Starting a technology-driven business or pursuing a digital transformation effort can be difficult. Below is a comprehensive glossary of the most important definitions and key concepts that can help make the process easier!
This list contains over 150 tech business terms, theories, and concepts–that’s a lot of information! You can click on a letter below to link to that section of the glossary:
Not sure where to start? Here’s a shortlist of ten diverse concepts you should check out:
- Build-Measure-Learn Feedback Loop
- Buyer Persona
- Charm Pricing
- Content Marketing
- Five Forces Theory
- ICE Score Model
- North Star Metric
- Recommendation Engines
- SWOT Analysis
- Vanity Metrics
A/B testing is a user experience research method used to help people determine which of two variants (A/B) is more effective for driving traffic or converting customers. A/B testing is a proven method for evaluating user behavior, confirming or disproving hypotheses, and making decisions. Other names for A/B testing are two-sample hypothesis tests, bucket testing, or split-run testing.
Common examples of A/B testing include: email marketing, product pricing, software login flows, YouTube thumbnails.
Activity-Based Costing (ABC)
Activity-based costing (ABC) is an accounting and costing method that can help organizations determine more accurate pricing of their products or services based on actual consumer behavior.
The ABC method helps organizations understand and segment cost drivers such as fixed costs, variable costs, and overhead costs. At the same time, ABC helps provide transparency for which activities are costly and/or under performing. As a result, organizations and leaders are able to adjust pricing or eliminate these activities to reduce cost.
Acquisition (User Acquisition/Customer Acquisition)
Customer/User acquisition (UA) is the act of gaining new users for a mobile app, service, or platform. User acquisition data is typically measured in relation to ad spending (online, mobile, or in-person).
Acquisition cost is widely considered a standard and important metric for determining an app’s success. However, from a revenue perspective other data points such as daily/monthly active users, time spent in the app, retention, number of subscribers, or advertising clicks are typically more significant. Nevertheless, understanding your user acquisition cost is essential for planning ad campaigns and evaluating operation costs.
Affiliate marketing is a revenue sharing strategy in which businesses reward affiliates (individuals or groups) for each visitor or customer the business is able to acquired through the affiliate’s marketing efforts. Affiliates are typically online influencers with a large social media following that can drive traffic to a product or service.
Affiliate Networks (related)
Affiliate networks act as intermediaries between businesses and affiliates. For affiliates, they might find “power in numbers” advantageous for finding new opportunities. Similarly, organizations benefit from affiliate networks because it simplifies the process of finding, validating, and negotiating with affiliates.
Affiliate Programs (related)
Affiliate programs are the arrangements businesses make with the individual affiliates. In other words, an affiliate program facilitates the relationship between organizations and the affiliates, thereby setting the terms and expectations for each party.
Agile development is a term used to describe a method of collaborative software development where teams work in “sprints” or iterative work cycles in an effort to streamline and enhance productivity.
The AIDA model stands for Attention, Interest, Desire, and Action. AIDA is a marketing model outlining the stages a prospective customer goes through when deciding to make a purchase. The AIDA model has been around since the early 1900s, but many similar models exist today.
Artificial Intelligence (AI)
Artificial intelligence (AI) is the simulation of human intelligence by machines or computer systems. Historically, there are two sides of the AI debate: those who believe AI can be used to enhance human behavior and activity, and those in favor of AI replacing human efforts entirely. AI’s superior ability to decipher and interpret large data sets make it both compelling and also threatening to people in both camps.
The primary goals of AI is to perceive it’s environment and learn how to achieve it’s goals (taught or learned). Specific goals of AI include: problem solving, knowledge representation, planning, learning (see machine learning), Natural Language Processing (NLP), perception with the aid of sensors, and motion with the aid of robotics.
The anchoring effect is a cognitive bias where an individual’s decisions are influenced or guided by a reference point or “anchor”. Importantly, once an anchor point is set in someone’s mind, it becomes a reference point for the future.
For instance, if a customer is an early adopter who bought a product or service at a low price, they are ‘anchored’ at that price point and will expect to continue paying a similar price thereafter. Interestingly, the same is true for customers who first purchase at a higher price point. For more info on anchoring, see Thinking Fast and Slow by Daniel Khaneman.
App Store Optimization (ASO)
App Store Optimization (ASO) is the process of setting your mobile app name, description, keywords, and screenshots in order to rank higher (or show up at all) in an app store’s search results.
Apps with effective ASO can rank higher in app store search results, meaning the app will be more visible to app store visitors. Ultimately, if an app is more visible to these visitors, there’s a greater likelihood they will download the app.
Application Program Interfaces (APIs)
Application programming interfaces (APIs) are a set of functions and procedures that allow software applications to connect to one another. The term API may reference either a specific program, or to the implementation method itself.
APIs are beneficial because they allow applications to utilize external functions and interact with other software programs, oftentimes to streamline or enhance a user experience. Features like logging into an app via Facebook authentication, connecting your bank account info on Venmo, and checking the weather on your phone are all powered by APIs.
An attrition rate is a metric used to measure employees or customers lost over a period of time who do not return. The rate is usually represented as a percentage compared to the customer base or total workforce.
From an outside perspective, attrition rates are considered important for evaluating worker satisfaction. Internally, attrition is an important metric for hiring and advertising efforts.
Average Revenue Per User (ARPU)
Average revenue per user (ARPU) is the sum of the total revenue divided by the total number of customers. ARPU is an important metric for businesses to understand how much their average customers are spending, thereby informing future decisions such as what to charge for other products or services.
