If you’ve ever taken sales training of any kind, you know that mastering sales vocabulary is shockingly difficult. Many sales terms sound interchangeable when, in fact, they mean drastically different things. And with an enormous number of sales words thrown around casually or used incorrectly each day, it’s no wonder even sales experts get confused sometimes.
That’s why we compiled a list of the 100 most useful sales terms every salesperson needs to know. Let’s dive in.
Sales metrics sales terms
Annual contract value (ACV)
Annual contract value (ACV) is the average revenue generated for a particular customer per year. ACV is primarily used in B2B businesses or in subscription-based B2C businesses where customers make regular, repeated purchases. While ACV can be useful in calculating expected annual revenue, it’s more frequently used to figure out how long it takes to recoup the costs of acquiring that customer.
Annual recurring revenue (ARR)
Annual recurring revenue (ARR) is the amount of money a business expects to earn over one year—from all its customers, not just one. ARR significantly helps with accurate long-term planning and future pricing considerations. Note that ARR only includes repeat purchases, not first-time customers.
Churn rate is the percentage of customers who stop buying from your company in a given time frame. This metric is calculated by dividing the number of lost customers at the end of the time period by the total number of customers at the beginning of the period.
The closing ratio is a sales metric used to measure sales agent success. It compares the number of closed deals to the number of prospects the agent interacted with. A closing ratio can also be used to predict future sales or make strategy adjustments. For instance, if the best agents in the company are averaging a 5-percent closing ratio, it’s probably not a reflection of their work ethic.
A conversion is any prospect that moves to the next step in the sales pipeline. Conversions can refer to sales, but they can also refer to prospects setting up a meeting to discuss pricing. In that case, the meeting is the conversion metric.
Conversion rate is the percentage of prospects that completed the desired action. Just like conversion, the conversion rate can refer to a sale. But it can also refer to a non-transactional process, such as a prospect signing up for a company’s emails.
Customer acquisition cost (CAC)
Customer acquisition cost (CAC) refers to the amount of money spent on the process of acquiring a customer. CAC includes marketing expenses, sales rep pay and commission, and work hours dedicated to wooing that customer. For a company to be profitable, the amount of money coming in from the customer needs to exceed the amount spent on attracting that customer.
Customer lifetime value (CLV)
Customer lifetime value (CLV) is an educated prediction of how much money an individual customer will give your company over their lifetime. CLV differs greatly between companies due to churn rate, average profit, price of goods, rate of repeat purchase, and length of the customer lifecycle.
Sales forecasting is the process of predicting future sales so your company can make budgeting, supply, and marketing decisions. Forecasts come from a variety of factors, including past profits, industry trends, supply chain status, and sales rep success metrics.
Key performance indicators (KPIs)
Key performance indicators (KPIs) are numerical measurements that reflect how a business or individual employee is performing. KPIs are normally set as goalposts, not requirements. Common KPIs include annual growth, conversion rates, number of cold calls made, and number of products sold.
Lead scoring is a ranking system that prioritizes leads by their potential value to the business. This helps sales reps identify which leads are the most likely to buy the product. Top-ranking leads are in a financial position to purchase the product, would benefit from the product, and actively need the product.
Monthly recurring revenue (MRR)
Monthly recurring revenue (MRR) is the same concept as annual recurring revenue (ARR) but is measured on a monthly scale. This term is almost exclusively used by subscription-based companies
Net Promoter Score® (NPS)
NPS is a metric used to assess customer loyalty. It’s measured via a survey that asks customers how likely they are to recommend the business or product to someone they know. Respondents select a number between 0 and 10, and their answer places them into one of three categories: promoters (repeat, satisfied buyers), passives (satisfied but wouldn’t necessarily recommend the product), or detractors (dissatisfied and wouldn’t promote). Companies want as many customers as possible to be promoters.
Profit margin measures a company’s gross profit relative to its revenue. To calculate profit margin, divide your gross profit (sales minus all expenses) by your revenue for a given time period. Then, multiply that result by 100 to get a percentage. You want your profit margin to be high.
A quota refers to the number of sales a rep is expected to achieve over a specific time frame (usually a month). Quotas are used as ideal numbers for reps so they have a sales goal to work toward. However, it’s rare for every sales rep to meet their quota, so it shouldn’t be used as a marker for company profit.
Sales performance management
Sales performance management is a set of sales processes created for maximum efficiency. Good sales performance management involves understanding sales rep compensation, quotas, and lead delegation, and then using that knowledge to shape how the sales team works.
Sales pipeline coverage
Sales pipeline coverage is a ratio that measures how full the sales pipeline is compared to the quota you want to achieve at the end of a given time period. This gives reps and managers a better picture of growth and quota possibility. If there aren’t enough leads coming in, then reaching the quota isn’t possible and strategies must be adjusted.
