Sales is a team sport. And when teams want to win, each member needs to be working from the same playbook. That's why we compiled this glossary of the most important sales terms, each clearly defined. Not only does it provide a handy reference, but it also puts all revenue operations professionals—sales, marketing and customer success—on the same page when it comes to critical metrics, analytics and strategy. Read on for our handy roundup.
H-N (click term to jump to entry)
Say the word “treat” near a dog, and their ears perk up. They think they know what’s about to happen. But before rushing to the treat, they need to calm their happy ears.
What are happy ears in sales?
In the context of sales, happy ears refers to a sales rep rush rushing in optimism. It’s understandable—reps want to be optimistic about their deals because they want to achieve success for themselves and the company. For example, if a prospect says, “Your product looks great — we can’t wait to discuss more,” it can be hard to fight the impulse to pop a bottle of champagne. But not so fast. You might feel good at first, but it’s healthy to drill a little deeper to make sure this opportunity is not a mirage by asking some follow-up questions to further qualify the opportunity.
How can happy ears affect your sales forecast accuracy?
Let’s revisit the dog scenario. The owner mentioned the word “treats.” The dog has no doubt that snacks are in her future, so the only question in her mind is, “How many?” In sales, it’s critical to pump the breaks and ask some important questions first. When will I get the treats? How many will I get?
Sales reps need to ask themselves similar questions when they’re qualifying their opportunities to ensure their forecasts are accurate. If a rep has happy ears and projects wins for certain deals, their forecast reflects that However, a deeper dive may reveal that these juicy-looking opportunities are actually a bad fit for a number of reasons:
- Bad timing
- The prospect lacks budget
- Not enough value provided for the prospect
If one of these situations plays out, conversations can break down between the rep and the prospect, and rep activity diminishes. The rep’s ears aren’t so perky, and they will fall short of their forecast.
How do you identify happy ears using sales activity data?
Sales activity data can be a reliable indicator of happy ears. A rep can be really excited about a response from a prospect. But if the prospect stops responding and engagement falls silent, happy ears can be easily identified.
What can you do about happy ears?
It’s important to be optimistic about a deal, but how do you keep your happy ears in check? The best thing to do is to think critically. Maintain a sense of curiosity. If a prospect says they’re interested, ask them why. If they want to see your product, ask them what their initiatives are. Drill down deeper to better understand the prospect and confirm that there is a good fit here.
For more information, read Don’t Let Your Reps Fail Alone.
Ideal Customer Profile
The ideal customer profile informs your entire sales strategy, as it defines who your sales team is pitching to.
What is an ideal customer profile?
An ideal customer profile (ICP) identifies the attributes of a company’s most valuable customers. Using firmographic and demographic data and insights, companies are able to develop a set of criteria that narrows the focus of go-to-market efforts, determines the accounts that best fit the product offering, and makes informed predictions about future success.
Why create an ideal customer profile?
Creating an ideal customer profile is is especially critical for early-stage companies that are trying to determine their best-fit accounts and their go-to-market strategies. It’s also useful for larger companies that have multiple products to sell.
For each product your company sells, creating an ICP helps to:
- Focus marketing, sales development, sales and executive teams on the highest-value accounts, and predict future success.
- Drive target-account list creation, segmentation, organizational structure, and other key activities.
- Produce compelling business results such as:
- Lower churn probability
- Higher conversion rates through the funnel
- Greater annual recurring revenue and lifetime value
How do you create an ideal customer profile?
How to create an ideal customer profile will largely depend on the stage of your company.
For early-stage companies, defining the ICP may be more qualitative than anything else, relying on the founder’s instinct, inclinations, and best guesses for where the product will resonate.
For later-stage companies, defining the ICP is likely a more quantitative exercise, taking into account analyses around total addressable market, customer churn, deal cycle velocity, average sales price, and other indicators.
Who should have input into the ideal customer profile?