In computing and programming, the ‘back end’ refers to the part of a system that handles data storing and manipulation, and isn’t directly accessed or seen by the user. Back end contrasts with front end, which refers to an application or system’s user interface. The server is usually considered the back end, even though in some situations front end display elements are also configured on the server itself.
Backlinks are links that navigate a visitor from one website to a page on another website. To a certain extent, search engines consider backlinks “votes” for a webpage, thereby signifying that webpage as valuable.
Websites with a higher volume of backlinks have higher domain authority (DA), and therefore show up higher on organic search results for keywords and search topics. Other terms for backlinks include (“inbound links”, “incoming links”, or “one way links”).
Beta testing is a strategy used to test real world adoption of a new product or service. The goal of beta testing is to collect authentic feedback from customers or users to determine whether your business idea is valid or if you need to pivot. In the mobile app industry, both Apple and Google have release methods for Beta testing and collecting feedback.
The term “Blitzscaling” comes from a rather controversial German WWII term “BlitzKrieg” meaning “lightening war”. Blitzscaling implies that speed of development and release of features or services is more important than efficiency. When a company chooses to Blitzscale, they’re willing to spend time, money, and resources to go to market quickly before analyzing whether or not those efforts are beneficial. While some aspects of Blitzscaling are incredibly valuable, the approach also considered risky, and therefore isn’t recommended for all companies.
The term and concept of Blitzscaling grew in popularity with the release of the book by the same title in 2018 by Reid Hoffman and Chris Yeh. You can learn more about Blitzscaling and order the book directly on their website here.
In startup culture, bootstrapping refers to starting and running your own operation using already existing resources, rather than fundraising or taking on debt. Many people build new companies with the bootstrap method by using internal capital, such as personal savings or cash from the first sales. You can learn more about how to bootstrap your mobile app startup idea here.
Bounce rate is a term used for website traffic analysis, and refers to the percentage of website visitors who leave your site after viewing only one page. While bounce rate might be an important metric for some websites, generally speaking other metrics such as session duration, conversions, or actions taken (like submitting a contact form) are more important.
Similar to the object it’s named for, bottlenecks are areas where production, sales, or processes face limitations or delays, thereby having adverse effects on the entire chain of production. Production managers, business process managers, DevOps engineers, and other leaders are trained to identify bottlenecks in an organization or process that might be impeding production. From there, they can work together to find ways to alleviate or surpass the bottleneck, thereby streamlining the flow of production.
Brand Ambassador Programs
Brand ambassador programs are company initiatives where social media influencers are compensated in some way to promote a product or service, usually on a recurring basis. The goal of brand ambassador programs is to reach niche markets through individual promotion, giving the advertisement a more “direct” or “personal” touch.
Build-Measure-Learn Feedback Loop
The Build-Measure-Learn loop (also called the Feedback loop) was popularized in the book The Lean Startup by Eric Reis. The purpose of Feedback loop is to visually represent the flow of an effective development approach, particularly if you’re building a software Minimum Viable Product (MVP).
You can learn more about the Feedback loop here.
Business Process Automation (BPA)
Business process automation (BPA) refers to leveraging technology to automate a business process that would otherwise happen manually. Other terms for BPA include “digital transformation” or simply “business automation”. The main goal of BPA software is to streamline a workflow to improve the overall way a business operates. You can learn more about BPA here.
Business Process Integration (BPI)
Business Process Integration (BPI) occurs when multiple organizations across multiple verticals seek to improve their operations and reach their desired enterprise goals by automating their business processes. The purpose of BPI is to allow systems and services to unite parts of their business processes, and/or secure data sharing between numerous applications. You can learn more about BPI here.
Business Process Management (BPM)
Business Process Management (BPM) is a discipline in which people use various methods to research, analyze, model, optimize, design and automate business processes. BPM methods can vary in complexity and approach, and often have a technological component. In some cases, companies will hire a Business Process Manager to handle such specialized analysis.
The main goal of BPM is to identify ways in which business processes could be streamlined or automated. When done effectively, an organization may be able to discover and implement ways to expedite sales, production, or workflows.
Business Process Mapping
Business Process Mapping involves outlining what a business entity does today, defining the goals and standards of a successful business process, and determining who is responsible for what at each stage.
Business Process mapping answers the questions surrounding who, what, and how a process happens from start to finish today. People typically figure this out by creating a visual representation such as a flowchart. Simply put, mapping serves as an effective visual aid for leadership teams to understand the full lifecycle of a business process as it exists today.
Business Process Modeling
Business Process Modeling is the act of creating visual representations of how business processes could theoretically work or be improved. Modeling is an opportunity for you to think critically and creatively about your business processes, and identify whether or not bottlenecks exist.
Business Process Outsourcing (BPO)
Business Process Outsourcing (BPO) is the act of subcontracting third-party vendors to help handle business processes so they can better focus on other aspects of the business (such as customer interactions or production).
Importantly, “outsourcing” in this sense doesn’t necessarily mean you’re contracting an offshore workforce or product. You could also hire domestic “onshore outsourcing”, or “nearshore outsourcing” with territories of which you share a border.
Business Process Re-engineering (BPR)
Business Process Re-engineering (BPR) is a business management strategy that focuses on rethinking and redesigning the way an organization works to improve the customer experience, streamline workflows, and cut expenses. Organization leaders might implement various related methods such as BPM, BPA, or modeling in their overall BPR strategy.
In business, buyer personas are semi-fictional representations of your ideal customer or user based on real data or market research about your existing customers. Creating a detailed fictitious persona–including a name, their desires, motivations, and fears–can help personify your customer. Doing so brings a level of personalization with your customer segments, and makes it easier for marketers to think about what they may or may not like. For more info on buyer personas, check out this HubSpot article.
