The language of sales

You're in a pipeline review meeting. The VP of Sales says, "We're tracking to 80% of quota, but the ACV on new deals is down 15% quarter over quarter. If NDR holds, we'll still hit the number."

Everyone nods. You nod too. You have no idea what just happened.

If you came from DevRel or engineering, you know this feeling. The language of sales and finance is a foreign language. And nobody hands you a phrasebook when you walk into your first go-to-market meeting.

I've been in these meetings for thirty years. I've watched incredibly talented technical people freeze when the conversation turns to pipeline and bookings. I've seen developer advocates with deep product expertise get dismissed because they couldn't connect their work to revenue outcomes. It's the ceiling that DevRel needs to break through before they get a shot at occupying the big chair

This post is the phrasebook I wish someone had given me earlier in my career. I wrote it to be a map. All these terms connect to each other. They tell a single story: is this business healthy, and where is the money coming from?

If you aspire to grow into the VP- or C-level chair, this is the post for you.

The story every business tells

Every business answers the same question: can we acquire customers, keep them, and grow them?

That's it. The entire vocabulary of sales and finance exists to measure and communicate progress on that single question. Acquire. Keep. Grow.

You may think marketing and DevRel is about "driving awareness" or "building community," but you would be wrong. The purpose of these functional areas is to help sales drive revenue. Period.

These terms aren't arbitrary. They're the chapters of that story. And once you see how they connect, the whole language starts to make sense.

Let me walk you through it.

How a customer becomes revenue

A person visits your website. They sign up for a free tier. They use the product. They upgrade to a paid plan. Their company renews the contract a year later. They add more seats or higher usage.

That journey is the engine of the business. Every term we're about to cover measures some part of it.

Here's the full picture, broken into five stages.

Stage 1: Leads become pipeline

Someone raises their hand. Maybe they filled out a form. Maybe they requested a demo. Maybe a salesperson reached out and they agreed to a meeting. That person is a lead. You may also hear them referred to, literally, as a "hand-raiser."

Not all leads are equal. A developer who stars your GitHub repo is different from a VP of Engineering who requests pricing information. Companies categorize leads to focus effort on the ones most likely to buy:

• MQL (Marketing Qualified Lead). Someone who engaged with marketing in a way that suggests buying intent. Downloaded a white paper, attended a webinar, visited the pricing page multiple times.
• SQL (Sales Qualified Lead). Someone the sales team has spoken with and confirmed as a real potential buyer with budget, authority, need, and timeline.

When a lead becomes an SQL with a real deal in motion, it enters the pipeline. Pipeline is the total dollar value of deals your sales team is working on. If a salesperson is talking to five companies about potential $100k contracts, that's $500k in pipeline.

Pipeline is potential, not money in the bank. But it's the most important leading indicator in any sales organization. Without pipeline, there's nothing to close.

The ratio of pipeline to quota tells you whether the sales team has enough at-bats. Most companies want 3x or 4x pipeline coverage. If your quarterly quota is $1M, you want $3M to $4M in pipeline to feel confident you'll hit the number. Deals fall through. Timelines slip. You need cushion.

Stage 2: Pipeline becomes bookings

A deal closes. The customer signs a contract. That's a booking.

Here's where it gets tricky. A booking is not the same as revenue. If a customer signs a three-year, $300k contract today, you booked $300k. But you haven't earned that money yet. You'll recognize it as revenue over the life of the contract.

Bookings measure what you sold. Revenue measures what you earned.

This distinction matters because you can book a lot of business and still run out of cash if the revenue comes in slowly. It also matters because sales teams are usually compensated on bookings, not revenue. They close the deal. Someone else has to deliver the value.

