Sales Terms – Full A-Z Guide

By | Last Updated: 4th June 2019 | This post may contain Affiliate Links

Whether you’re new to sales, or just want to brush up on your sales terms, this full A to Z guide has got you covered.

Here is a list of common sales terms you need to know. So, if you’re a marketing expert, you can communicate better with the folks over in sales; and if you’re an ambitious entrepreneur, you can nail the lingo right out of the gate.

AB Testing (also known as Split Testing) is a testing involving two variants, typically for measuring and comparing market response to each. For example, you can measure visitor traffic or conversion rate on two different web pages having similar content and purpose.

Account refers to a record of principal and background information about an individual or corporate customer, including contact information, preferred services, and transactions with your company and so on.

Account Based Marketing (also known as ABM) is a calculated framework that engages qualified individual clients or customer accounts as unique markets in themselves, worthy of focused, hyper-personalised treatment by sales, marketing and other teams.   

Account Based Selling (ABS) or Account Based Sales Development (ABSD) is a primarily B2B selling framework that treats qualified or high value accounts as unique markets in themselves.

An account executive (AE) is a sales specialist who has primary responsibility for one or more customer accounts (called a portfolio), commonly tasked not only to nurture and grow the company’s relationships with said accounts but sometimes also to convert qualified leads into paying customers.

Accounts Payable refers to an accounting entry denoting the amount of short-term monetary obligation your company owes its suppliers, vendors and other service providers.

Accounts Receivable refers to the amount of money yet to be collected from your customers who purchased a product or subscribed to a service.

Analytics is the active study of different types of data with the aim of discovering meaningful patterns and translating these into insight (such as historical analyses and forecasts), or action (such as those intended to improve business performance).

Annual Recurring Revenue (ARR) is the value of contracted, often subscription-based revenues normalised for one calendar year.

Artificial Intelligence (AI) refers to a system of computers, software, machines and processes that simulate certain aspects of human intelligence such as image perception, voice recognition and reasoning.

Average Contract Value (ACV) is the average revenue you derive from a single customer in a given period. It is called Annual Contract Value (ACV) when annualised and Average Purchase Value (APV) when the revenue derived is not subscription-based.

Average Sale/Selling Price (ASP) is a term that may refer to the average price of a product in a given market or channel or the price a certain class of products or services is commonly sold for.

B2B is an acronym for Business-to-Business, a model for selling, relationship-building or engagement.

B2C is an acronym for Business-to-Consumer, a model for selling, relationship-building or engagement.

Base Salary refers to an agreed-upon amount of payment an employee received as compensation for work rendered.

Baseline refers to a minimum level or starting point from which further measurements or comparisons can be made for analyses, forecasting, performance improvement or strategy formulation.

bonus is a gift or additional compensation given on top of the standard pay or fee, often serving as a reward for outstanding performance or for achieving certain business targets.

Business Intelligence (BI) refers to the interpretation of (primarily internal) data to inform product and market decisions.

business development representative (BDR) or sales development representative (SDR) is a sales specialist focusing on finding new prospects, establishing foundational relationships, and refreshing the sales pipeline with new leads for account executives.

buyer is an individual or organisational entity that purchases a product or subscribes to a service.

Buying Intent refers to the apparent likelihood of a person or organisation of purchasing a product or service as inferred from behaviour such as online browsing, media consumption, document downloads, event participation.

Call for Proposal is the process by which a company asks for something to be sold to them. Competitors usually compete to win the client’s business.

Challenger Sales Model is a sales framework that takes the disruptive approach to solution selling, where customers are pushed beyond their comfort zones to embrace new ideas for their business.

Champion/Challenger Test is a testing approach for determining the best engagement strategy for a given market segment, wherein the Champion represents your current production/servicing paradigm while the Challenger(s) represent new or different ways of doing things.

Channel Partner is a person or organisation that offers services or products on behalf of another entity, mostly via a co-branding agreement.

Channel Sales is a method of classifying and deploying your sales force into groups focusing on different distribution channels such as in-house sellers, retailers, dealers, and direct marketers.

Clawback means contractual provision or an action involving an employer or benefactor taking back money already released to an employee or beneficiary.

Click Through Rate (CTR) is typically expressed as a percentage and refers to the number of clicks on a link (usually an ad) divided by the number of times the page containing the link is shown.

client is an entity who pays another entity for products purchased or services rendered. Also called a customer.

Closed Won is the status of an opportunity where the deal has been closed with the prospect/lead who is now considered a customer.

Cold Call is an attempt to engage a prospect (via a personal visit or a voice call) who have no prior knowledge about or contact with the salesperson making the call.