Call To Action (CTA)
Call to Action (CTA) is a marketing terms for any prompt designed to encourage someone to take a desired action. One of the most common CTA use cases occurs on website home pages, where visitors may see “Contact Us” or “Sign Up” button prompts. CTAs are essentially the trigger points designed to move someone from causal visitor to buyer, subscriber, or follower.
Capital Asset Pricing Model (CAPM)
The capital asset pricing model (CAPM) is an theoretical portrayal of how financial markets price securities, thereby speculating expected rate of return and risks on capital investments. CAPM is considered relatively simple and therefore remains a popular approach for asset risk-reward analysis. However, CAPM has failed numerous empirical tests. In addition, more modern approaches to asset pricing are coming into favor.
Center Stage Effect
The Center Stage Effect is a popular marketing phenomenon where if a prospective customer is presented with three options, they are likely to choose the middle (center) option. For instance, many companies will offer three tiers of pricing and feature services, and will make the middle offer the most attractive. For more info and center stage effect examples, check out our article here.
Central Limit Theorem (CLT)
The central limit theorem (CLT) is a probability theory stating that oftentimes when independent random variables are added to a group, their sum tends towards a normal distribution (the mean) even if the independent variables are not evenly distributed.
A common example is coin tossing. The probability of landing on heads after flipping a coin many times will approach a normal distribution, with the mean equal to half the total number of flips. CLT is an important concept in many aspects of our lives, especially finance and understanding trends and distribution patterns.
Charm pricing is also known as psychological pricing, or the belief that using specific pricing methods (such as odd numbers) can influence buying decisions. One of the most common charm pricing tactics is to end your price with the number 9. For example, $24.99 seems more attractive than $25, even though it’s only a “savings” of $0.01.
Other charm pricing tactics include using other odd numbers (7 is also popular), limited-time sales, and buy one get one free (BOGOF) sales.
The churn rate, also known as customer churn or attrition rate, is the rate at which customers stop using a product or doing business with an entity.
The churn rate metric is usually expressed as a percentage. The most common way for determining churn is: the number of churned customers/total number of customers.
Click Through Rates (CTR)
The click through rate (CTR), also simply called “click rate”, is calculated as: the number of people who click on a specific link/the total number of people who viewed the source. CTR is usually expressed as a percentage, and is calculated to determine how effective an advertisement campaign is (website, email, etc).
Cohort analysis is a type of behavioral analytics that breaks up related data within a data set into set groups, or cohorts, in order to evaluate their performance independently. Cohorts are usually determined in advanced based on user activity, preferences, or desires. From there, experiments are run or features are introduced in waves to these cohorts to measure, prove, or disprove business hypotheses.
Content Management Systems (CMS)
A content management system (CMS) is a software application used by people to create and manage digital content. WordPress is an example of a widely-used CMS, where people are able to collaborate by creating, editing, or deleting content online.
Content marketing is a marketing strategy focused on attracting customers by creating, publishing, or distributing valuable content (online or print). Content marketing is usually discussed in relation to inbound marketing, where efforts are focused on producing valuable content to rank highly on customers’ organic search results, rather than pay for advertising.
Providing value to potential customers with free content is perceived as helpful, and thereby builds trust and authority with potential buyers of your product or service. For more info on content marketing, check out Content Chemistry by Andy Crestodina.
Cost of Goods Sold (COGS)
Cost of Goods Sold (COGS), also called cost of sales, refers to the direct costs of producing goods sold by a company. The amount includes the cost of materials and the labor directly used to create or deliver the product or service.
Cost Per Acquisition (CPA)
Cost Per Acquisition (CPA) is an important marketing metric that measures the cost to acquire one paying customer via an advertising campaign or channel.
Cost-Per Click (CPC)
Cost-per-click (CPC), also known as pay-per-click, is an online advertising bidding system where advertisers set a maximum bid (max CPC) they’re willing to pay publishers for each click on an ad. Most online advertisement platforms work this way, including Google Ads and Facebook Ads.
Online ads usually direct visitors to your website or a product/service. Therefore, understanding your cost per acquisition (CPA) is a useful metric when setting your max CPC rate.
Cost Per Thousand (CPM)
Cost per thousand (CPM) is a marketing metric used to denote the price for 1,000 advertisement impressions (views or engagements) on a web page. The “M” in CPM stands for “mille”, the Latin word for thousand. Although CPM is a useful metric to know about, metrics such as CPC or CPA are arguably more important.
Customer Relationship Management (CRM)
Customer Relationship Management (CRM) refers to the interaction between businesses and their customers, and is synonymous with software systems that help manage and facilitate those relationships and their data.
Some companies choose enterprise CRMs such as Salesforce or HubSpot, whereas others see the benefit in creating a custom CRM from scratch. You can learn more about the pros and cons of custom CRM development here.
Customer retention refers to a company’s ability to retain customers, turn them into repeat buyers, instill customer loyalty, and prevent churn.
Cycle time refers to the amount of time a team spends working on producing a deliverable, which could anything from a physical item to a software feature. Teams will often run analysis and experiments to determine ways they might be able to reduce cycle time for faster delivery.
Decision Trees (DTs)
A decision tree is a decision analysis method, usually represented as a flowchart-like diagram, that shows various outcomes (advantages and disadvantages) for a series of decisions. Decision trees can help you assess the possible alternatives, risks, and monetary consequences associated with any situation.
Diffusion is the aggregate process and rate at which a new idea or product is accepted into the market. Diffusion rate is the speed that an idea spreads from one consumer to the next.
In business, disruption refers to when a new entity enters the market with a non-conventional business model or marketing approach and is able to challenge or overtake established competitors. For a detailed analysis of disruption and innovation, check out Tony Robbins webpage here.