When creating an ICP, it’s important to ensure communications across the entire revenue operations organization. Have conversations with marketing, sales, product, and customer success teams to gather a broad set of opinions to inform the exercise. Once complete, communicate the findings back to the team.
For more information, read Top 3 Tips for Account-Based Sales.
At its core, inbound marketing refers to any marketing activity that aims to bring new customers to the business.
What is inbound marketing?
Inbound marketing refers to marketing tactics designed and deployed to generate leads for the sales or sales development team. These tactics include paid and free media and are typically coordinated by the entire marketing team—product marketing, customer marketing, content marketing, and demand generation.
How does inbound marketing differ from outbound marketing?
Inbound marketing casts a wider net than outbound marketing. You can’t always control which people see or respond to marketing efforts. The goal of inbound marketing is to add enough value to the recipient that you earn their trust and they want to learn more about your product. This is often called lead conversion—when a person goes from anonymous (you don’t have their contact information) to known (you have their contact information and the sales team can follow up).
What are some inbound marketing strategies?
Inbound marketing strategies include, but are not limited to:
- Online events, such as webinars.
- Offline events, like trade shows, conferences, executive buying centers and field marketing events.
- Search engine optimization (SEO), which means ensures that your website features all the content that your buyer will care about, thus increasing the likelihood that your site appears prominently in their Google, Bing, Yahoo, and other search-engine results.
- Search engine marketing, which involves running paid advertisements on sites like Google, Bing, and Yahoo to attract impressions and clicks from your audience. This also includes sponsoring keywords so that your company’s information appears when certain keywords are searched for.
- Account-based marketing (ABM), which involves designing specific programs for key accounts that offer hyper-relevance to the company or the buying group within that company.
How does inbound marketing drive revenue?
Inbound marketing drives revenue by keeping the top of the sales funnel full. Inbound marketing creates leads, which can turn into marketing-qualified leads (typically through a lead-scoring process), get handed off to the sales or sales development team for human qualification, and ultimately turn into opportunities for the sales team to close.
For more information, read How Marketers Can Take a Data-Driven Approach.
All sales leaders aren’t equal. By qualifying the different types of leads, sales leaders can better assess which to prioritize. Inbound sales are one such type of lead.
What is inbound sales?
Inbound sales refers to sales interactions with customers or prospects who have already expressed interest in your product or service. We call these warm leads. Since the customer has already indicated a willingness to speak with you, you already know interaction is less intrusive on their time. Inbound sales typically generate from leads from your company’s website or marketing team.The customer takes the initiative to reach out or otherwise indicate interest, and the salesperson follows up.
How does inbound sales differ from outbound sales?
Inbound leads tend to inspire more engaging conversations compared with that of an outbound sale, since outbound sales involve reaching out to someone whom you do not know and who is not expecting your call or email, and therefore risks seeming intrusive, or ignored.
What are some inbound sales techniques?
- Before reaching out, do your research on the prospect. Show them you truly understand both their job and the company they work for. Since they’ve already expressed interest in your product, try to understand what specifically is appealing to them so you can pitch your product in the best way.
- Research the customer’s pain points and address them in the conversation.
- Consistently listen to the prospect.
- Discover the buyer’s timeline so that you can get a sense of when the deal might close, should they wish to move forward. This will allow you to service them best while also producing the most accurate sales forecast.
For more information, read How to Create the Ultimate Sales Process Playbook.
Key Performance Indicators (KPIs)
Key performance indicators, often known only as KPIs, increase accountability and set the standard for employees throughout the quarter.
What are key performance indicators?
KPIs are metrics that employees aim to hit in order to fulfill their objectives for the company. Sales is a numbers game, and everything rides on the results. As individuals, and as a team, we use these KPIs to hold ourselves accountable and make sure we are on track to deliver on our goals for the company.
KPIs also provide insight into the health of the company overall. They can show a business where it’s succeeding and where it’s not, providing direction and education on next steps.
Why is it important to track key performance indicators?