Cold Email is the use of email to engage a prospect who have no prior knowledge about or contact with the salesperson sending the email.

Commission is the amount of money a sales professional earns for reaching a specific sales volume or for executing one or more business transactions. 

Complex Sale is a type of sale common in B2B markets involving multiple decision makers, custom service or purchase agreements, and relatively longer sales cycles.

Compounded Annual Growth Rate (CAGR) is the measure of growth over different time periods. Consider it the growth rate that gets you from the initial investment value to the ending investment value – e.g. we grew 52% CAGR (not the same value as YoY).

Content refers to a material or document released in various forms (such as text, image, audio, and video) and created to inform, engage or influence specific audiences.

Content Management System (CMS) is a computer program or software application used to create, modify, store and manage digital content.

Conversion is the process of turning a target consumer into a paying customer; or more generally, the point at which a user performs a specific action favourable to a marketer or a seller.

Cost of Goods Sold (COGS) relates to the incremental cost of producing one good (e.g. one subscription.)

Cost Per Click (CPC) is an advertising metric by which advertisers pay a bidding fee based on the number of people who click their ads. Commonly used in Google AdWords and Facebook Ads.

Cost Per Impression (CPI) is an advertising metric by which advertisers pay a bidding fee based on the number of eyeballs that are exposed to their ads. Commonly used in Google AdWords and Facebook Ads.

Customer is an individual or an organisation that purchases a product or signs up for a service offered by a business.

Customer Acquisition Cost (CAC) is the cost that is required to acquire a new paying customer for a product or service.

Customer Relationship Management (CRM) is a system, set of practices, and associated technologies used to record, manage and analyse customer data and interactions, with the aim of improving customer engagement and revenue.

Dark is a description for the state wherein a prospect have become unresponsive to calls, invitations, emails and other attempts at engagement (e.g., Mr Smith has gone dark.)

Day Sales Outstanding (DSO) is the time after acquiring a client before actually getting paid.

Deal Closing (or Closing a Deal) is the process of completing a sales transaction wherein the prospect agrees to purchase a product or sign up for a service.

Decision Maker in the context of sales, is a person who possesses the required expertise and authority in making purchase decisions.

Demand Generation is a marketing process that aims to build awareness and excitement about a company’s products and services, often used by businesses to promote new offerings or feature sets, reach new markets, generate consumer buzz and drive customer loyalty

Direct Mail is a communication channel where newsletters, catalogs, brochures, and other documents are sent via traditional postal services (such as the US Postal Service) that physically deliver parcels (also called snail mail).

Direct Sales is the method of selling a product or service in a location other than the associated retail stores or offices, wherein the seller personally engages a prospect in a physical or face-to-face environment such as a home or a cafe.

Discount means a promotional reduction in the cost of a product or service, commonly deployed to speed up sales.

A discovery call (might be used interchangeably with a qualifying call) is the first call with a potential customer, designed to determine if they are a good fit — wherein the seller can start building rapport, set the tone for the relationship and gain deeper insight about the prospect’s challenges.

Double Trigger is a clause that accelerates vesting when an employee is let go (without due cause) in an acquisition

Draw on Sales Commission is a form of compensation for sales professionals that is released in advance against expected commissions or earnings.

Drip Campaign is an automated response email that is sent after a certain amount of time.

E-Commerce is a field, platform, or environment where the buying and selling of goods and services are transacted online.

Employee Engagement is the state, level, or process of building employee commitment to an organisation, reflected in how much they strive to improve the company’s image, well-being and profitability.

Engagement is the state or process of keeping a specific class of audience (employees, management, customers, etc.) interested about a company or brand and invested in its success because of its perceived relevance and benefits to the audience.

Enrichment means the act or process of upgrading the value or improving the quality of something (such as a product, service or function) that induces the target beneficiary (customers, employees, etc.) to have a better experience, or derive a deeper meaning, connection and attachment to the product or function.

Enterprise Resource Planning (ERP) refers to software that seeks to centralise purchasing, inventory, shipping and fulfilment, product planning, HR, and more.

Fair Market Value (FMV) is the price that a reasonably interested buyer would be willing to pay for a given asset or service. This is very difficult to compute, but used to value companies.

Fiscal Year is a financial accounting period of one year (that may or may not coincide with the calendar year), which is used by governments and businesses for taxation, budget planning, performance assessment, strategy formulation and other purposes.

Forecasting is a prediction or calculation of a trend or event likely to occur in the future based on qualitative, quantitative and historical data as well as emergent but relevant factors.

