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.
A-G (click term to jump to entry)
Annual recurring revenue
Artificial intelligence
Average contract value
BASHO email
B2B buying groups
Buyer persona
Champion
Chief Revenue Officer
Cross-sell
Churn
Customer relationship management (CRM)
Customer retention
Data entry
Discovery call
Gatekeeper
Go-to-market strategy
H-N
O-R
S
T-Z
Annual Recurring Revenue
Annual recurring revenue (ARR) is now the go-to metric to evaluate a company’s success and valuation. The higher the ARR, the bigger the company’s footprint, and the greater the chances of long-term success. If a private firm goes public, ARR is a marquee data point to determine the IPO value or acquisition cost. In public SaaS companies, ARR is a barometer of the company’s overall health, growth, and long-term viability.
What is annual recurring revenue?
In software-as-a-service (SaaS) business models, annual revenue isn’t calculated as a culmination of one-off sales, but as a series of recurring sales at regular intervals. This is the key metric for any SaaS business: annual recurring revenue. This is the sum of contracted revenue that the company is going to recognize in any given fiscal year.
How do you calculate annual recurring revenue?
To calculate ARR, divide the total contracted revenue value by the number of relative years. For example, if a customer signs a 3-year contract for $12,000, divide $12,000 (contract cost) by 3 (number of years) for an ARR of $4,000 a year.
Why is annual recurring revenue important in SaaS businesses?
Annual recurring revenue has ushered in a fundamental shift in how software is sold. Prior to the rise of SaaS business models, software was often sold on a persisting license basis; if you purchased 100 licenses for Microsoft Word, those licenses were good forever.
Because software is more complex and evolves much faster now, the recurring revenue model allows for different pricing tiers that graduate based on the level of complexity delivered. This model also requires businesses to earn and re-earn the trust of their customers to renew purchasing contracts.
For more information, read 9 Sales Forecasting Metrics Sales Teams Need to Track & Report.
Artificial Intelligence
Over the past several years, sales organizations have increasingly adopted artificial intelligence (AI) to help run and grow their businesses. With AI, sales teams can better understand the state of their business and improve key areas.
What is AI for sales?
In sales, artificial intelligence refers to machine learning that analyzes current and historical sales data — such as sales activity, win rate, sales cycle length and more — to provide insights and predictions into future sales. This allows the business to more accurately forecast sales, save more deals and ultimately invest and grow with confidence.
What can AI do for sales?
Revenue is the lifeblood of any business. But revenue is not just an outcome, it is a process. Some parts of the process AI can impact include:
- Forecast accuracy: allowing executives to monitor the health of the quarter.
- Data quality: ensuring that every lead engaged by your sales reps is converted and associated with the related opportunity.
- Sales rep productivity: eliminating the need for manual sales activity data entry by reps.
- Pipeline visibility: giving you clear visibility into the health of your deals, showing you where there is risk or extra opportunity in your pipeline.
Understanding in real time what is going to happen thanks to AI allows sales leaders to take actionable steps to mitigate risk or salvage any missteps in the sales process.
How do you use AI for sales forecasting?
For years, sales leaders have been trying to find new ways to create an accurate forecast. Many have what’s called a three-headed hydra: a combination of CRM, Excel spreadsheets and business intelligence tools.
With AI, businesses can now capture and analyze years of previous closed-won and closed-lost sales opportunities to identify patterns and predict future revenue. This gives sales executives real-time visibility and understanding into their businesses and the true health of their forecasts.
For more information, read How AI can help you up your sales game.
Average Contract Value
Knowing your average contract value allows you to more accurately forecast sales for a more predictable revenue stream.
What is average contract value?
Average contract value (ACV) is the average of a customer’s contracted revenue, expressed annually.
How do you calculate average contract value?
The ACV is relatively simple. Let’s say you have a customer who has signed a contract for $300,000 over a contracted length of 3 years.
$300,000/3 years = $100,000 ACV
Why is average contract value important for SaaS sales?
Understanding ACV is important for SaaS sales, since SaaS models generally rely on annual or multi-year subscription sales.
Let’s say Customer A has signed a contract for $2,000 for a year, Customer B has a contract for $3,000 for 2 years, and Customer C has a contract for $4,500 for 5 years.
