Introduction

In the business world, which often runs at a breakneck speed, it’s vital that necessary information can be communicated quickly and easily between individuals, teams, stakeholders, and management. This is where acronyms step in. 

Acronyms are words formed from the first letters of other words or expressions. They’re very similar to abbreviations (though not quite the same thing).

For this reason, acronyms are ideal for use in high-pressure situations, where it’s necessary to communicate a lot of information in as few words as possible. When everyone is cued into the acronyms’ meanings, there’s no need to explain the concepts they stand for any further.

Below are 25 of the most commonly used acronyms in business settings. Many of these are KPIs; others describe specific aspects of business operations. Ultimately, using acronyms provides tremendous potential for streamlined, optimized communication at all levels of your organization.

1. ROI (Return on Investment)

A measure of the profitability of an investment. Found by dividing the net profit by cost of investment, ROI is one of the most common and important metrics for ascertaining an asset’s value. ROIs are used in numerous contexts across industries as varied as education, real estate, and tech. 

2. KPI (Key Performance Indicator) 

KPIs are measurable values that demonstrate how effectively a company is achieving key business objectives. They are often visualized as widgets on performance-tracking dashboards, such as those from Plecto. Plecto dashboards can host a wide range of prebuilt KPI widgets—and have the potential to host more of your own creation.

3. CRM (Customer Relationship Management) 

Software for managing a company's interactions with current and potential customers. Well-known CRMs include Salesforce, HubSpot, and Pipedrive—and all three of these CRMs can be integrated with Plecto.

4. ERP (Enterprise Resource Planning) 

ERP is a type of software used to manage day-to-day business activities such as accounting, procurement, project management, risk management, and supply chain operations. Microsoft Dynamics and Zoho are two well-known ERPs that integrate with Plecto, allowing for the full range of their capabilities to be enhanced with Plecto’s data dashboards.

5. B2B (Business-to-Business) 

B2B refers to transactions between two businesses, such as a manufacturer and a wholesaler. SaaS products such as Plecto are commonly classed as B2B products as they help optimize business operations and workflow and aren’t intended for popular, individual use.

6. B2C (Business-to-Consumer)

B2C refers to transactions between a business and consumers. The number of B2C enterprises is basically endless—they range from online booking and food delivery companies, to travel booking and e-commerce firms.

7. CAC (Customer Acquisition Cost) 

CAC is one of the core sales-related KPIs. It’s the mean (average) cost of obtaining one new customer. Find your CAC by adding together all marketing and sales expenditures in a period, and dividing by the number of new customers obtained in that time. These expenditures can include ad spend, salaries, marketing tool subscriptions, promotional materials, and upgrade costs—basically, everything in the kitchen sink. In short, you can think of CAC as a type of ROI for obtaining new customers.

8. CLV (Customer Lifetime Value) 

CLV is the total revenue a business can reasonably expect from a single customer account throughout the business relationship. Also called Lifetime Value (LTV), CLV measures the total revenue a business can reasonably expect from a single customer account through the entire course of their relationship. The “basic” formula for CLV consists of multiplying average purchase value, purchase frequency, and customer lifespan together, although this formula has several more advanced variations. Knowing your CLV can help fine-tune your marketing strategy, inform your product development, and streamline your customer acquisition and retention processes.

9. COGS (Cost of Goods Sold) 

The direct costs attributable to the production of the goods sold by a company, COGS is often found as a component in formulas for KPIs such as Inventory Turnover.

10. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) 

EBITDA is a measure of a company's overall financial performance and is used as an alternative to simple earnings or net income in some circumstances. EBITDA

11. FTE (Full-Time Equivalent) 

FTE indicates the level of an employee's involvement in a project or a company. A single FTE represents the amount of work a single, full-time employee typically performs in a given period (usually one year). FTE is found by dividing the total number of hours worked by the number of hours considered full-time.

12. GAAP (Generally Accepted Accounting Principles) 

GAAP common set of accounting principles, standards, and procedures that companies must follow when they compile their financial statements. Examples of GAAP include:

• The Revenue Recognition Principle: Revenue should be recognized in the period it is earned in, not when payment is received.
• The Cost Principle: Assets should be recorded at their original cost, and this should not be adjusted for changes in market value.
• The Full Disclosure Principle: Financial statements should disclose all relevant information that could affect users’ understanding of the company’s financial position and performance.

13. HR (Human Resources) 

A particularly well-known acronym, HR is the department within a company responsible for managing employee-related activities.

14. IPO (Initial Public Offering) 

IPO is the process by which a private company can go public by selling its shares to the public.

15. M&A (Mergers and Acquisitions) 

M&A refers to the consolidation of companies or assets through various types of financial transactions.

16. MoM (Month-over-Month) 

MoM is a measure of growth or change from one month to the next.

17. NPS (Net Promoter Score) 

Closely linked to CSAT, NPS is a common KPI that measures your customers’ loyalty to your company. Measured on a 0-10 scale, customers who identify as 9-10 are called promoters, those with 7-8 as passives, and those with 0-6 as detractors. You then subtract the percentage of detractors from promoters, leaving a score between -100 and +100. While +1 is actually considered a “good” NPS score, it’s clear you should try to aim higher than +1!

18. P&L (Profit and Loss) 

P&L is a financial statement that summarizes the revenues, costs, and expenses incurred during a specified period. P&Ls are essential components of ongoing investor and stakeholder communications, and are used for activities such as budgeting and tax planning.

19. R&D (Research and Development) 

R&D is the process by which a company works to obtain new knowledge and use it to create new technology, products, services, or systems that it will either use or sell.

20. SaaS (Software as a Service) 

A software distribution model in which applications are hosted by a service provider and made available to customers over the internet. SaaS solutions cover a huge range of applicability and usually come in a B2B format. Plecto is an example of a SaaS solution, one that allows users to build dashboards to visualize and track relevant data.

21. SEO (Search Engine Optimization) 

The process of improving the visibility of a website or a web page in a search engine's unpaid results. The bread-and-butter of online marketing efforts, SEO is a rapidly evolving field and has changed greatly over the past couple decades. Recent advances in AI promise to bring both new challenges and opportunities for how SEO is practiced in the 2020s and beyond.

22. SWOT (Strengths, Weaknesses, Opportunities, and Threats) 

SWOT is a well-known strategic planning tool used to identify these four elements of a business or project. 

• Strengths are the internal attributes and resources that support a competitive advantage: branding, customer base, or skilled workforce.
• Weaknesses are the internal attributes and resources that work against a competitive advantage: limited finances, a weak brand, or outdated technology.
• Opportunities are external conditions that could benefit a business: market trends, advancements in tech, or regulatory changes.
• Threats are external factors that could spell trouble for a business: new competitors, changing consumer habits, or an economic downturn.

23. YoY (Year-over-Year) 

YoY indicates growth or change, usually financial or revenue-based, from one year to the next.

24. YTD (Year-to-Date) 

YTD indicates a period starting from the beginning of the current year up to the current date.

25. CAGR (Compound Annual Growth Rate) 

CAGR measures the mean (average) annual growth rate of an investment over a specified period of time longer than one year. CAGR more or less “smooths out” year-to-year discrepancies and therefore allows long-term financial planning to be simplified.

The bottom line

Whether you want to promote a culture of greater efficiency at your workplace or simply want to familiarize yourself with these terms, you can’t go wrong with learning—and applying—these acronyms to your daily workflow. And even better, you can use dashboards to further enhance and optimize your experience of engaging with the concepts, practices, and KPIs these acronyms represent.

Try Plecto free for 14 days, and see how its efficiency Plecto dashboards promote can take your product to new heights!