Gatekeeper is a person (e.g., an executive secretary), application (e.g., a subscription or authentication interface) or other entities that control access to a person or object with a desired attribute such as a premium feature in case of a software service, or the ability to make purchase decisions in case of a corporate executive.

Global Business Unit (GBU) is a semi-autonomous component of a multinational corporation that focuses on a specific industry vertical or a specific set of functions, products or services, operating on a global scale.

Go-to-market (GTM) strategy or Go-to-market plan refers to a plan, set of actions or road map that a company formulates with the aim of optimising marketing and sales resources to establish the value of a new (or re-branded) product or service for consumers and achieve competitive advantage, using methods such as advertising, distribution, pricing, direct sales and social media engagement.

Gross Margin refers to total sales minus the cost of goods sold (COGS). Median for true SaaS cos is 70%, but what are considered to be “good margins” varies in SaaS. If you are running a marketplace/transaction revenue business, be very clear about gross margin.

Ideal Customer Profile (ICP) refers to a type or class of customer who possesses all the desirable attributes (such as gender, age, location, financial capacity, lifestyle, brand affinity, etc.) that increase the possibility of an opt-in or a purchase, (your perfect type of client).

Inbound refers to interest (could be sales or marketing driven) that comes in – e.g. cold emails to you, submitted forms on your website, press inquiries, etc.

Inbound Sales is a process, method or transaction wherein purchases occur as a result of customers directly approaching, engaging and embracing your brand, achieved by focusing on their needs and strategically leading them to your solution.

Key Accounts are whale spenders or VIP customers prioritised by sales reps and customer success; churn from these clients would be a detrimental loss to the company’s revenue.

Key Performance Indicators (KPIs) are the most relevant measurable values that help indicate whether an organisation or individual has succeeded at achieving targets or a desired level of performance.

Lead refers to a prospect or potential customer (who can be an individual or organisation) that exhibits interest in your service or product; or any additional information about such entity.

Lead Generation is a set of activities aimed at generating interest around a product or service through methods such as 1. content marketing (blogging, podcasts, free downloads); 2. advertising (PPC, banner ads, Yellow Pages, sponsoring an event); 3. referrals; 4. outbound marketing (cold email, cold calling), and 5. partnerships (joint ventures, affiliate marketing).

Lead Nurturing refers to the process of engaging and building long-term relationships with prospective customers through different marketing techniques that develop their preference for your product and services.

Lead Qualification is the process of determining whether a potential customer has the characteristics of your company’s ideal client.

Lead Scoring is the process of assigning a relative value to each lead based on different criteria, with the aim of ranking leads in terms of engagement priority.

Lifetime Value (LTV) is the total value of a customer from a business perspective or in terms of revenue before they churn. MRR/churn %

Loss Aversion is a psychological effect whereby people feel more strongly (negatively) about losing a sum of money than they do (positively) from gaining the same amount.

Marketing Qualified Lead (MQL) is a type of lead that has been evaluated — based on a given set of criteria — to have a higher likelihood of becoming a paying customer compared to other leads.

Metrics are quantities that are measured and used to: Assess a set of attributes such as a company’s profitability. Determine cost efficiency or an individual’s job performance. Implement corrections or remedial actions. Make accurate revenue forecasts. Formulate departmental or corporate strategies.  

Mid-Market is a classification of business organisations in terms of scale (revenue, number of employees, etc.), occupying the segment between the small companies and large multinational enterprises serving the same market.

Minimum Viable Product (MVP) is a development framework by which a new product or website is built with bare minimum / basic features; just enough to satisfy early adopters. The point is to validate product-market fit and demand. This is usually a fast, crappy product thrown together to see if anyone will buy it. Speed of execution is the goal.

Monthly Recurring Revenue (MRR) is the amount of reasonably regular and predictable income a company expects to receive every month, typically used in rental and subscription-based businesses. The formula for calculating MRR = ARR divided by 12.

Needs Assessment is a process for analysing a system, person, function or organisation with the aim of determining what the entity lacks to achieve a desired state or outcome, usually involving the identification and classification of specific needs according to their level of importance.   

Negotiation is a strategic dialogue, discussion, or bargaining process between two or more parties with the goal of reaching a mutually acceptable agreement.

Net Asset Value (NAV) refers to value per share in a mutual fund or ETF.

Net New Business is a prospect that you have newly converted into a paying customer or an existing account that has been dormant for a long period but has been re-engaged and reactivated as a revenue-generating account.

Net Promoter Score (NPS) is a rating used to gauge the loyalty or satisfaction of a firm’s customer relationships. This survey is typically administered on a scale of 1-10, with 9-10 considered as promoters, 6-8 as passives, and 1-6 as detractors.