Domain Authority (DA)
A website’s Domain Authority (DA) is a score on a 100-point scale indicating its relevance (or authority) for a specific subject area or industry. Websites with a high DA rank higher in search engines for relevant keywords and search topics. Backlinks are considered an important (if not the most important) factor for increasing DA.
A double-sided incentive program is a referral program, where referrers are rewarded in some way for sending new customer referrals to your service or platform. Double-sided incentive programs are considered a “win-win”, as you are potentially able to gain new customers through social proof, which may be more cost-effective than online advertising directly to the consumer.
The DuPont analysis is a framework developed by the DuPont Corporation used to analyze key metrics of financial performance to identify strengths and weaknesses that drive return on equity (ROE). The equation is as follows:
DuPont Analysis=Net Profit Margin×AT×EM
AT= Asset Turnover, or Sales/Average Total Assets
EM= Equity Multiplier, or Average Total Assets/Average Shareholders Equity
Dynamic pricing is a monetization strategy where the cost to consumer for a product or service fluctuates based factors determined by the company. Rush fees and Uber’s “surge pricing“, where the cost of a ride changes based on time and driver availability, are common examples of dynamic pricing.
Early adopters are the first wave of customers or users willing to try your product or service before the majority of others. As a cohort, early adopters are valuable for collecting initial feedback if you have an MVP or product that’s just hit the market. Early adopters are sometimes classified as risk-takers or influencers who can help spread awareness of a product (positive or negative), thereby influencing consumer behavior at large.
Economic Value Added (EVA)
Economic Value Added (EVA) is a formula for estimating a company’s financial performance based on residual wealth. You can calculate EVA by deducting cost of capital (including required return of the company’s shareholders) from its operating profit, adjusted for taxes on a cash basis. Simply put, EVA=net profit – capital charge for raising the firm’s capital.
In software, an engagement loop is a growth tactic flow where users enter and cycle through continuously, offering incentives and rewards that motivate the user to remain engaged (spending time and/or money). Stages of the engagement loop commonly include: action-feedback-motivation.
Enterprise software, also known as enterprise application software (EAS) is a computer software application built to satisfy the needs of an organization rather than an individual user.
The expectancy theory proposes that an individual will take an action or behave in a certain way based on what they expect the results will be. Simply put, people’s behaviors are motivated by what their desired outcomes may be.
Expected Monetary Value (EMV)
The Expected Monetary Value (EMV) is a decision theory statistic that attempts to estimate how much money you can expect to make or lose with a given decision. EMV is usually represented on a decision tree diagram or flowchart.
Fear Of Missing Out (FOMO)
The acronym FOMO stands for “Fear Of Missing Out”, and refers to the anxiety one may feel while seeing others experiencing something fun or exciting–especially on social media– and fearing they might not be able to participate.
Field of Dreams Fallacy
The movie Field of Dreams has a famous quote “if you build it they will come”. In the business and startup world this is a dangerous phrase because it leads people to believe that all they have to do it build their idea and it will be guaranteed to work.
Five Forces Theory
The Five Forces theory, also known as Porter’s Five Forces named after its originator Michael Porter, is a method for analyzing a company’s competitive environment. The five forces are: competition in the industry, potential of new entrants in the industry, power of suppliers, power of customers, threat of substitute products.
A flowchart is a diagram that helps visualize a step by step process or workflow. Flowcharts can also be useful for analyzing organizational structures and examining how different departments or workflows are interconnected. LucidChart is an effective and robust software for creating flowcharts. See also Decision Trees.
They Flywheel framework is a cyclical model for reaching both new and existing customers in all phases of the buyer’s journey. The three common stages of the flywheel include: attract, engage, and delight.
Fogg Behavior Model (FBM)
The Fogg behavior model (named for Dr. BJ Fogg) states that three elements must be present at the same time for a behavior to occur: motivation, ability, and prompt. If someone does not take action, the Fogg model states that at least one of those factors are missing. You can learn more about the Fogg model here.
The four Ps, also known as the marketing mix, are four important components needed to market a good or service. The four Ps include: the Product (good or service), the Price (what consumers pay), the Place (location), and Promotion (advertising). Essentially, the four Ps help answer the what, where, and why questions consumers might have about a product or service.
Freemium Model (monetization strategy)
The freemium model is a two-tiered user acquisition strategy where people are divided into either a free or paid tier of a service or product. The freemium model is especially popular with mobile apps and certain streaming services such as Spotify. You can learn more about the freemium model in our article here.
In software and technology, friction refers to how difficult it is for people to do an action, or make a purchase. Popular books such as Hacking Growth encourage teams to consider ways to reduce friction, thereby streamlining processes and UX for end users.
In software, front end refers to the refers to an application or system’s user interface which is directly accessed and seen by users. People occasionally treat the term UI and front end as synonymous but programmatically they aren’t identical. Front end contrasts with the back end, which stores and manipulates data and isn’t seen by the end user.
In business, the term funnel may refer to a sales funnel or marketing funnel, or the flow that people go through to become customers, users, or consumers. People usually call the top of the funnel “marketing”, the middle of the funnel “sales process” which leads to the final part where the prospect becomes a customer.
Game theory is the study of mathematical models and theoretical frameworks used by social scientists and computer scientists to analyze strategic and social interactions among players (rational decision makers) in a competitive environment. Game theory models are used in an attempt to predict outcomes of what people might do in strategic settings. The prisoner’s dilemma is one of the most well-known game theory models.