Value chain refers to the value your company brings to the market. Value can be measured in many ways, but generally, companies try to be either cost-effective (extremely low cost) or benefit-effective (extremely high benefit). The more value a company offers, the higher its chances of success.
Sales job sales terms
Account executives are responsible for managing customer accounts. They handle current and prospective clients daily. Account executives are slightly more specialized than sales reps, as they’re frequently assigned to high-profile accounts.
Account development representative
Account development representatives are responsible for creating new sales strategies, identifying potential clients, and understanding market trends. They consult with sales managers to keep strategies current.
Business development representative (BDR)
Business development representatives (BDRs) focus on outbound leads for a company. These are not necessarily individual sales, but rather partnerships that could be beneficial for the company’s future.
Commission is an additional payment that sales reps earn after closing a deal. Commission rates and policies vary from company to company.
Field sales rep
Field sales reps often work outside of an office and travel to potential and current customers to negotiate deals in person. These reps can be B2B or B2C and are highly valued by sales companies.
Inside sales rep
Inside sales reps work from an office and primarily interact with their clients by phone or online communication methods.
Sales coaches work with sales teams and individuals to improve skills and self-confidence on the sales floor. Sales coaches can be in-house managers with additional training or be hired as third-party consultants.
Sales development representative (SDR)
Sales development representatives (SDRs) are inside sales reps who work to convert inbound leads. They’re the primary contact between leads, prospects, clients, and the company itself. Depending on the size of the business, SDRs may also handle outbound leads.
Service level agreement
A service level agreement (SLA) is a contract between sales and marketing outlining each department’s expectations for the other. SLAs ensure alignment and accountability between the two teams.
Sales software sales terms
Ad-hoc reporting is a sales reporting tool that reflects user parameters. Many sales software programs automatically generate certain sales reports (overall quarterly reports, etc). Ad-hoc reports are generated by request and usually answer specific metric questions (for instance, What is the combined conversion rate for sales rep 1 and sales rep 2?)
Business intelligence is an umbrella term for any tool or process that a company uses to make data-driven decisions. This includes data analysis, KPI comparison, or data visualization.
Cases or tickets
Used interchangeably, cases and tickets refer to any post-purchase customer issues. They are compiled and handled by the customer service team, but all departments should have access to them through company software.
Customer relationship management (CRM) systems
Customer relationship management (CRM) systems are sales software programs that help businesses track every aspect of sales and marketing, from sales metrics to customer profiles. CRMs also integrate with other sales technology software to streamline company activities.
Cloud-based CRM software refers to any CRM that is capable of being hosted in the Cloud. This makes all relevant data accessible to every user—regardless of their location—enabling inside sales agents and field sales agents to stay on the same page.
CPQ (configure price quote) software is a form of sales automation software. It helps sales agents automate customer quotes and proposals, resulting in faster communication, better accuracy, and an improved customer experience.
Contract management is the process of handling contracts with customers, vendors, partners, and employees. Different departments often manage different types of contracts, but they are all considered contract management.
CRM analytics refers to the analysis of data in a CRM. These analytics can be used to improve sales and marketing tactics.
Enterprise resource planning (ERP)
Enterprise resource planning (ERP) is business software that manages a company’s financials, supply chain, operations, commerce, reporting, HR, and manufacturing. An entire company can be managed with the right ERP, particularly when it’s combined with the right CRM.
Escalations refer to the process of customer cases or tickets being moved to a higher-authority agent or manager. This usually happens when a lower-level member is unable or unqualified to fix the customer issue.
A knowledge base is an online collection of information about a business. It can include everything from product information to sales scripts to marketing plans. Internal knowledge bases are meant to be used by employees, while external knowledge bases are customer-facing, often in the form of FAQs and product usage information.
Lead management refers to the entire process of generating, qualifying, and tracking leads. It also includes prioritizing leads in order of buyer intent for the sales team using lead management software.
In contrast to a Cloud CRM, an on-premise CRM is CRM software hosted solely on the company’s server. On-premise CRMs are more common for businesses handling large amounts of sensitive information.
Opportunity management is the process of organizing, delegating, and tracking all the deals in a sales pipeline. This ensures equal distribution and more likelihood of closing. Opportunity management is handled within a CRM by a sales manager.
A sales dashboard is a visual picture of real-time sales data that keeps everyone in your company up-to-date on metrics. Sales reps can use the sales dashboard to easily monitor daily, weekly, and monthly goals.
Business improvement terms
You caught us—we have 101 terms for you. Our last one is the key to business improvement and sales success: Zendesk Sell.
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