A few more terms that show up at this stage:

• Win rate. The percentage of pipeline that converts to closed deals. If you have $1M in pipeline and close $250k, your win rate is 25%.
• Sales cycle. How long it takes to close a deal, measured from first meaningful contact to signed contract. Enterprise deals might take six to twelve months. Self-serve PLG deals might close the same day.
• ASP (Average Selling Price). The average size of your closed deals. If you closed ten deals worth $500k total, your ASP is $50k.
• ACV (Annual Contract Value). The annualized value of a single contract. If a customer signs a three-year deal worth $300k total, the ACV is $100k. ACV tells you about individual deal size. ASP tells you the average across all deals. When someone says "ACV is down," they mean customers are signing smaller contracts.

Stage 3: Bookings become ARR

When you sell a subscription, you usually talk about ARR (Annual Recurring Revenue). This is the annualized value of your subscription contracts.

If a customer signs a $10k monthly contract, that's $120k ARR. If they sign a $60k annual contract paid upfront, that's also $60k ARR.

ARR is the heartbeat of a SaaS business. It tells you how much recurring revenue you can count on if nothing changes. No new sales. No churn. Just the current base renewing.

MRR (Monthly Recurring Revenue) is the same concept on a monthly basis. MRR times twelve equals ARR.

Why does this matter? Because recurring revenue is worth more than one-time revenue. A customer paying you $100k per year, every year, is more valuable than a customer who pays $100k once and never returns. The entire SaaS business model depends on this math.

Stage 4: ARR faces the churn test

Customers leave. They cancel their subscriptions. They don't renew. This is churn.

There are two ways to measure it:

• Logo churn. What percentage of customers did you lose?
• Revenue churn. What percentage of ARR did you lose?

These numbers can be very different. If you lost ten small customers worth $10k total but kept your five enterprise customers worth $500k, your logo churn is high but your revenue churn is low.

Revenue churn is what the CFO watches. Logo churn tells you about customer satisfaction. Revenue churn tells you about financial health.

A healthy SaaS business has annual revenue churn under 10%. Great businesses get it under 5%. If you're losing 20% of your revenue every year, you're on a treadmill, running hard just to stay in place.

Stage 5: Expansion saves the day

As you undoubtedly know, your existing customers can become worth more over time. They add seats. They upgrade to a higher tier. They store more data. They use more of your API and pay based on usage.

This is expansion revenue. And it's the most efficient revenue you can generate. You already acquired the customer. You already have a relationship. Selling them more is dramatically cheaper than finding someone new.

The metric that captures this is NDR (Net Dollar Retention), also called NRR (Net Revenue Retention).

NDR measures what happened to a cohort of customers over a year. Take the ARR from customers you had twelve months ago. Now look at what those same customers pay today. Include upgrades (expansion), include downgrades (contraction), and include cancellations (churn). What's the ratio?

If you started with $1M in ARR from a cohort and those same customers now pay $1.1M, your NDR is 110%. You grew revenue from your existing base without adding a single new customer.

This is the number that makes CFOs smile.

NDR above 100% means your expansion outpaces your churn. You could stop selling to new customers and still grow. Below 100% means you're shrinking from within. Every new customer you acquire is partially filling a hole left by customers you're losing.

The top SaaS companies have NDR above 120%. Snowflake hit 169% at IPO and has reported above 180% at peak. That means for every dollar of ARR they had a year ago, they had $1.80 the next year. From the same customers. No new logos required.

But NDR can hide problems. That's why CFOs also track gross retention, which measures what happened to your cohort before expansion. Take the same cohort. Look at renewals and churn only. Ignore upsells.

If your gross retention is 75% but your NDR is 110%, you're losing a quarter of your customers every year and papering over it with aggressive upsells to whoever stays. That works until it doesn't. Eventually you run out of room to expand the survivors.

A company with 95% gross retention and 110% NDR is in a fundamentally different position than a company with 75% gross retention and 110% NDR. Same NDR. Very different businesses. The first one has a sticky product. The second one has a churn problem and a good sales team.

When a company has strong NDR, they can afford to spend more to acquire each customer. Which brings us to the efficiency metrics.