Gamification refers to online marketing techniques used to motivate app users, website visitors, or consumers to take more actions, make more purchases, or spend more time using a service. Gamification techniques use reward systems, prompts, and engagement loops similar to those used in video games to encourage use and purchases. See also Hook Model.
A Gantt chart, named after its inventor Henry Gantt, is a bar chart that illustrates a project schedule over time. Gantt charts are helpful for project managers, and useful for displaying tasks, events, and plans over a period of time.
Graphical User Interface (GUI)
GUI (graphical user interface) refers to a software application interface in which users interact with system elements using visual indicators (such as buttons), rather than purely text-based command labels. For instance, WordPress.com has a GUI that allows users to easily compose and publish blogs and webpages rather than coding HTML and CSS from scratch.
Growth hacking refers to strategies focused on growing a company, either by number of sales, users, or other important metrics. The term growth hacking was coined by Sean Ellis, and is the subject of his popular book Hacking Growth.
The halo effect is a tendency for people to allow positive impressions of someone in one area to effect their perspective of that person overall, regardless of whether or not that impression is relevant in another area. For instance, someone who likes Dewayne “The Rock” Johnson as a wrestler or actor might assume he would make a terrific financial advisor, based simply on his success in other fields. The halo effect also illustrates the importance first impressions can have on people.
The Hawthorne effect refers to the tendency people have to alter their behavior once they know their activity is being observed, examined, or monitored. Originally, the comprehensive Hawthorne studies were conducted in an attempt to measure workplace productivity based on a variety of factors, such as work environment, total hours worked/week, meal time, etc. While these factors ended up largely proving that these factors were irrelevant to productivity, the Hawthorne studies did prove that productivity can improve when employees feel as though they’re being heard.
The Hook model is an visual representation of a flow companies can use to motivate (or ‘hook’) someone to use or buy something continually. The Hook model (developed by Nir Eyal) is also known as an engagement loop, the four phases of which include: trigger, action, reward, investment.
ICE Score Model
The ICE scoring model helps people prioritize features and ideas by calculating the sum of scores assigned to three independent variables: Impact, Confidence, and Ease. Each of these categories is given a rating, usually on a 1-5 point scale. Once each category is assigned a value, the totals can be compared to show which features should be prioritized.
In-App Purchase (IAP)
In-App Purchases (IAPs) are mobile app add-ons that users can purchase. IAPs are popular in freemium monetization models, where people can access some tier of the service for free but then pay to unlock new features or enhance their experience. While IAPs can be great ways to generate revenue, developers need to consider that Apple and Google will take 15-30% of revenue earned from each IAP sale.
Infographics are illustrations and visual aids that demonstrate a concept or idea. They are popularly used in business blogs, social media posts, and PowerPoint presentations. A great resource for infographic templates is Venngage.
Software integration is the process of combining various types of software features or sub-systems so they can be used in a single application. This is commonly done using APIs. See also Business Process Integration.
Internet of Things (IoT)
The Internet of things (IoT) refers to physical devices or products (“things”) with sensors, software, or other technologies which can connect and exchange data with other systems over the internet. Common examples of IoT include things like home surveillance systems, Amazon’s Echo, wearable smart devices, and autonomous farming equipment.
Jaccard Index (Jaccard Similarity Coefficient)
Although not widely known by name, the Jaccard Index (also called the Jaccard similarity coefficient) is one of the most popular recommendation engines companies use to present similar choices to users/customers. Amazon’s recommendation engine is probably the most well-known platform built using Jaccard index methodologies. Companies use recommendation algorithms as an upselling tactic, or as a way to keep users engaged.
Just-In-Time Inventory (JIT)
Just-in-time (JIT) inventory refers to a management strategy where a company keeps as little physical inventory on hand and only places an order for the product once a customer order has been placed. JIT rose in popularity alongside outsourcing, and companies realized they could save warehouse storage space and the costs associated with it by only ordering the goods once an order is confirmed. In software, JIT compilation is a way of executing computer code compilation at run time rather than beforehand (Ahead of Time compilation [AOH]).
Kaizen is a Japanese term and business philosophy meaning “continuous improvement” or “change for the better”. The term Kaizen became a popular concept in the early 1950s with the rise in interest of lean manufacturing techniques. Toyota is well-known for implementing the concept of Kaizen at their factories. For more info on Kaizen, you can check out the work of Edward W. Demming.
Kanban, meaning signboard or billboard, is a popular method used to implement agile (or lean) software development. The goal of Kanban is to present full transparency of activities and effective communication across various departments or teams within an organization. Kanban became a popular concept in the early 1950s with the rise in interest of lean manufacturing techniques. Today, Trello is a popular digital form of Kanban in action. For more info on Kanban, you can check out the work of Edward W. Demming.
Law of Reciprocity
The Law of Reciprocity is a popular social psychology theory or persuasion, stating that when someone does something nice for you, you’ll feel an urge to do something for them in return. In business, giving away materials or parts of a service for free are ways to build trust with potential customers. As a result, these customers or users might then return the favor by leaving a positive review, making additional purchases, or telling others about your company via social media or word of mouth (WOM).
Lean (Lean Manufacturing; Lean Startup; Lean Development)
The term “lean” is commonly associated with agile software development, where teams are able to work quickly and efficiently using less resources, time, cost, and personnel. The lean manufacturing philosophy that started in the early 1950s paved the way for an overall rise in quality and workplace efficiency–all of which are trends applied in the software development industry. Other lean methodologies include kaizen, kanban, and JIT. For more info, check out The Lean Startup by Eric Ries.
Learning Management System (LMS)
A learning management system (LMS) is a software system designed for the administration, storage, and dissemination of learning resources, educational courses, and training programs for an organization (e-Learning).
