Have you ever sat on a sales call or in a business meeting and come across sales terms and acronyms that you’ve never heard of before? You’re not the only one.
The sales world is full of phrases and buzzwords that you need to understand to walk confidently into sales meetings and know exactly what’s going on.
Here’s the low down on the top used sales terms and what they mean. Bookmark this link so you always have a glossary in your back pocket.
1. Account-based marketing (ABM) / Account-based selling (ABS)
Account based marketing/selling is where sales and marketing collaborate to create highly personalised buying experience and messaging for a set of predetermined high-value prospects, likely to convert.
2. Adoption process
The adoption process is what all buyers go through - from becoming aware and learning about your product or service through to whether they decide to buy or not.
3. AIDA (Attention Interest Desire Action)
Similar to the adoption process but used more by marketing teams, AIDA stands for Attention, Interest, Desire, Action and describes the states in the customer journey from finding your product or service through to deciding if they want it.
4. Annual Recurring Revenue (ARR)
Annual recurring revenue is a term used by SaaS or subscription based companies to determine how much money they are likely to make from a client over a period of time. For example, if a customer bought a 3 year subscription for your service at $30,000, to understand the ARR you’d divide the total cost by the number of years they’re in a contract for - so $30,000 / 3 years = $10,000 ARR.
5. BANT (Budget Authority Need Timing)
BANT is a methodology used by sales teams to determine whether a prospect is a good fit and if / when they’re likely to convert. It looks at:
B = Budget: how much money do they have available to spend on your product or service and can they afford it?
A = Authority: do they have authority to buy the product or service or is someone else the decision maker?
N = Need: do they have a need for what you’re trying to sell to them?
T = Timing: what timeframe are they looking to buy within?
6. Bottom of the funnel (BOFU)
Prospects or leads at the bottom of the funnel are one step away from purchasing - they’ve made it through the interest and qualification stages and are extremely likely to convert to a paying customer.
7. Business development (BD)
Business development is the process taken by businesses to develop relationships with clients and suppliers to provide growth opportunities and long-term value for the business.
8. Business to business (B2B)
B2B stands for business-to-business. It’s when one business makes a transaction or partnership with another business rather than directly with an end consumer.
9. Business to consumer (B2C)
B2B or business-to-consumer is targeting and selling directly to the end consumer in the mass market.
10. Buyer persona
A buyer persona is a fictional person based on your ideal customers - buyer personas are based on market research and real data about existing customers. they can help marketing understand who to target marketing activities at and helps sales qualify inbound and outbound leads.
11. Buying cycle
This is the process that potential customers go through before deciding whether to make a purchase. Similar to AIDA, the buying cycle is usually made up of lots of stages relevant to each individual basis but on the whole covers Awareness, Evaluation and Purchase.
12. Buying intent
This is a prediction of whether a customer is likely to buy from you.
13. Churn rate
“Churn rate” is how many recurring revenue companies calculate success and retention rate to make sure they’re not losing customers at a fast pace.
To calculate churn rate you work out how many customers the business has lost in a given timeframe and divide that by the number of customers you had at the beginning of that time frame.
Many companies attempt to reduce churn rate each month. By understanding churn rate you can work out whether you’re making enough money from the customers that do stick around to become a sustainable business.
If a prospect moves through the full sales life cycle but decides not to purchase your product or service, they become “closed-lost”.
Opposite to closed-lost, closed won is used when a sales rep manages to close a deal and sell a product or service to a customer at the end of the sales cycle.
16. Close ratio
This can either be used to assess a sales reps performance and determine the number of closed-wins they gained vs closed-lost or it can be used on a business level to determine how many deals they close vs win to do sales revenue forecasting.
17. Cold calling
Cold calling is when a sales rep makes unsolicited calls to try and sell products or services. It’s often carried out by sales teams with very high sales targets but is also seen as an inefficient use of time as the technique used is usually impersonal and generic.
Commission is the payment given to a salesperson on top of a basic salary for winning new business. Commission is often paid as a percentage of the value of the deal made.
19. Conversion rate
Conversion rate is the rate that people take an action on your website. It’s a way of the marketing team being able to distinguish how many visitors it takes to make a sale and work out whether the messaging and offers are working to gain new customers.
Cross-selling is when a sales representative has more than one product or service that are beneficial or complementary to one another and they sell manage to sell both to a customer or opportunity.
