Sales Glossary Terms to Know
The sales process refers to the series of steps that a business or individual takes to effectively sell a product or service to a potential customer. This process typically includes identifying and qualifying leads, nurturing prospects through effective communication, presenting the value proposition, handling objections, and ultimately, closing the sale.
The sales process is a critical component of revenue generation, as it directly impacts a company's ability to convert leads into paying customers.
A list of sales terms to improve your sales conversations
For startups, the sales process is especially important as they work to establish a customer base, generate revenue, and achieve financial sustainability. Knowing common sales glossary terms, such as "lead qualification," "sales funnel," "closing ratio," and "customer lifetime value," can help startup founders and sales teams better understand the dynamics of their sales operations, identify areas for improvement, and optimize their sales strategies.
Familiarity with sales terminology also facilitates effective communication with investors, partners, and other stakeholders, which can be crucial for securing funding and support for the startup's growth.
Here is an alphabetized glossary of key sales terms to support your sales conversations:
- Account executive - Sales representative responsible for managing major or key customer accounts.
- Account management - Managing ongoing customer relationships and maximizing sales opportunities with existing accounts.
- Action plan - Specific steps mapped out to achieve a sales goal or convert a prospect.
- Advertising - Paid public promotion of a product or brand to create awareness and interest.
- Appointment setting - Scheduling sales meetings, calls, or presentations between a sales rep and a prospect.
- Attrition - The natural rate at which customers stop using a product or service over time. Average order value - The average amount that a customer spends per order. Higher AOVs boost sales revenues.
- B2B - Business-to-business sales between companies rather than between a company and individual consumers.
- Bait and switch - An unethical tactic of advertising a low-priced product to attract customers but trying to switch them to a higher priced option.
- Bandwidth - The amount of time, resources and focus a salesperson has available to dedicate to selling.
- Benchmark - A standard sales performance goal or quota used to evaluate reps. Benchmarks help forecast and measure results.
- Call reluctance - Hesitancy or fear about making sales calls, usually due to rejection anxiety. Channel sales - Selling to customers indirectly through resellers, retailers, affiliates and distribution partners.
- Churn rate - The rate at which customers stop subscribing to a service or purchasing from a company over a period of time.
- Close - The final stage of the selling process when a prospect makes a commitment to buy the product or service.
- Closing techniques - Strategies salespeople use to successfully convert prospects into buyers and finalize the sale.
- Closing ratio - The number of deals closed compared to the number of prospects pitched. Higher ratios indicate better conversion rates.
- Cold calling - Phoning prospective customers without an introduction or appointment to generate new leads.
- Commission - Compensation given to salespeople based on a percentage of their sales.
- Commissions motivate reps to sell more.
- Competitive analysis - Research into competitors' offerings, pricing, and marketing to position against them more effectively.
- Consultative selling - Collaborating with prospects to understand their needs and craft customized solutions. The salesperson acts as an expert consultant.
- Consumer sales - Selling to individual customers rather than to businesses. Requires understanding consumer psychology.
- Conversion rate - The percentage of prospects that become buyers. Higher conversion rates grow revenues.
- Cross-selling - Selling complementary products to current customers to increase sales. For example, suggesting batteries with an electronic purchase.
- Customer acquisition cost - The total cost involved in acquiring a new customer from initial marketing spend to final sale. Lower CACs improve profitability.
- Customer lifetime value - Projected revenue a customer will generate during their entire relationship with a company. Higher CLVs indicate more valuable customers.
- Customer relationship management (CRM) - Systems and processes used for recording interactions and managing relationships with prospects and customers. CRM systems store client data to help maximize sales opportunities.
- Customer retention - Repeated sales and loyalty from existing customers. Customer retention costs less than acquiring new customers.
- Customer service - Assistance provided to customers before, during and after purchase to enhance the buying experience and build loyalty.
- Deal registration - Formal programs that reward sales reps who develop new customer opportunities with protection or commissions on the deal.
- Demand generation - Marketing programs and campaigns aimed at identifying and cultivating new prospective buyers.
- Distributor - A third-party company that purchases, stores and sells manufacturer's products to retailers or directly to customers.
- Email marketing - Using email campaigns to advertise products and generate sales leads.
- Forecast - An estimate or projection of expected sales results, typically for the upcoming weeks or months.
- Growth hacking - Using innovative, data-driven marketing techniques to acquire customers and accelerate growth. Focuses on scalability.
- Hunters - Sales reps who aggressively prospect for new business and acquire new accounts.