Lifetime Value (LTV)
Lifetime value (LTV), also called customer lifetime value (CLV or CLTV), refers to the estimated average monetary value per customer of your product or service. For your business to succeed, you want your LTV to be higher than acquisition cost and your operating expenses or COGS.
M-Commerce (mobile commerce) is a monetization strategy similar to E-commerce except that the transaction happens via a mobile app rather than a website. M-Commerce is the most effective monetization strategy for online stores or retailers who sell material goods. Amazon is the most well-known example of the M-Commerce model.
Machine learning is a branch of artificial intelligence that analyzes data and automates modelling based on information it gathers about that data. Ultimately, the goal is to use computer system machine learning to identify patterns (learn) and act without human intervention. Machine learning is beneficial because it can process large data easily and efficiently, and pick up on trends that might otherwise be missed by human analysis. Importantly, the degree of autonomy of machine learning systems is determined by the individuals who set up them up.
Material Requirements Planning (MRP)
Material requirements planning (MRP) systems are software-based applications that help organizations plan, schedule, and manage manufacturing processes based on supply and demand needs.
Minimum Viable Product (MVP)
The Lean Startup author Eric Ries defines a minimum viable product (MVP) as the following: “An MVP is a product with just enough features to satisfy early customers, and to provide feedback for future product development.” Effective MVPs allow you to build and test your idea quickly, without wasting too much time or effort perfecting every detail. MVPs come in many forms and can be anything from a mobile app in beta testing to simple mock-ups. You can learn more about minimum viable products from our free resource guide here.
A mobile application, also called mobile app or simply app, is a software application designed to run on a mobile device such as a smartphone, tablet, or watch. Mobile apps are usually downloaded via the App Store or Google Play, rather than being hosted or consumed on a website. For more information on mobile apps, check out our Essential Guide to App Development here.
A monetization strategy is the plan for how your business, product, or service will generate revenue. Every successful business has one of multiple monetization strategies in place for any given sector.
Moore’s law refers to Intel co-founder Gordon Moore’s observation that the number of transistors on a microchip doubles every two years while the cost is also halved. Essentially, Moore’s law claims that as speed and capabilities of our computers increases every couple of years (even faster than that by today’s standards), the price consumers pay also decreases. Furthermore, Moore’s law states that growth of microprocessors is exponential.
Net Present Value (NPV)
Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. Emphasis is on the “present” value of cash, as the value of that cash depreciates over time. NPV calculations are used for capital budgeting and investment planning to analyze the projected profitability of an investment or project.
Net Promoter Score (NPS)
Net Promoter Score is a marketing metric that calculates the average survey rating of how likely people might be to recommend your product or service to a friend or colleague (usually on a 10 or 100-point scale). The scale is divided up into people who are either promoters, passives, or detractors.
A network effect refers to when the value of a product, service, or platform is determined at least in part by the number of buyers, sellers, or users of that entity. Simply put, the higher the demand and usage for something for the product or service, the greater the value. eBay, Amazon, Uber, and social media platforms like Facebook are all examples of services who’s pricing and value increases with the volume of customers on their platforms.
North Star Metric
A north star metric is the most important metric a company focuses on to measure success. This key metric usually corresponds with the needs your product or service delivers to a customer, along with what generates revenue. Honing in on your north star metric is important because it allows you to focus on what you do best and what’s best for your customers. For a company like Amazon, purchase frequency might be their north star metric, whereas a social media company like Facebook’s north star might be time spent on the app.
In business and human resources, onboarding refers to the process of hiring and introducing someone new to an organization. In software, user onboarding refers to the flow someone goes through to create an account and became acquainted to a system. User onboarding is an important aspect of UX.
An organizational model is a visual representation of an organizational structure, including individual roles, hierarchies, and the relations and interactions between those roles.
An organizational structure is the hierarchy of how a business is structured and operates, including branches, departments, and individual roles. Organizational structures are usually represented using organization models.
The term penny gap, coined by Josh Kopeland, is the space between something being absolutely free and something very cheap. The penny gap concept states that customers are less willing to spend $0.01 for something they’re used to getting for free versus paying an extra $10 on a monthly bill that’s usually $100.
PIE Score (Framework)
The PIE framework is a system used to help prioritize feature ideas by assigning numeric values to three categories: Potential, Importance, and Ease. PIE is similar to the ICE score model.
A tech startup pivot means a shift away from your original product or offering to something new that you think customers, clients, or app users will be more interested in (or more willing to pay for). To learn more about pivots, check out our article here.
The planning fallacy is a prediction phenomenon where people often underestimate the amount of time needed to complete a future task, which results in delays, missed deadlines, and/or additional expenses.
Point of Purchase (POP)
The point of purchase (POP), also known as point of sale, is the time and place where a transaction is finalized. POP is a term used for both in-person retailers as well as online stores. In the case of online/mobile services, there are various strategies and approaches to consider from a programmatic perspective.
The prisoner’s dilemma is a standard paradox example of game theory demonstrating that two individual parties might not decide to work together, even if it’s in their best interest to do so.
Product Life Cycle (PLC)
The product life cycle (PLC) describes the stages of a product from launch to termination. The main stages of PLC include: introduction, growth, maturity, and decline. Importantly, the PLC is only for existing or ‘live’ products and services, not necessarily new ones.
Product/market fit, also known as product-market fit, is the degree to which a product or service satisfies a market demand. People measure product/market fit by assessing how well a company meets the needs of early adopters, gathers feedback and gauges interest in its product. Product/market fit is widely considered the first step to building a successful venture.