21. Customer Acquisition Cost
This helps understand how much an individual customer costs a business. Usually this would take into account all spends of the sales and marketing department - activity, salaries, commission etc in a given timeframe (usually a month, quarter or year). And then by dividing that by the total number of customers acquired within that time frame you get the individual acquisition cost of a customer. .
22. Customer Lifetime Value (CLV)
CLV looks at a customer’s value over their full lifetime with a company, rather than just looking at what they spend when they initially convert. This would include any further spend with the business after the initial deal to figure out how much an average customer is actually worth.
This is an important metric to track as it costs a business less to keep existing customers than it does to acquire new ones so ensuring customers continue to use your products or services after the initial purchase is imperative.
23. Customer Relationship Management (CRM)
CRM is software that allows businesses to manage customers and leads. All CRM software allows you to track contact details for these customers but many options allow you to do more advanced things - like send personal emails and push notifications, track open rates and engagement, create sales lifecycles to track where each potential customer is etc. CRMs are designed to help make the life of a sales rep easier - providing as much information as possible in one place about each customer and lead.
Decision-makers are the people within a business who have the authority to sign off a sales deal or purchase. Due to their seniority, these people are often harder to contact and are often guarded by a gatekeeper.
25. Demand generation
Demand generation is, as it says on the tin, generating demand for your product or service. Demand generation often encompasses lots of different marketing activities and tactics to bring potential customers inbound.
26. Discovery call
A discovery call is the first call a sales rep will make with a prospect. It’s less about selling and more about asking questions and building rapport with customers.
Engagement is the interaction with a buyer. Made up of touchpoints and time - this could include tracking the times you get a response from a customer following personal outreach or every time they interact with some sort of marketing activity - like social posts, length of time they’ve watched your webinar for, purchased special offers etc.
Keeping customers and potential customers engaged results in them becoming more invested in your businesses and encourages loyalty.
Forecasting is carried out by sales teams to predict future sales over a given period of time. It’s often based on previous activity and what is currently in the sales pipeline. It helps set goals and expectations around profits and growth and allows sales reps to plan their time knowing how many deals they’re predicted to close.
A gatekeeper is someone who enables or prevents information being passed to the intended person. In a sales call environment, the gatekeeper would decide whether or not your time is worthy of the decision-maker you have requested to speak to.
30. Ideal customer profile (ICP)
An ideal customer profile is a definition of a business that is going to get the most value out of using your product or service and also provide you with the most value in return.
They tend to be based on the characteristics of the high value customers you already have.
Your ICP should define the type of customer that you are going to put your sales and marketing efforts into acquiring as they are the type of business you are most likely going to convert into paying customers and make successful. Not only that, they are also likely to provide you with testimonials, referrals and product feedback, bringing more value than just revenue.
31. Inbound sales
Inbound sales is the role of selling to those who have responded to marketing activity - like attended a webinar, downloaded content, filled in a web enquiry form etc.
Inbound sales reps are laser-focused on creating a relationship with a lead and understanding their pain points to sell a product or service.
Inbound sales tend to have a much shorter close time than outbound as the lead is already aware of the business and what it does.
32. Inside sales
Inside sales is the act of doing sales remotely - rather than going out to meet up with prospects in person. Inside sales reps carry out sales over email, phone and video demos and is a role adopted mostly in B2B, tech and SaaS businesses.
A lead is an individual that has entered the top of the sales funnel but has not yet been qualified as a prospect. They are likely to have interacted with marketing activity in some way and have therefore expressed an interest in your product or service.
34. Lead generation
This is an activity carried out by the marketing team. It involves pushing out content, ads and communications to target audiences to try and gather a large number of leads.
35. Lead nurturing
Lead nurturing is developing relationships with your leads and guiding them through the buying process. It’s super important as many leads who enter your pipeline will not be in a position to buy straight away. The act of lead nurturing allows you to form a relationship and provide value to a lead through information and content and in turn keep you top of mind until they’re ready to buy.
36. Loss leader
A loss leader is a product or service priced below it’s actual value to attract customers into your store or to your website where they’ll likely spend more money.
37. Low hanging fruit
Low hanging fruit is the term used to describe the easiest or quickest tasks to be done which will often have a big impact on the business.
Margin is the difference between the cost it takes to produce a product or service and the selling price.
39. Marketing qualified lead (MQL)
A marketing qualified lead is a lead that matches the intended target market and has engaged with marketing materials.
Markup is an amount added to the price of goods or services before sale to cover the cost of overheads.
41. Middle of the funnel (MOFU)
Leads enter the middle of the funnel after a need for your product or service has been identified and when they are looking to do more research to find a solution to their problem. When leads are in the middle of the funnel they typically receive proof points of why your company can fulfill their needs - this will include product literature and case studies.
