting that refers to the inflow or outflow of money for a specific period. For example, if a company uses the subscription pricing model with monthly payments, the money flow that comes in each month will be the combined subscription fee that customers pay. If the company buys a product, that money outflow will decrease the total flow of money for that month. This is because a purchase is a cash outflow. In this example, that cash inflow is also called the Monthly Recurring Revenue (MRR).
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What is an Earned Channel?
An Earned Channel is any marketing channel where visibility is gained when other people or organizations share content about your company with others. “Word of mouth” is a common expression to highlight the earned channel. The earned channel is different from the owned, or organic channel because the earned channel does not include self-created content.
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What is a Minimum Viable Product (MVP)?
A Minimum Viable Product (MVP) is the simplest form of a product that has just enough features to satisfy the needs of early users. The term is often used when launching a startup, where the MVP is supposed to be a time-effective way of investigating the product-market fit of the product. The main goal of an MVP is to collect early user feedback. After collecting feedback, an entrepreneur can enhance the product-market fit by adopting the product to the feedback suggestions.
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What is a Monthly Recurring Revenue (MRR)?
A Monthly Recurring Revenue (MRR) is a term within business. Companies using a subscription pricing model will get a Monthly Recurring Revenue if their customers pay the subscription fee on a monthly basis. For example, if you have 10 customers and the subscription fee is $5, the company will have an MRR of $50. The cash flow from January’s operations will be $50, and that amount will be the same for February if no customers churn or sign up.
Having an MRR is oftentimes beneficial for software products using the SaaS business model.
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What is an Organic Channel?
An Organic Channel is any marketing channel where visibility is gained thanks to non-paid self-created content. For example, website traffic coming in through a blog article, social media post, or YouTube video, will be coming in through the organic channel. Working with Search Engine Optimization (SEO) is usually a good way to grow the organic channel. Website traffic can also come in through Paid and Earned Channels.
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What is a Paid Channel?
A Paid Channel is a marketing channel where money is invested to gain visibility among your target audience. A common paid channel for modern businesses is Google Ads. Website traffic coming in thanks to Google Ads would be classified as paid traffic, coming from the paid channel. Traffic can also come in through the Organic and Earned Channels.
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What is a Pricing Plan?
A Pricing Plan is a set of features that is sold at a specific price. Companies offering subscriptions can set up different pricing plans to attract more customers. For example, software products can set up a basic pricing plan that includes the most basic of the software product’s features at a cheaper price. The company can then charge extra for an unlimited pricing plan that unlocks all of the features.
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What is Product-Market Fit?
The Product-Market Fit often describes how well a product fits the needs of the market. For example, a product that is able to supply the market with the features the market needs has a good product-market fit. If the company develops features that the customers do not see any value in, the product-market fit is not improved.
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What is Search Engine Optimization (SEO)?
Search Engine Optimization (SEO) is a method within marketing that aims to improve a website’s search engine ranking. It involves a process where content is created to help search engines better understand what users should be exposed to your website. Improving the SEO score can prove to be a great way to grow a business. The organic channel can especially benefit from having a good SEO score.
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