On Track Earnings / On Target Earnings (OTE) refers to a common sales pay structure composed of a base salary with an additional amount of commission. For example, this would refer to a sales rep’s take-home pay if they are meeting quotas and earning expected commissions. OTE is an estimation; over/under quota reps will make different salaries depending on performance.  

Onboarding is the process or act of introducing a new customer to your product or service; or integrating a newly hired employee into your workforce or team.

Optimisation is the process or act of altering a system, design, or procedure such that it 1) attains full functionality or efficiency, or 2) generates maximum output, benefit, or impact.

Outbound Sales refers to a process where the seller directly initiates contact with a prospect customer with the aim of closing a deal down the line using methods such as cold calling, cold emails and direct outreach on social media.

Point of Contact (POC) is the person or unit representing an entity, typically tasked to facilitate decision-making and coordinate the flow of information to and from the entity.

Predictive Analytics refers to the field or tool that uses historical data, statistical models, emergent trends and other information to formulate an informed forecast about the future, usually with regards to the performance, growth, or feasibility of a business.

Pricing/Price is the amount of money needed in order to purchase the service or product.

Procurement is the process of finding and acquiring goods and services, usually involving demand assessment, bid reviews, approval requests and transaction logging.

Product refers to anything (an idea, item, service, process or information) that meets a need or a desire and offered to a market, usually but not always at a price.

Product Lifecycle Management (PLM) is the process of managing a service or product across its entire lifecycle — ideation, design, development, deployment, termination/disposal.

Product Qualified Lead (PQL) is a potential customer who meets a set of predefined criteria and have used a benchmark product(s), indicating a relatively higher likelihood of making a purchase.

Profitability is the potential, degree, metric, ability or relative efficiency of a business to yield financial gain (i.e., profits) after all relevant expenses and costs have been deducted.

Proof of Concept (PoC) is a study, prototype, or demonstration attempting to prove that a business idea is feasible and has the potential to be successful.

Purchase Order (PO) is a document issued by a buyer to a seller to indicate the services or products the buyer intends to subscribe to or purchase at the indicated cost.

Quarter is a three-month period in a company’s fiscal year commonly used to make comparative performance analyses, detect or forecast business trends, report earnings, and pay shareholder dividends.

Quota is a predefined benchmark indicating the amount of sales a selling unit such as a sales rep or a regional sales team should achieve within a given period, often used as a measure of success, performance and eligibility for commissions and other rewards.

Referral means the act, process, or technique of generating sales leads wherein a third party shares information about a new prospect.

Request for Proposal (RFP) is a business document that requests vendors or service providers to submit a proposal or bid during a procurement process.

Request for Quotation (RFQ) is a business document asking suppliers or service providers to give a compressive quote/pricing for the purchase of an item(s) or the completion of a specific task.

Request for Tender (RFT) is a formal process where suppliers or service providers are invited to submit a bid for the procurement of an item, commodity or service.

Return on Investment (ROI) is a metric — commonly expressed as a percentage — that indicates the efficiency or profitability of an investment, computed by dividing the benefit (return) by the cost of investment.

Revenue is the amount of money a business generates during a specific period such as a year or a quarter; also called sales.

Sales Acceleration is the act or practice of speeding up the sales process using tools and technologies that improve the productivity and efficiency of sales professionals.

Sales Automation is the act, practice or technique of using software to simplify, speed up or streamline the entire sales process or specific component activities such as customer tracking, forecasting, and inventory monitoring.

Sales Sequence is the established order of activities (such as voice calls and emails) and the frequency at which your sales team engages a prospect or an account, as guided by data analytics.

Sales Cycle is a repeating process characterised by a predictable sequence of stages that a company undergoes as it sells its products and services to customers.

Sales Demo is the act or process of showing the functions, benefits and value of a product or service as it relates to a particular audience, with the aim of leading the audience towards a purchase.

Sales Development Representative (SDR) or Business Development Representative (BDR) is a sales specialist focusing on finding new prospects, establishing foundational relationships, and refreshing the sales pipeline with new leads for account executives.

Sales Enablement is a strategic process that provides a company’s sales professionals with tools, technology, training and other resources that improve their performance at customer engagement and at generating value for all stakeholders in the sales process.

Sales Funnel is a visualisation of the sales process that defines the stages through which prospective customers go through as they are led by sales professionals towards a purchasing decision.

Sales Lead is a potential consumer of your company’s product or service who have 1) expressed interest about your offerings, and 2) shared contact information.

Sales Operations is a collection of aligned business processes, strategic implementations and other activities aimed at achieving organisational goals, specially in the areas of sales revenue, market coverage and growth.