The efficiency question

Acquiring customers costs money. Sales team salaries. Marketing spend. The free tier that doesn't pay for itself. The conferences, the ads, the content.

How much should you spend?

Two metrics govern this question.

CAC: The cost of acquisition

CAC (Customer Acquisition Cost) is the total cost of acquiring a new customer. Add up all your sales and marketing costs for a period. Divide by the number of new customers you acquired.

If you spent $1M on sales and marketing last quarter and acquired 100 new customers, your CAC is $10k per customer.

CAC by itself means nothing. A $10k CAC might be amazing if those customers pay you $100k per year. It might be terrible if they pay $5k per year and churn after six months.

LTV: The lifetime payoff

LTV (Lifetime Value), also called CLV, estimates how much total revenue you'll earn from a customer over the entire relationship.

The simple version: take the average revenue per customer per year. Divide by your annual churn rate. If customers pay you $20k per year and your churn is 10%, your LTV is $200k.

The math: if you lose 10% of customers per year, the average customer stays for 10 years (1 divided by 0.10). Multiply 10 years by $20k per year and you get $200k.

One catch: CFOs don't think in revenue. They think in gross margin. Gross margin is what's left after you subtract the direct costs of delivering your product. Hosting. Support. Infrastructure. If a customer pays you $100k but costs you $30k to serve, your gross margin is $70k, or 70%.

Real LTV calculations use gross profit, not revenue. A customer paying $100k at 70% margin is worth more than a customer paying $120k at 40% margin. The first one nets you $70k per year. The second one nets you $48k. Margin determines value, not price.

Most SaaS companies aim for gross margins above 70%. Below 60% and you start to wonder whether it's really a software business or something more labor-intensive.

More sophisticated LTV models factor in expansion, discounting for the time value of money, and that gross margin we just discussed. But the simple version gets you most of the way there.

The ratio that matters

The LTV/CAC ratio tells you if your unit economics work.

If you spend $10k to acquire a customer who's worth $200k over their lifetime, your LTV/CAC ratio is 20x. That's incredible. You should spend more on acquisition.

If you spend $50k to acquire a customer worth $30k, your ratio is 0.6x. You're losing money on every customer. This is how companies die.

Most investors want to see LTV/CAC above 3x. Great companies get to 5x or higher.

There's a related metric called payback period. How many months does it take to recoup the cost of acquiring a customer? If your CAC is $10k and the customer pays you $1k per month, your payback period is ten months. After that, you're profitable on that customer.

Investors love short payback periods. If you can recoup CAC in under twelve months, you can fund growth with your own cash flow. If payback takes three years, you need outside capital to keep acquiring.

What the CFO sees

When a CFO looks at the business, they're watching these numbers tell a story across three timeframes.

The past: Did we hit the number?

Revenue. Bookings. Win rates. These are the historical record. They tell you whether the team executed against the plan.

If you said you'd book $10M and you booked $8M, that's an 80% attainment. The CFO wants to know why. Was the pipeline too thin? Did deals slip? Did win rates drop? Did the average deal size shrink?

Every miss has a diagnostic path. The vocabulary gives you the tools to find it.

The present: Are we on track?

Pipeline coverage. Sales cycle trends. NDR trajectory. These tell you whether you're going to hit the future number.

If pipeline coverage dropped from 4x to 2x, alarms should be going off. Even if this quarter is fine, next quarter is in trouble.

If NDR is declining, even healthy new sales can't save you. You're leaking from the bottom of the bucket.

The CFO is always living in the future. Today's results are already locked in. They want to know what's coming.

The future: Is the model sustainable?

LTV/CAC. Payback period. CAC trends. These tell you whether the business can keep growing profitably.

If CAC is rising faster than LTV, eventually the math breaks. If payback periods are stretching, you'll need more capital to sustain growth.