KPIs can be scary; they represent a commitment to your goals. What if you don’t hit these metrics?By identifying their KPIs, each contributor gains a sense of responsibility to attain them. With established metrics like KPIs, if someone is not on track to meet their goals, managers can identify the area that is lacking and coach the rep to ensure improvement.
What are some examples of key performance indicators for revenue operations teams?
Some standard KPIs for revenue operations teams include:
- Number of phone calls with prospect or customer
- Number of emails sent to prospect or customer
- Meetings created
- New contacts created
- Revenue generated
For more information, read 15 Sales Metrics Every Revenue Leader Should Track.
In the past, computers were designed to perform specific tasks but did not have the ability to self-correct. This is changing with new machine-learning technology.
What is machine learning?
Machine learning refers to the process of artificial intelligence “learning” from its own experience. For example, you can have a robot become an expert chess player by playing games by itself and learning from previous mistakes. Indeed, Google actually did invent a computer that used machine learning to become an unbeatable chess player.
How can machine learning affect sales?
Technology can eliminate repetitive sales tasks by automatically capturing important data from a variety of sources, including CRM, reps’ calendars, emails, marketing automation and other business systems, and updating it in real time. This frees up reps’ time to focus on more creative pursuits.
Additionally, machine learning with added data analytics empowers sales leaders to use historical sales data to help assess current deals and accurately predict future sales. This information can signal which deals need help and which are likely to close, informing everything from how reps approach prospects to strategizing during one-on-one sales meetings.
As an example, many tech companies including Okta, AppDynamics and Juniper Networks were able to apply artificial intelligence for better sales visibility and increased forecast accuracy. This involved using predictive analytics to figure out which signals led to a closed-won deal and which patterns led to a closed-lost deal.
How can you apply machine learning to improve your sales forecast accuracy?
Machine learning and AI can automatically analyze your sales data to provide more accurate forecasts and better visibility into the overall health of your business. No longer do sales teams have to rely on their gut feelings or poor data due to human error. AI takes the guesswork out of forecasting.
For more information, read How AI Can Help You Up Your Sales Game.
Originally developed in the 1990s, MEDDIC continues to be a popular methodology that B2B sales teams follow today.
What is MEDDIC?
The acronym MEDDIC stands for:
MEDDIC can be used by sales teams to better qualify potential customers. By applying the MEDDIC rubric to their pipeline, a rep and their manager can easily know whether it’s worth spending time and energy on a particular prospect—or whether it’s better to move on to other opportunities.
What are MEDDIC qualifications?
Each element in the MEDDIC acronym can be defined as follows:
Metrics. In order to properly qualify a potential deal, reps should identify quantifiable gains the prospect hopes to achieve through your solution or product. For example, a company may want to reduce manual data entry by sales reps by 30%. Knowing this helps reps provide more concrete economic benefits.
Economic buyer. The economic buyer holds the purse strings and can either greenlight or stonewall your sales attempts. It’s critical to know who this person is and develop a positive relationship with them.
Decision criteria. What’s involved in making decisions at the company you’re trying to sell to? How do they choose from multiple solutions? Knowing how they make decisions allows you to cater to those needs.
Decision process. The decision process is every box that needs to be checked to finalize the sale. What are the exact steps that go into every purchase on the prospect’s side? Once you know this, you can identify when a deal is stalling and what you can do to move it along.
Identify pain. Every serious prospect has to have a legitimate business reason for purchasing your product. If you’re unable to identify what that is—or if the pain is not great enough to warrant a purchase—it may be tough for your internal buyer to say yes.
Champion. A champion is someone inside the company who is invested in the purchase of your solution. They are likely the person who will benefit the most from this purchase or feels the most pain around a current problem. This person will ideally fight for you, provide you with information about where the sale stands, and help influence others in the buying group.
What are the benefits of using MEDDIC methodology?
For revenue operations teams, the MEDDIC process provides a simple checklist for sales teams to identify and qualify prospects. Time is money. The more time sales can spend on the right deals, the more revenue they will bring in. When MEDDIC is properly identified, reps can be confident they should spend time on this deal.