Sales Partnerships is a formal collaboration between individuals or organisations aimed at bolstering the sales performance of a product or service for mutual benefit.

Sales Pipeline is a type of visualisation showing the status of each sales prospect in the customer life cycle or sales process.

Sales Process is a series of strategic steps or a set of activities aimed at driving sales growth through the alignment of personnel, market insight, methodologies, relevant business units, and technology.

Sales Productivity is a metric that indicates how efficient a sales unit is at closing sales and generating revenue for the company, based on sales volume, payroll expenses, level of personnel activity and other factors.

Sales Prospect is a potential consumer of your product or service who meets a given set of benchmarks; typically a sales lead whose financial capacity, buying authority and willingness to purchase are found sufficient enough to qualify and be upgraded in the sales funnel as a prospect.

Sales Prospecting is the process of finding, building and qualifying a pool of potential buyers or clients through networking, cold calling, advertising and other engagement methods.

Sales Qualified Lead (SQL) is a potential customer that has already met the criteria for MQL and has further shown a higher likelihood of opting in or making a purchase. SQLs are flagged by sales development representatives and forwarded to quota-driven Account Executives (AE) for closing-level engagements.

Segmentation is the process of subdividing a large market into distinct partitions (or segments) based on demographics and other factors, with the aim of formulating and implementing separate strategies to better engage the consumers in each segment.

Signaling is a process in which a consumer conveys readiness to purchase your product or service as indicated by “signals” or triggers such as willingness to sign up, participation in events, asking questions about your solutions, etc.

Smarketing is the process of closely aligning the sales and marketing operations of a business, with the aim of increasing revenues via a shared integrated strategy.

Social Selling is the deliberate use of online social networks as sales channels, where sellers directly engage and develop relationships with prospects by probing their needs and providing relevant and valuable insight.

Software as a Service (SaaS) is a software distribution model where customers access and use the software under a subscription agreement. Almost always, the service is accessed on the Internet using cloud and browser technologies.

Solution Selling is a sales approach commonly adopted in a B2B environment where the salesperson probes the customer’s problem(s) and develops/proposes a solution using the seller company’s products or services.

SPIN Selling is an acronym for four types of questions (Situation, Problem, Implication, Need-payoff) a sales professional should ask a prospect to establish a customer-centric selling paradigm and increase closing rate.

Target/Targeting refers to the specific group or subset of potential consumers a company plans to sell its product; or the process involving the strategic identification and engagement of such group.

Tenor refers to the period or amount of time left for fully settling a loan until the financial contract defining its terms and conditions expires.

Top of the Funnel (TOFU) refers to the top and biggest portion of a sales or marketing funnel where prospects enter a screening process until only the leads most inclined to purchase are left. It is also a descriptive term for prospects (raw leads) that have shown initial interest in a service or product as a result of inbound marketing and outbound customer engagements.

Triggers are a set of signals or occurrences that meet certain criteria to be considered an opportunity to make a sale.

Unique Selling Point/Proposition (USP) is a marketing concept that refers to the distinct advantage (lowest price, highest quality, different component materials, or new service features, etc.) a business has over other businesses catering to the same market or audience

User Experience (UX) covers all aspects that relate to a user’s interaction with a product, service, business, or brand, especially those factors that impact the user’s emotions, viewpoint, attitude, and behaviour. In digital marketing, an excellent UX help drive excellent Call-to-Action (CTA) performance.

User Interface (UI) refers to the all the elements that allow people to access, use and interact with appliances, software, digital devices and other machines. Web and mobile sites for example, use menus, buttons, and hyperlinks to enable users to navigate a web page or an app. Home appliances use knobs, touch screens, levers and other means to enable human interaction.

Value Proposition is a statement or message that encapsulates the reasons — such as benefits and unique attributes — consumers would want to patronise a brand or purchase a product.

Value statement is an official declaration that informs the customers and staff of an organisation about the company’s top priorities and its core beliefs.

Value Triangle is a concept in sales and marketing that describes the interrelationships of three factors: cost, quality and speed in the determining the value of a product or service.

Vertical refers to a market where a business targets only a small subset of customers such as a specific industry, sector, profession, or niche. For example, manufacturers of jet plane engines cater only to companies that produce or maintain jet planes.

Warm Call is the process or act of calling or visiting a sales prospect with whom the sales professional has had a prior contact such as during an event or via a referral.

Warm Email is the process or act of emailing a sales prospect with whom the sales professional has had a prior contact such as during an event or via a referral.

White Label is a term describing a product or service that can be purchased by a business entity and legally re-sold, marketed, and distributed under the entity’s own brand or trademark. Most of these products are turnkey and lightweight.