Push and Pull Strategies
Push and pull strategies (or push-pull strategies) are marketing terms which involve either ‘pushing’ your brand in front of audiences with paid advertising or outreach, or ‘pulling’ them in organically with inbound methodologies. For more info on ‘pull’ methodology, see inbound marketing and content marketing.
Reach and Frequency
In marketing and advertising, ‘reach’ measures the number of people who will see or hear an advertising campaign, and ‘frequency’ refers the number of times those people will see the ad. The higher the reach, the more people will see your ad.
A recommendation engine is a type of data filtering tool that uses algorithms to offer suggestions to people based on their previous behaviors or actions. YouTube’s infamous recommendation engine is based on viewing history and content preferences and engagement (likes, shares, etc). Amazon’s recommendation algorithm is based on purchasing history and consumer profiling (see also Jaccard Index). Recommendation engines are powerful ways online platforms can keep people engaged, or keep people spending money on the platform.
Companies use referral programs as a growth marketing tactic to acquire new customers through their existing customers. Existing customers are encouraged or incentivized to recommend the product or service to their contacts in exchange for something (usually a discount or free item).
Relationship marketing is a form of marketing that emphasizes direct, personal, and quality relationships to increase customer retention and satisfaction, rather than just focusing on transaction sales. The idea is that satisfied customers will be recurring buyers, or even recommend your product or service to their friends through free word-of-mouth promotion.
Repurchase rate (also known as rebuy rate) is the percentage of customers who have purchased a good or service, and purchased that good or service again within a period of time. People typically measure repurchase rate in 30/60/90/180/360 days from the first order.
Responsive design is an approach to web page design that makes use of flexible layouts and image scaling so that it looks and works well on whichever device type (screen size) you are using to view the content. Responsive design is based on set containers and breakpoints, which divide possible screen sizes in ranges and adjust page elements accordingly. So, the layout might look completely different on a large desktop monitor and on a small mobile phone display.
Return on Equity (ROE)
Return on equity (ROE) is a way of measuring financial performance calculated by dividing net income by shareholders’ equity. Since shareholders’ equity is equal to a company’s assets minus its debt, ROE is considered the return on net assets.
An RSS (Really Simple Syndication) feed is a file that contains a summary of updates from a website, which is usually a list of recent blog posts or articles.
In project management, an S-curve is a graph that plots cumulative data points over time, such as cost and worker hours. S-curves are useful because they allow you to track the progress of a project, allowing you to visualize and compare the expected shape of the S-curve vs the actual current shape.
In software development, a sandbox is a testing environment that isolates untested code (new features or experiments) and is separate from the production environment. Other terms for a sandbox include: working directory, test server, or development server.
In software development, Scrum is a framework using agile methodologies for planning, delegating, developing, delivering, and sustaining products in a complex environment. Scrum teams are small (10 people or fewer), and may meet daily for brief meetings called daily scrums (sometimes these are just 15 minutes). The goal of Scrum is for small teams to work efficiently by divvying up tasks and working “in sprints” to deliver features quickly.
Search Engine Marketing (SEM)
Search Engine Marketing (SEM) is a form of digital marketing where the goal is to promote or increase the visibility of a website in search engine results pages (SERPs). Marketing your website with SEM usually involves optimizing paid advertising, but you can also implement pull strategies (content marketing, writing guest blog posts, etc).
Search Engine Optimization (SEO)
Search Engine Optimization (SEO) is the process of increasing the quantity of your website’s traffic from search engines. A good SEO strategy will focus on delivering quality content so your webpage can show up higher on search engine results, thereby attracting more organic visitors to your website. SEO goes hand in hand with content marketing.
In marketing, segmentation is the process of dividing a broad group of existing consumers or business markets into sub-groups of consumers (known as segments) based on some type of shared characteristics. Understanding the various buyer personas of your business and their purchase history is helpful for identifying possible segments to focus on.
Seven S Model
The Seven S Model, also known as the McKinsey 7S Framework, is a tool for analyzing a company’s organizational structure based on 7 key elements: Structure, Strategy, Skill, System, Shared Values, Style, and Staff.
The Shewhart cycle is a four-stage work/production methodology cycle developed by Walter Andrew Shewhart in the early 1900s. The Shewhart cycle mirrors the scientific method (plan-do-check) with four stages: Plan-Do-Check-Act (PDCA). Later, W. Edwards Deming expressed his preference for a change to Plan-Do-Study-Act (PDSA), which implies more analysis rather than passive monitoring (check). Today, these cycles are still used in lean methodologies.
Single Sign-On (SSO)
Single sign-on (SSO) is an authentication scheme that allows a person to log in with a single ID and password to any of several related, yet independent, software systems. Large companies that use a variety of applications may implement some form of SSO for security and ease of use, as people typically won’t need to re-authenticate every time they want to log in to a system.
Social Proof Principle
The social proof psychology principle says that when people are uncertain about something, they’ll most likely turn to others for behavioral guidance, and therefore be influenced by their actions. In order to harness this concept for persuasion, marketers must first identify the uncertainties of their customers and then buffer accordingly with appropriate social proof.
Stage-Gate Development Model
A stage gate (also known as phase-gate) process is a project management technique in which a project is divided into stages or phases, separated by “gates” (decision points). At each gate, managers or some board of governance decides whether to continue, tweak, or abandon the project or initiative.
Strategic Business Unit (SBU)
In business, a strategic business unit (SBU) is a team that focuses on product offering and market segment in order to improve profitability.
Statistical Process Control (SPC)
Statistical process control (SPC), developed by Walter Andrew Shewhart, is a method of quality control that uses statistical methods to monitor and control a process. SPC helps to ensure that the process operates efficiently, producing more consistent product output with less waste (rework or scraps).