For sales managers, having the MEDDIC qualifications in an easily accessible place allows them to determine whether their reps are spending their time wisely, or whether the deal is a dud and they should invest their time elsewhere.
Marketing can use MEDDIC qualifications to learn more about common pain points from prospects, as well as who the economic buyer and champions are. They can then tailor content and messaging to these specific personas to increase awareness.
Customer success can also use MEDDIC qualifications to better understand their new customer as they onboard them. Knowing what the pain was can help them focus on more specific solutions as they implement the solution.
For more information, read How to Create the Ultimate Sales Process Playbook.
Monthly Recurring Revenue
Not all revenue is created the same, and how you sell, sign and track income can vary. Among those revenue categories is monthly recurring revenue.
What is monthly recurring revenue?
Monthly recurring revenue (MRR) refers to consistent income paid every month, usually based around subscription products.
MRR contracts can last years. Monthly recurring revenue also allows companies to potentially receive income without their product being used. An example of this would be an online product subscription: A SaaS business will typically bill a set amount — say $30 — per month for use of a product, but only a small percentage of customers will use the product every day. Some customers may never even use it but neglect to cancel. Either way, the Saas company can still count on that $30 a month from all subscribers.
How do you calculate monthly recurring revenue?
Monthly recurring revenue is calculated by determining how many different sources of income are coming in each month. Subtracting the company’s total businesses expenses from the monthly recurring revenue will leave you with the remaining amount of profit:
Monthly recurring revenue from all sources – total business expenses = Profit
Why is monthly recurring revenue important?
Monthly recurring revenue allows businesses to plan for the future. This predictable revenue is critical not only for the long-term viability of the company but also for the growth of the company and improvement of the product, as the company can count on this revenue to invest in such things as personnel, research and development.
For more information, read 15 Sales Metrics Every Revenue Leader Should Track.
Net Promoter Score
Your net promoter score is a critical piece of information when trying to promote your value proposition, woo customers and reduce churn.
What is the net promoter score?
The net promoter score (NPS) is a metric used to assess customer experience. It is helpful in gauging customer loyalty and how likely a customer is to recommend a product or service to others.
What is a good net promoter score?
NPS is measured on a scale from -100 to +100. Although any number above 0 is considered a “good” net promoter score, +50 is rated “excellent” and +70 is “world class.”
How do you calculate net promoter score?
NPS is based on a single-question survey that typically asks, “On a scale from 1-10, how likely are you to recommend….” Responses from 1-6 are considered detractors. A response from 7-8 is considered passive. A response of 9 or 10 is considered promoters.
Let’s say you give 10 customers this survey. Five customers are promoters (50% of respondents), two are passive (20%), and three are detractors (30%). You calculate your NPS with this equation:
Promoters – Detractors = Net Promoter Score
In the above scenario, that leaves you with an NPS of 20. Not bad, but that leads us to our next question.
How can you improve your net promoter score?
There are many useful strategies to improve your net promoter score. There is no one-size-fits-all approach here, but rather some ways to get things moving:
- Personally engage with your promoters and detractors. Encourage your team to determine exactly what went right and what went wrong. This allows you to make improvements to avoid less-positive experiences in the future.
- Encourage NPS importance internally, and share the vision companywide. Ensure that your company leadership is aware of efforts to drive the score in a positive direction.
- Identify underlying trends. Do some research into the root causes of the positive and negative experiences and how these underlying issues can best be highlighted or addressed.
How revenue operations teams impact Net Promoter Scores
The buying cycles for B2B businesses have changed dramatically. Most prospects engage with a brand through the website and content well before they reach out to a sales rep. This means the customer experience starts from the first marketing or outbound sales touch, continues through the sales process, and extends past contract signing.
Ensuring that customer experience is consistent and enjoyable is paramount to achieving a high net promoter score, which means alignment across the entire revenue operations team is critical.
For more information, read Increase Customer Renewals with 5 Creative Value-Add Strategies.