Sustainable companies improve these ratios over time. They get more efficient as they scale. Economies of scale in marketing. Better conversion rates as the brand becomes known. Lower churn as the product matures.

There's a shorthand investors use to assess this quickly: the Rule of 40. Add your revenue growth rate to your profit margin. The sum should be 40 or higher.

A company growing 50% with a -10% margin? That's 40. Passing. A company growing 20% with 25% margins? That's 45. Passing. A company growing 15% with 10% margins? That's 25. Trouble.

The Rule of 40 captures a fundamental tradeoff. You can grow fast and lose money. You can grow slow and make money. But you can't grow slow and lose money. That's just dying.

Early-stage companies often run below 40 because they're investing heavily in growth. That's fine if the growth is actually happening. Mature companies that fall below 40 have a harder story to tell.

A case study in the numbers: MSFT

At the time I'm writing this post, Microsoft stock has dropped significantly amid a broader market selloff. Let's use the numbers we've talked about here to analyze the situation.

In late January 2026, Microsoft reported Q2 earnings. Revenue hit $81.3 billion, up 17%. EPS up 24%. Cloud revenue crossed $50 billion for the first time. By every surface measure, a strong quarter.

The stock dropped 10% in a single day. $357 billion in market value gone. The second-largest single-day loss in US stock market history.

What happened? The vocabulary we've covered explains it.

Growth rate deceleration. Azure growth went from 40% to 39%. Guidance for next quarter: 37-38%. The absolute numbers are still enormous. But the trend is bending down. Investors don't buy the current number. They buy the trajectory. A slowing growth rate is a leading indicator that future revenue won't meet expectations.

Gross margin compression. Microsoft's gross margin dropped to 68%, with guidance of 65% for cloud next quarter. Remember: CFOs think in margin, not revenue. Microsoft is getting bigger but keeping less of each dollar. That directly impacts LTV calculations and long-term profitability.

Massive investment with unclear returns. Capex hit $37.5 billion in one quarter. That's $72.4 billion for the first half of the fiscal year, up 65% year over year. This is the CAC equivalent for infrastructure. Microsoft is betting huge on AI. The question investors are asking: will the LTV justify this spend? They're not sure.

Pipeline concentration risk. Here's a number that spooked people: 45% of Microsoft's $625 billion in future cloud contracts comes from one customer. OpenAI. One relationship accounting for nearly half of future revenue. If that relationship changes, the forecast craters.

Rule of 40 trajectory. Microsoft still passes easily. They're profitable and growing. But growth slowing plus margins compressing means they're moving in the wrong direction. The math isn't broken today. But extrapolate the trend and it gets uncomfortable.

The quarter was fine. The market punished the forward guidance on input metrics. Slower growth. Lower margins. Continued massive spend with unclear returns. The leading indicators pointed down, and that's what investors sold.

This is why the vocabulary matters. Revenue and EPS looked great. But the numbers underneath told a different story about where the business is heading. CFOs and investors saw it immediately.

How this connects to your work

You're a developer marketer or a DevRel professional. Why should you care about any of this?

Because your work feeds this machine. And if you can't connect what you do to the numbers that matter, you'll always be fighting for budget and respect.

DevRel feeds the top of the funnel

Every developer who hears about your product at a conference, reads your blog, or joins your Discord is a potential lead. Not all of them will become customers. But some of them will. And more importantly, some of them will become champions inside their companies who bring your product in through the front door.

Developer-sourced pipeline is real. It's usually higher quality than outbound pipeline because the developer already understands and believes in the product. Track it. Talk about it.

Content influences velocity

Great documentation and tutorials accelerate the sales cycle. When a developer can get to "hello world" in minutes, they can prove value internally faster. Faster proof means shorter sales cycles. Shorter sales cycles mean more deals closed per quarter.

If your getting-started experience shaves two weeks off the average sales cycle, that's worth real money. Quantify it.