Subscription Model (monetization strategy)
For online platforms, the subscription model is one of the most popular, yet also one of the most challenging monetization strategies. In order to maintain subscriptions and prevent churn, a platform typically must be able to deliver quality content consistently. Keeping users engaged is a key aspect to any platform that relies on the subscription model. As a result, streaming channels like Netflix, workout systems like Peleton, or E-commerce websites like Amazon Prime, are some of the most successful streaming platforms.
Sunk Cost Fallacy
The sunk cost fallacy refers to our tendency to focus on our past investments instead of our present and future costs and benefits, meaning that we commit ourselves to decisions that are no longer in our best interests. In business, unfortunately many people fall victim to the sunk cost fallacy by pumping money into a product or business that is not profitable or even sustainable, with no evidence that things will improve.
Supply and Demand
In business, supply and demand is a theory that explains the interaction between the sellers of a resource and the buyers for that resource–the greater the supply, the lower the cost; the greater the demand, the higher the cost.
Surge pricing is also known as a dynamic pricing is a monetization tactic where the cost to consumer for a product or service increases based factors determined by the company. For instance, ride-share company Uber implements surge pricing when various elements are at play, such as having a lack of drivers, high volume of rides needed, location and distance needed to travel, or the time of day/night.
SWOT – Strength, Weaknesses, Opportunities, Threats
SWOT analysis is a strategic planning technique to help companies or individuals assess their strengths, weaknesses, opportunities, and threats relative to their competitors. The SWOT analysis method is a popular approach for the self-evaluation of a business in respect to their competitive environment and project planning initiatives.
The term technology stack, or tech stack, refers to the combination of programming languages, frameworks, and tools that developers use to build a web or mobile app. Developers and development teams like to establish a tech stack based on their individual skills, preferences, and/or the needs of their clients. Formalizing a tech stack also fosters consistency and familiarity, which is especially important when multiple people are working on the same project.
Testimonials are an promotional tactic for businesses to demonstrate their validity, and customer satisfaction. As consumers, our purchase decisions are influenced by reviews and the testimonials of previous buyers. Quoting testimonials on your website is a popular approach. By allowing customers to speak candidly about their experience working with you, prospective buyers will take their words to heart and expect the same results.
User Acquisition (UA)
User acquisition (UA) is the act of gaining new users for an app, web platform, or other service. The term “acquisition” is company or platform-specific, as every entity has their own goalposts for when a user is “acquired”. For pay to download mobile apps, user acquisition can be measured simply by the number of successful downloads/installs. On the other hand, a dating platform might only consider a user “acquired” if they successfully create an account.
User Interface (UI)
In computing and software, user interface (UI) refers to the elements of a system that users see and interact with. Viewing a display screen, seeing and clicking buttons, and even tracking your mouse are examples of UI. Today, there are UI specialists who look for ways a system can be more visually appealing and intuitive from a design perspective.
User Experience (UX)
In computing and software, user experience (UX) refers to how people use and navigate a software system, such as a mobile app. The quality of an end-user’s experience determines whether or not a system has good or bad UX. Good UX relies on simplicity and clarity, where users are able to continuously navigate a system without being confused or lost. Bad UX is when a website has a pop-up ad that covers up content or even action buttons (like making it impossible for someone to share content or subscribe, for example).
Vanity metrics are metrics that look good or impressive to others, but don’t actually inform or have a correlation with the success of your business. For example, a brand may have tons of Instagram followers, but if their marketing posts lead to zero conversions then their large number of followers is just a vanity metric. To avoid vanity metrics, focus your analysis on your efforts that have direct correlation with profitability, active use, or customer satisfaction.
Virality – (Viral Marketing; Viral Loop; Viral Coefficient)
In marketing and internet culture, when something “goes viral” it means that quickly spreads and becomes popular to a wide online audience. Viral funny videos on YouTube or funny/controversial Tweets are the most common things that go viral.
Another term related to virality is the viral loop. The viral loop is a cycle of experiencing and sharing (online or through word-of-mouth) with four stages: see, click, desire to share, share.
Lastly, another important concept is viral coefficient. Viral coefficient refers to the number of new customers that are generated through sharing efforts of one satisfied customers. For instance, one satisfied customer may tell three of their friends about a product, and from there those three tell an additional three people each, meaning that one original customer ended up generating twelve new customers. See also network effect.
Want-Got Gap refers to the common discrepancy between a customer’s actual situation and their desired situation. People often fall into a trap where they want something very expensive, but don’t necessarily have sufficient financial means, data, resources, or skills to “get” it.
Waterfall development is a methodology where progress and changes happen in linear sequential phases, where each phase depends on the completion of the previous phase before it can begin. This differs from the more popular agile approach, where features are siloed off in teams and developed independently in fast iterations (“sprints”). Waterfall development predates the agile approach, and is considered to be less flexible than agile methodologies.
A Web App is a software application that may be developed for both desktop and mobile devices, and can be consumed on any web browser (not in the App Store or Google Play Store). When compared to mobile apps, web apps are advantageous as most searches happen online (Google) and not in the App Store or Google Play Store. For instance, if you want to search for “best dentists near me”, you would likely go to Google to conduct the search and not the App Store. For more info, check out our FAQ section here.
Word of Mouth (WOM)
Word of mouth marketing, also called WOM advertising, refers to a company’s efforts to incentivize people to share their product or service, either by sharing content online or through an active recruitment/referral program. When a company puts out a funny, surprising, or controversial advertisement, they hope that these efforts will catch someone’s attention enough that they will spontaneously talk about it with their friends. WOM is considered a very popular and influential form of marketing brands of all sizes should consider.