Sales Terms 101
What is Sales and Why is it Important?
How does Apple make money? Yup, they sell iPhones. Business depends on sales. Sales might be the most important, and rewarding skill to have in today’s world. What is sales? Sales is the process of getting customers to buy a product or service.
Today, I’m going to help you boost your sales IQ by telling you about some common sales terms.
Here are the kinds of sales terms you’ll learn in the post:
- Sales Funnels
- Pipelines
- Who You’ll interact With
- Keeping Track of How You’re Doing
- Keeping Track of Customers
- Interacting with Customers
- Types of Sales
- Knowing the Customer
- Persuading Customers
- Sales+Marketing
What is a Sales Funnel?
The funnel is a visual representation of the business process.
Buying Process/Cycle
These are the stages a buyer goes through to pay for a product. The stages are different for different business models, but they all share these 3 principles:
- Awareness: Leads become aware of what you’re offering or they become aware of a need they want to be filled. For example, a lead sees an ad for a bidet and laughs at it, or toilet paper runs out.
- Evaluation: Leads know your product solves their problem but aren’t sure if your bidet is the best option.
- Purchase: Leads buy your bidet and are made fun of by their friends.
Top of the Funnel (TOFU)
This is the largest part of the funnel because this where you have the widest audience. The top of the funnel is awareness. Leads are aware they have a problem to be solved, or they are aware of your product. This is the first stage of the buying process.
Some common activities in this part of the funnel might be:
- Advertising
- Podcasts
- Ebooks
- Blog posts
- How-to articles
Middle of the Funnel (MOFU)
The middle of the funnel is where people are researching. Your audience narrows as people decide whether your product is the best fit. This is the second stage of the buying process.
Some common activities in this part of the funnel are:
- Product Comparisons
- Guides
- Case Studies
- Infographics
Bottom of the Funnel (BOFU)
The bottom of the funnel is where a lead is about to become a customer. This is the smallest part of the funnel and the most important.
Some common activities in this part of the funnel are:
- Discounts
- Free Trials
Pipeline
The step-by-step process of a sale. A sales rep moves a prospect through the stages that lead to a sale. For example: Complete demo -> Proposal sent -> Contract sent -> Deal won or lost
Stage
What stage a prospect is within a pipeline. Different businesses have different stages but potential stages might be “potential” “qualified” “interested.” A lead who completed a demo might be in the “interested” stage.
Weighted Pipeline
A pipeline that gives certain values for a lead based on what stage they are at. For example, a lead who agreed to a meeting might have a 20% chance of buying, a lead who completed a demo might have 50%, and a closed-won opportunity is 100%. This would mean, instead of having 20 prospects in a pipeline, there might be 20 opportunities at 60% or more chance of closing leaving a weighted pipeline value of $75,000.
Who You’ll Interact With
Lead
Someone who has shown interest in buying a product or service. Maybe they signed up for your newsletter to receive updates on new shoes coming out.
Cold Lead
A lead who doesn’t know you.
Warm Lead
A lead who does know you.
Lead Qualification
The process of figuring out whether a lead is qualified to buy based on certain criteria like budget, time, etc…
Prospect AKA Qualified Lead
A lead that is interested in what you’re selling and has the means to buy it.
Bad Leads
Leads that are unlikely to become buyers.
Decision-Maker
The person who decided whether to buy or not. They are protected by the gatekeeper.
Gatekeeper
A person who hands off information to the decision-maker, like a receptionist or personal assistant.
Keeping Track of How you’re performing
Quota
The goal of a sales rep. This is might be how much a sales rep is expected to sell in a given timeframe. Quotas differ from business to business. For example, a quota might be to sell 10 products a month.
Churn Rate
A percentage of how many customers you lost during a certain period. Churn rate is calculated by dividing the number of customers you lost during a certain time frame and dividing that by how many customers you had at the beginning of the time frame. (New sales during the time frame are not included.)
The equation is (lost customers)/(total initial customers)=churn rate%. For example, a company had 1,000 customers at the beginning of September and only 900 customers at the end o September, the customer churn rate would be: (1,000–900)/1,000 = 100/1,000 = 10%.
Churn rate is very important for returning revenue companies like Netflix.
Opportunity
A prospect that’s working with sales reps.
Closed Opportunities
Opportunities that have firmly decided to buy or not buy a product/service.
Closed-Won
When a deal ends with a purchase.
Closed-Lost
When a deal ends with no purchase.
Commission
The payment a sales rep gets after selling a product.
Keeping Track of Customers
Customer Relationship Management (CRM)
Software that allows sales reps to manage existing and potential customers. Most CRM’s allow sales reps to track everything from contact info, position in a pipeline, and any other information needed.
Some popular CRMs are:
Interacting with Customers
Cold Calling
Calling someone who doesn’t know you to turn them into a potential customer.
Cold Emailing
Emailing someone who doesn’t know you to turn them into a potential customer.
Discovery Call
The first call a prospect receives from a sales rep. This call is meant to gather information about the prospect and qualify them.
Prospecting
Sales reps searching and finding potential buyers and moving them through the sales process.
Types of Sales
Business-to-Business (B2B)
A business that sells to other businesses.
Business-to-Consumer (B2C)
A business that sells to customers (like McDonald’s).
Knowing the Customer
Consumer
A person who uses a product or service. If a mom buys a star wars toy for her kid, the kid is the consumer and the mom is the buyer.
Buyer Behavior
How a customer buys a product. This is influenced by many factors such as desires, beliefs, attitudes, emotions, etc..
Buyer Persona
A representation of what your ideal customer would look like. For example, if you’re selling a motorcycle, maybe Speedy Steven, a made-up 30-year-old man would be your buyer persona.
Buying Criteria
What a consumer needs to know before buying. Questions like “how much does it cost?”, “How does it work?”, “why do I need it?” etc…
Buying Signal
An indication from a prospect that they want to buy. Maybe they nod their head yes or ask something like “how soon can it be delivered?”
Persuading Customers
Pain Point
A prospect’s current unmet needs. The most important thing for a sales rep to address is how their product fixes their prospect’s pain points.
Benefit
The value of a product provides a consumer. Not a feature. For example, this new car will make your neighbors jealous.
Feature
How the product solves a prospects pain point. If someone is buying a car for a snowy winter then 4 wheel drive would be a feature.
Objection
A prospect’s reason for not buying a product. “I don’t have the ___ right now.”
Sound Bite
How a sales rep responds to common rejections. “It’s at no extra cost to you!”
Positioning Statement
How a sales rep opens communication with a potential buyer to engage them around their pain points.
Sales Rep: I help restaurants who are frustrated with the inability to increase revenue in these challenging times.
Buyer: Yes, that’s becoming a problem.
Sales Rep: I talk to a lot of restaurants, and lately I’m hearing the two biggest problems are too much competition and the rise of delivery services. Do these problems sound familiar?
Social Selling
When a sales rep interacts directly with a prospect over social media. This might mean thoughtfully answering a prospect’s questions on Reddit regarding problems your product addresses.
Sales + Marketing 4 ever
Service Level Agreement (SLA)
An agreement between marketing and sales teams. For example, sales reps might want 30 high quality leads a month from marketing and marketing might want sales teams to make at least 5 cold calls to each lead.