Developer experience drives retention

Churn often happens because the product stopped working for the people who use it. If developers hit walls, if the API is unreliable, if the docs are confusing, they'll push for alternatives. And NDR will suffer.

Every improvement you make to the developer experience is an investment in retention. Retention compounds. The math is heavily in your favor.

Community creates expansion

Developers talk to each other. A happy developer in one team tells a colleague in another. That colleague starts a new project on your platform. Expansion happens.

Community health is an NDR predictor. Strong communities retain and expand. Weak communities churn.

Costs matter too

Everything you do costs money. Conferences. Content production. Newsletter sponsorships. Podcast ads. Swag. The DevRel team's travel budget. It all adds up, and it all flows into CAC.

When budgets tighten, someone will propose cutting marketing spend. Sometimes they're right. Sometimes they're about to shut off the pipeline and won't realize it for six months.

Here's how to think about it: every dollar you spend should connect to one of the numbers we've discussed. Pipeline. Conversion. Retention. Expansion. If you can draw a line from the spend to the outcome, defend it with data. If you can't draw that line, question whether you should be spending it.

The conference booth that generates 50 qualified leads feeding $2M in pipeline? That's worth the $30k. The newsletter sponsorship that drove 200 signups last quarter, 15 of which converted to paid? Do the math. The podcast ad where you have no idea if anyone heard it or acted on it? That's the one to cut.

Don't spend on things you can't measure. And don't let someone else cut the things that are working just because the attribution is hard to explain. Your job is to make the connection visible. Build the dashboards. Track the sources. Know which dollars are earning their keep.

The CFO wants to know the money is working. Show them, and they'll fight for your budget.

Speaking the language

Next time you're in that pipeline review, listen differently.

When they say pipeline is down, ask yourself: is that a lead generation problem (marketing) or a conversion problem (sales)? When they say ACV is shrinking, ask: are we targeting smaller customers or giving bigger discounts? When they say NDR is holding, know that means existing customers are growing and the product is working.

You don't need to become a finance expert. You need to understand how your work connects to the numbers that run the business.

Developer marketing is not separate from revenue. It's one of the primary drivers. But only if you can speak the language well enough to prove it.

These concepts are covered in more depth in Picks and Shovels: Marketing to Developers During the AI Gold Rush. The book includes frameworks for connecting developer marketing activities to pipeline and revenue outcomes.

Quick reference

For those moments when you need a fast definition:

Term	What it means
Lead	Someone who has shown interest in your product
MQL	Marketing Qualified Lead. A lead that engaged with marketing in a way suggesting buying intent
SQL	Sales Qualified Lead. A lead verified by sales as a real potential buyer
Pipeline	Total dollar value of deals in progress
Booking	A signed deal. The commitment to pay
Revenue	Money actually earned and recognized
ARR	Annual Recurring Revenue. The annualized value of subscriptions
MRR	Monthly Recurring Revenue. ARR divided by 12
ACV	Annual Contract Value. The annualized value of a single contract
ASP	Average Selling Price. Average deal size across all deals
Churn	Lost customers or revenue
Expansion	Revenue growth from existing customers
Gross retention	What percentage of ARR renewed, before counting expansion
NDR/NRR	Net Dollar Retention. Renewals plus expansion minus churn
Gross margin	Revenue minus direct costs of delivery, as a percentage
CAC	Customer Acquisition Cost. Total sales and marketing spend per new customer
LTV	Lifetime Value. Total gross profit expected from a customer over the relationship
Win rate	Percentage of pipeline that closes
Sales cycle	Time from first contact to signed deal
Quota	The sales target for a rep or team
Attainment	Actual performance versus quota, as a percentage
Pipeline coverage	Ratio of pipeline to quota. Usually want 3x-4x
Rule of 40	Growth rate plus profit margin. Should be 40 or higher

The terms are just vocabulary. The power is in seeing how they connect. Every one of these metrics influences the others. That's the language of sales.