42. Minimum viable product (MVP)
A minimum viable product is a product or service with just enough features to be given to early customers or users to test out and give early feedback which in turn helps steer future product roadmaps when released to the general public.
Objections are the challenges or concerns that a lead has about your product or service when going through the sales cycle. Whether a lead goes on to buy your product or service will depend on how the sales rep handles the objections.
Onboarding is carried out with a new customer to introduce them to the product or service they’ve just purchased. Onboarding involves getting them set up to use it and best practices to make the most out of it.
An opportunity is a lead that has been qualified as they have shown a need for your product or service and is being actively worked on by sales to turn them into a customer.
46. Outbound sales
Opposite to inbound, outbound sales involves a sales rep going out to potential buyers to sell their goods or services without the buyer showing any interest in the offering first. This often includes cold calling or emailing to try and generate some interest.
47. Pain point
A pain point defines the customer’s needs. Knowing what their pain point is allows a sales rep to explain to the customer why the product or service will benefit them.
A sales pipeline describes the steps of your sales process - from qualifying leads to closing deals. It provides sales teams with a visual way of seeing where their prospects are in the sales process and what activity has occurred so far. It also demonstrates which prospects are stuck in a particular stage, which have become lost leads and which sales activities are the best for conversion.
49. Positioning statement
Positioning statements are questions and comments used by a sales rep during a sales call to start a conversation with the prospect. They are structured in such a way that the rep should be able to leave the call understanding the prospect’s pain points in order to then move them along the pipeline.
50. Product life cycle
A product life cycle is how long a product is available before it’s “removed from the shelves”. A product life cycle is generally made up of 4 stages: Introduction, Growth, Maturity and Decline.
Every product will have its own individual life cycle. Often a product life cycle is determined by how well it sells and is received by buyers.
A prospect is a lead that has been qualified by sales as meeting their ideal customer profile or buyer persona.
Prospecting is the process used by sales teams to identify and develop business opportunities by finding and researching potential customers or clients, using relevant data.
53. Qualified lead
A qualified lead is someone who has opted in to receive communications from your business. Sales and marketing teams often have different qualification processes for these leads so it’s important that sales are aware and are happy with the leads that marketing plans to hand over.
A quota is another term for a sales goal - it defines how many sales or how much money an individual sales rep should be looking to close in any given time frame.
55. Sales qualified lead (SQL)
A sales qualified lead is one who has shown enough interest in your product or service to be contacted and nurtured by a member of the sales team. This often differs from an MQL as, rather than just engaged with the business once, they have to have shown a specific level of interaction before moving from an MQL to an SQL.
56. Service level agreement (SLA)
A service level agreement can mean two things:
- An SLA among sales and marketing teams defines what sales expects from marketing and vice versa so each can be held accountable to their activity.
- An SLA between a business and a customer defines what uptime levels a customer is to expect from a service they have purchased or subscribed to. If the seller does not uphold their SLA, the customer is often entitled to some sort of compensation.
57. Social selling
Social selling is when a sales rep uses social media to interact with potential buyers. They will answer questions, provide content and react to their updates until the prospect is ready to buy.
The sales pipeline is made up of many stages that prospects move to from first entering the pipeline after interacting with a business through to becoming a paying customer. Each stage determines how close a prospect is to converting.
59. Tire kicker
A tire kicker is a lead who is never going to buy your product. They may have taken a free trial to see what your product is like but never intend on paying.
60. Top of the funnel (TOFU)
Leads at the top of the funnel have just shown an interest in your product or service. They’ve generally found a pain point they’re trying to resolve and are currently researching options.
Upselling is when a potential buyer has an idea in mind of what they want to purchase and the sales rep managed to persuade them to upgrade to a better / more expensive model or version.
62. Value proposition
The value proposition is the main benefit that businesses use to try and differentiate themselves from competition and seem more appealing to potential customers.
63. Warm calling
Opposite to cold calling, warm calling is done when a sales rep has prior permission from a lead to contact them. Warm calling makes a conversation much easier as the lead already likely knows what the business is and what it does.
That’s it! Start to understand what all these sales terms mean and you’re guaranteed to sound like you know what you’re talking about.
Ricochet’s Chrome extension helps sales reps with the first stage of the sales cycle - business research and due diligence. Open Ricochet on any business website or Twitter profile and you’ll get a business overview and data you need to understand if they meet your ideal customer profile.