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.
A few basic sales terms
Account
Customer accounts, also called customer profiles, are created the first time a customer buys a product or service from your business. These accounts contain important information about the customer, including purchases, interactions, contact information, and preferences.
Business-to-business (B2B)
Business-to-business (B2B) refers to sales that happen between one business and another. These transactions can be with partners, distributors, suppliers, or clients. Many B2B companies sell to individual customers, too, but they often have separate departments for both, as B2B sales are more complex with a longer sales process.
Business to customer (B2C)
Business-to-customer (B2C) refers to sales that happen between businesses and individual consumers. B2C sales include your typical purchases from various stores—clothing, furniture, groceries, and everyday essentials. Compared to B2B sales, B2C sales are usually more spontaneous and generate a lower profit per sale.
Lead
A lead is any potential customer who expresses interest in your company’s products or services. Leads can be inbound (the customer reaches out to you) or outbound (you reach out to them). Most companies focus their efforts on outbound leads through marketing strategies, social sales, and ad campaigns.
Prospect
A prospect is a lead that has interacted with someone in your company. This distinction allows your sales team to identify who needs initial outreach and who is officially at the beginning of the sales pipeline. If you need help remembering, think of a prospect as a prospective buyer: someone in the store looking at products. Leads are outside the window thinking about coming 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
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.
Closing ratio
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.
Conversion
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
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.
Forecasting
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
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
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.
Quota
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
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 strategy sales terms
ABC
ABC stands for “always be closing.” It’s a sales strategy that reminds reps that every step they take in the sales process is one step closer to closing the deal. Though it’s not a universally accepted strategy (different customers react differently to tactics and every rep needs to adjust accordingly), it is a nice reminder of the end game when things feel frustrating.
Account-based selling
Account-based selling is a sales strategy where the entire company focuses on converting a few high-value leads rather than casting a broad net. This isn’t a long-term strategy, but it can be extremely useful if a company wants to use a high-profile client as a marketing pull for lower-profile customers.
BANT framework
The BANT framework is a checklist used during lead qualification.
B = Budget: Can the lead afford the product?
A = Authority: Is the lead a decision-maker with the authority to buy the product?
N = Need: Does the lead or their business need the product?
T = Time: Is this lead likely to purchase the product in the next sales cycle?
Leads that check all four boxes are extremely qualified and should be nurtured.
Benefits
Benefits refer to how a product solves a prospect’s problems. Benefits should not be confused with features; benefits are the positive outcomes of features. For instance, time saved is a benefit, while automation is the feature that causes that benefit. When selling, reps highlight benefits, then describe how the product results in those benefits down the line.
Cold calling
Cold calling is the process of making an unsolicited phone call to a qualified lead in the hopes of turning them into a prospect. Cold calling is universally acknowledged as a difficult strategy, but it can produce results. It’s also a fast and personal way to contact numerous leads in a short amount of time.
Cross-selling
Cross-selling is the act of selling an additional product or service to a customer. It occurs when a sales rep discovers that a prospect or client can benefit from more than one solution. For example, a rep for a mattress company can persuade a prospect to buy new pillows with their new mattress. In this case, the rep can potentially increase the value of the sale by directing the prospect to a different product within the same company.
Direct sales
Direct sales are sales that don’t require a middleman. The products are sold directly to the consumer from the seller. Direct sales has become synonymous with multi-level marketing, but they’re not the same. Multi-level marketing is direct sales through distributors who work as independent contractors for a larger company.
Discovery call
A discovery call is an initial conversation a lead (soon-to-be prospect) has with a sales rep. This can be a cold call or a scheduled call based on an information request. The discovery call is crucial in determining the prospect’s pain points and setting a positive tone for the relationship.
Feature
A feature is an aspect of a product that directly benefits a customer. For instance, mass email automation is a key feature of most marketing and sales software that helps the customer by simplifying large-scale marketing campaigns and saving time on outreach. It’s important to remember that the feature is not the benefit—it simply causes the benefit.
Hard sell
A hard sell is an aggressive sales tactic in which the rep directly challenges the prospect’s objections. This is largely an outdated selling style, but in certain circles, it still pulls in large amounts of revenue. However, most companies now prefer a softer approach.
Markup
A markup refers to a price increase for a product or service. It’s usually done to compensate for expensive production costs or dips in revenue and profit. Mark-ups can be risky because they can deter current customers, but they can also save a struggling company from a bad month or quarter.
Objection
Objections are any concerns raised by prospects during a sales conversation. Common objections are about the price of a product or the necessity of a product. Many reps use sales scripts to address these objections while still acknowledging the concerns.
Pain point
A pain point is a specific problem for a lead—a problem that can hopefully be fixed by a product or service from your company. Being able to understand and identify customer pain points is a key sales skill for reps. If a customer’s biggest need is ecommerce software and you’re trying to sell them customer service software, you’re unlikely to make the sale.
Positioning statement
A positioning statement is a semi-prepared statement used by sales reps to start conversations with potential customers. A strong positioning statement lets the customer know who the sales rep is, who they work for, and what solutions they offer.
Prospecting
Sales prospecting is the never-ending process of identifying and contacting potential buyers. Many companies have departments dedicated to this task because a strong sales pipeline requires constant movement and new leads. Prospecting tools can greatly help with this process.
Sales enablement
Sales enablement describes the process of providing your sales team with the tools, training, skills, or resources they need to succeed. This includes everything from sales software and mobile access to social media sales training and individual sales coaching.
Sales script
Sales scripts are written dialogues or guidelines used by sales reps while they’re interacting with prospects. These scripts can be extremely detailed and word-for-word, or they can simply be key points for a sales rep to touch on. Sales scripts help keep company branding and sales strategy consistent.
Smarketing
Smarketing is a newer term referring to the alignment of the sales and marketing departments for smoother workflows and consistent branding.
Social selling
Social selling is a sales strategy in which reps and companies use social media as a way to interact with prospects and existing customers. With social selling, social media is typically not where sales take place, but rather a means of communication and lead nurturing.
Soft sell
A soft sell is a strategy in which sales reps take time to build trust with the prospect and work with them to find the ideal solution. Soft sales are extremely popular in the consumer market right now and are used by many sales reps.
Sound bite
Sound bites are small phrases that sales reps use to communicate simple matters to prospects. Usually, sound bites are answers to commonly asked questions or objections that make the rep’s life easier.
Upselling
Upselling is a tactic in which a rep tries to increase the value of a sale by encouraging a prospect to buy a higher-end version of the initial product they were interested in. Depending on the type of company, upsells may include additional features, more expensive products, or subscription upgrades.
Value proposition
A value proposition is a breakdown of all the benefits provided by a product or service. Sales reps may choose to emphasize or omit certain benefits from this list depending on the prospect.
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