Explore 26 crucial sales terms every marketer should know, including B2C, B2B, lead scoring, KPI, sales cycle, and more. Understand the significance of these terms for successful sales and access a video transcript for detailed explanations.
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You might think that your vocab-learning days ended as soon as you graduated high school,
but that’s where you’d be wrong. While you might not need words like
“antidisestablishmentarianism” in your day-to-day work, the business world is
full of its own jargon. In order for you to be successful at driving sales,
you need to be familiar with the terminology involved in the sales process.
In this video, we’re gonna cover 26 sales terms that you need to know.
Let’s start with a few basic sales terms that are important for every business.
First, we have the term “business-to-consumer,” or B2C. B2C is used to describe a type of business
aimed at individual consumers. There are all kinds of B2C industries out there, including
retail, healthcare, entertainment, and more. Then we have the term “business-to-business,”
or B2B. Whereas B2C companies sell to consumers, B2B companies sell to — you
guessed it — other businesses. So, if you sell something like financial consulting
services or fabricated metal products to other companies, you’re a B2B business.
Onto our next term — decision-maker. A decision-maker is someone who… well… makes
decisions. Often, these are purchase decisions. In a B2B setting, that may mean the business owner,
a CFO or a marketing manager. These are the people that B2B sales campaigns should target.
A buyer persona is a fictional representation of the type of person you want to target
with your sales. For B2C companies, your buyer persona would represent a customer,
whereas for a B2B company, it would represent a decision-maker at your target companies.
An ideal customer profile, or ICP, is similar to a buyer persona, but they’re not the same thing.
Instead of creating a fictional representation of your customers, an ICP lists out the traits
that an ideal customer would have. And an ICP actually focuses on the
companies you’d like to work with, not the individual decision-makers who work there.
A CRM platform is a tool that lets you gather, store, organize,
and analyze data about your customers. It pulls that data from your website or other tools and
helps you centralize it in one place. You can benefit from having a CRM,
because it lets you learn a lot more about your customers and hone your sales techniques
as a result. Plus, a lot of CRMs come with cool features like sales automation. Sales
automation will perform routine tasks for you instead of you having to do it manually.
Now let’s take a look at some terms related to sales leads. But what is a lead, exactly?
A lead is someone who takes an interest in what you sell, but hasn’t purchased from you quite yet.
So, if you were a potential customer, you start off knowing nothing about a business.
Then you learn about the business and get kind of interested in what they offer. And
finally you get interested enough that you decide to buy. A lead is that middle step
where you’re in the process of making a decision and learning about your options.
A marketing qualified lead, or MQL, is a lead that the marketing team decides is worth sending
over to the sales team. These leads have shown an interest in your products or services, and
they’re far enough along in the marketing process that it’s time for the sales team to take over.
A sales accepted lead, or SAL, is a lead that your sales team deems worth talking to
after some initial research. Basically, someone becomes an MQL when the marketing team decides
they’re ready to go over to the sales team, but the sales team still has to accept them. When
they do, the lead becomes an SAL. A sales qualified lead, or SQL,
is a lead your sales team decides is worth bringing on as a customer. This happens after
the sales team decides that someone is a good fit for your business. SQLs are the
ones that you really work toward converting. Lead scoring is a system for prioritizing your
leads. Sometimes you’ll have a lot of leads at once, and you’ll want to know which ones
to focus your efforts on. Lead scoring allows you to develop criteria for what makes a good lead,
assign values to each criterion, and rank your leads based on how many of those criteria they
meet. You can then prioritize the highest-scoring leads since they’re deemed more likely to become
a customer and bring revenue to your business. A sales funnel is a visual representation of the
customer journey. At the top of the “traditional” funnel, there are a lot of prospective customers,
but only some of those people make it to the bottom and convert.
Our next term is sales forecasting. Just like a weather forecast predicts things like rain
and snow, a sales forecast predicts what your sales and revenue will look like down the road.