- Inbound sales - When potential customers seek out a company and its sales team first to make a purchase. The opposite of outbound sales.
- Industry knowledge - Understanding the products, customers, supply chain, competitive landscape and trends in one's target industry.
- Inside sales - Sales activities conducted over the phone, email, online or via video calls rather than through field reps. Inside sales is lower cost.
- Key account management - Strategic focus on the top set of major customers that drive a large portion of sales revenue.
- Lead qualification - Vetting leads to evaluate if they are ready to buy or strong sales prospects based on characteristics like budget, need and timeline.
- Lead scoring - Rating and prioritizing leads based on defined criteria to focus sales efforts on those most likely to convert to opportunities.
- Lifetime value - The total revenue a customer is projected to generate during their relationship with a company. LTV helps determine acquisition investment and retention strategy.
- Loss leader - Selling a product or service below cost to attract new customers with the aim of selling additional higher profit items in the future.
- Margin - The profit made on a product or service after subtracting costs. Higher margins mean greater profitability.
- Market segmentation - Dividing customers into groups that share common characteristics, priorities and buying behaviors. Segmentation enables more targeted marketing and sales approaches.
- Market share - The percentage of total market sales that a company generates for a given product or service. Higher market share indicates greater competitiveness.
- Merchandising - Marketing activities focused on showcasing and selling products in retail environments. Store displays, signage, demos and promotions are examples.
- New business development - Initiatives for attracting new customers and expanding into new markets or segments.
- Objection handling - Responding to customer concerns, doubts or reasons for not buying to overcome barriers to closing the sale.
- Onboarding - Training and preparation provided to new sales hires to equip them to meet performance expectations.
- Outbound sales - Sales reps proactively initiating contact with potential customers also known as cold calling. The opposite of inbound sales.
- Owner - Sales reps responsible for developing their own leads and managing the sales process from end-to-end with minimal supervision.
- Partnership - A formal collaborative relationship between companies that provides sales access or distribution for mutually beneficial revenue growth.
- Persona - Detailed profiles representing key customer segments to understand their demographics, priorities, challenges and motivations to enable better targeting.
- Pipeline - The number of prospective deals at various stages in the sales process from lead to close. Stronger pipelines signal future growth.
- Presentations - Structured overviews of products, services and tailored solutions given by sales reps to persuade prospects.
- Primary research - Collecting original sales data directly from the source through surveys, interviews, focus groups, field trials, and more.
- Product knowledge - Understanding the features, advantages, benefits, pricing, options and applications for the products one sells. Enable reps to match solutions to needs.
- Profit margin - The percentage of profit from each unit sold after accounting for all expenses. Wider margins mean greater profitability.
- Prospect - A potential customer identified through lead generation efforts as likely to purchase. Prospects still need to be qualified before advancing in the sales process.
- Prospecting - The process of identifying, contacting and vetting new potential customers also known as lead generation.
- Qualified lead - A prospect that fits the ideal customer profile and has expressed interest, ability and readiness to make a purchase. Qualified leads justify investing sales time.
- Quota - Minimum sales goals assigned to reps for a given period. Quotas motivate performance and help forecast revenues.
- Referral - A new sales lead provided voluntarily by an existing satisfied customer to a friend or colleague. Referrals require less prospecting effort to gain.
- Relationship selling - Building ongoing, loyal associations with customers rather than singular transactions. Focuses on mutual value over time.
- Renewal - Extending an existing contract or subscription for continued sales. Renewals are more efficient than acquiring new customers.
- Request for proposal (RFP) - Formal invitation for suppliers to bid on supplying products or services. Usually includes detailed specifications the offers must meet.
- Sales cycle - The process a prospect goes through from initial awareness to becoming a customer. It includes stages like prospecting, developing, presenting, handling objections and closing.
- Sales efficiency - Revenue generated by a sales rep per the time invested. Higher efficiency improves productivity and return on investment.
- Sales funnel - Model of the customer journey from awareness to interest, consideration, evaluation and ultimately purchase. Used to identify profitable stages to invest in.
- Sales process - The structured sequence of stages and best practices followed from lead to close to win new business.
- Sales promotion - Marketing tactics like discounts, coupons, contests used to incentivize immediate sales.
- Sales quota - Minimum sales volume or revenue that a rep is expected to generate within a given timeframe. Quotas are benchmarks for performance.
- Sales strategy - The integrated plan of action designed to achieve sales objectives. Sales strategies drive resource allocation, hiring and growth initiatives.
- Sales territory - Geographic region or segment of designated customers assigned to a sales team.