You can make these predictions based on data, like previous sales, and then you can use the forecast
to help plan your operations. Our next batch of terms
focuses on the sales pipeline. A sales pipeline is a model that represents
the stages your customers go through on the way to conversion. It’s different from a sales funnel
because a funnel focuses on conversion rates, when a pipeline focuses on customer actions.
Every sales pipeline looks different, but let’s define a few of the most common pipeline stages.
A sales cycle is the full sales process that happens for a single customer. So,
the pipeline covers all your customers, but each individual customer has their own sales cycle that
lasts from the time they first start engaging with you to the time they become a customer.
The first sales pipeline stage is prospecting. This is basically your top-of-funnel marketing
stage, where you’re trying to attract new prospects that fit your ICP. A great
way to do this is to put out targeted content, especially via ads or emails,
to get people interested in your brand. The next stage is lead qualification,
which is where you weed out the people who are just browsing and lock in on the people
who are actually going to bring growth to your business. You can use more targeted content,
like downloadable guides or gated videos, to draw people in and learn more about them,
even getting their contact info if you didn’t already get that out of them.
After you meet with your leads and get to know them more, you’re ready for the proposal stage.
In this stage, you should have a very solid idea of what your business can do for your leads. It’s
just a matter of getting it down on paper and convincing your lead to become a customer. So,
once you’ve assessed their needs and shown them what your business can offer them,
you draw up a proposal for your services. After a successful pitch and proposal comes
the close. This stage is simple — it’s where your leads decide to buy your product or
service and become customers. It’s called “close” because you’re closing the deal,
likely signing a contract. There may be some negotiation
before you make things official, especially if what you offer requires a large investment. So,
just be patient and ready to make a deal. Finally, we have customer retention. If
you thought the sales pipeline ended with the sale itself, you were wrong. After the sale,
you want to deliver the product or service to the customer, and then you want to keep providing
them with good customer service that encourages them to come back and buy from you again later.
That covers the sales pipeline. Now, for our last six terms,
we’ll be focusing on sales metrics and analytics. Our first analytics term is key performance
indicator, or KPI. A KPI is a metric — in this case, a sales metric — that gives you valuable
insights into the kinds of results your campaigns are driving. Now that we’ve defined that term,
let’s define a few important sales KPIs. Churn rate is a measurement of how many customers
stop doing business with you during a given period. This is very relevant for businesses with
long-term clients. To calculate it, you divide the number of lost customers by the total number
of customers you had, and then multiply by 100. Close rate is the percentage of leads who become
customers. To calculate it, just divide the number of converted leads by the total number of leads,
and then multiply by 100. So, if you have 50 leads during a given quarter and 20 of
those leads convert during that quarter, your close rate for that quarter is 40%.
Another important sales metric is customer acquisition cost, or CAC. This metric measures
how much it costs to acquire the average customer. After all, marketing and sales efforts cost money,
so you want to make sure you’re not spending more than you’re earning on each conversion.
To calculate CAC, you have to figure out which marketing and sales expenses you count toward
your conversions. Then you just add up all those expenses for a given period,
and divide by the total number of customers you earned during that period.
Next is customer lifetime value, or CLV. CLV measures how much monetary value you can expect
a customer to bring to your company over the whole course of their relationship with you.
Calculating this is a little tricky, but the simplest way is to multiply
customer value by average customer lifespan. Our final sales term for this video is annual
recurring revenue, or ARR. This metric measures how much money you earn per year from recurring
payments like subscriptions and contracts, if your company makes revenue that way.
There you go! That’s 26 valuable sales terms for your business, defined. I hope you were paying
attention, because now we have a vocab test. … OR, I guess instead of a vocab test,
you could just subscribe to our YouTube channel. That’ll work. Your choice.
Anyway, that’s all for this video. Thanks so much for watching, and I’ll see ya in the next one!
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