A: $2000/1 year = $2000 ACV
B: $3000/2 years = $1500 ACV
C: $4500/5 years = $900 ACV
For business success, it is helpful to understand both short-term revenue streams, such as Customer A’s 1-year contract, as well as recurring revenue for future years, such as the multi-year contracts of Customers B and C.
What is total contract value?
Total contract value (TCV) breaks down a business’s profits further to map out annual recurring revenue (ARR), which provides a predictable revenue stream that enables companies to create sales strategies and make intelligent decisions for business growth, such as investing in research and development.
For more information, read The Complete Guide to Sales Forecasting.
BASHO Email
A key sales tool, BASHO emails show your prospects that you’ve taken the time to research them and their companies.
What is a BASHO email?
A BASHO email is a customized, personalized email from sales that aims to connect with a high-value prospect, with the ultimate goal of setting up a meeting with them to explain the value you can provide to their company.
What are some BASHO email best practices?
When doing your research to craft a BASHO, you should:
- Appeal to their ego. Show that you understand the prospect by picking up on details in their LinkedIn profile or company bio. What motivates them? What are their pain points? Speak
- Create an impetus for a response. What value will they be getting from a call with you? What problems will you solve for them?
- Focus on timing. Why is now the right time for them to connect with you?
- Ask for internal referrals. If they aren’t the right person to talk to or aren’t the decisionmaker, one call to action can be an ask for an intro to “the right person” to evaluate Clari, especially at larger companies.
What are the steps to creating a BASHO email?
Here are a few simple tips for setting up a successful BASHO.
- Resonate. Create a short, compelling subject line. Include the word “you” or “your” in the first line of the email and make sure the prospect knows this is a 1:1 correspondence, not a mass email.
- Be relevant. Ensure the prospect knows why you’re reaching out. Reference your research. The first paragraph should mention relevant news or compelling events about the prospect or their company.
- Address the “so what?” Why should the prospect and/or their company care about Clari? This second paragraph should outline to them why they should take a call.
- Include a call to action. The final paragraph should have some sort of ask. For example, close the email with a request for a meeting or internal referral.
For more information, read How to Create the Ultimate Sales Process Playbook.
B2B Buying Groups
Buying groups have emerged as a common factor in many B2B deals, particularly for SaaS purchases.
What are B2B buying groups?
A buying group typically involves six to 10 decision makers in a company who all need to sign off on large purchases for the company.
How have B2B buying groups changed sales?
Buying groups add an additional layer of complexity to B2B sales as the path to a sale becomes less linear. Instead of identifying and selling to a single individual, a sales rep needs to sell to a group of people, all with a variety of interests, needs, and goals. For example, for someone selling a sales AI platform, the customer buying group may include the following titles:
- Chief revenue officer
- Chief finance officer
- Chief security officer
- Vice president of sales operationss
- Vice president of sales
- Director of sales
Why is it important to be multi-threaded in deals?
Ensuring your deals are multi-threaded means having conversations, meetings, and channels with more than one person in the buying group. Deals that are single-threaded carry a lot of risk because if the one contact at the prospect’s company leaves or loses influence, your deal could crumble.
Multi-threaded deals give you the ability to influence multiple people in the buying group, giving you a stronger foothold for success.
For more information, read How Marketers Can De-Risk Single-Threaded Deals.
Buyer Persona
Simply put, buyer personas help you understand your customers and prospective customers.
What is a buyer persona?
A buyer persona is a representation of your ideal customer based on research and data about your existing customers. A buyer persona is how sales and marketing identify their target prospective customers.
Why do I need a buyer persona?
You need a buyer persona so that you can ensure that all activities involved in acquiring and serving your customers are tailored to the targeted buyer’s needs.
How do you create a buyer persona?
Buyer personas can be created through research, surveys, and interviews with your target audience. That includes a mix of customers and prospects, and those outside of your contacts who might align with your target audience.
Here are some steps for creating a buyer persona:
- Create a list of questions and compile a survey
- Take your data from the survey and input them into a data organizer;
- Make sense of your data and start fine-tuning your persona. For example, sales might see who is buying, and see if those buyers have any similarities. Personas can also be based on what a product is built around, not just who buys it.
How do you use a buyer persona?
You can start by identifying what market your personas are in, their budgets, what behaviors they typically engage in, and other basic traits. From there you can start tailoring your messaging and marketing spend to increase your viable leads.
For more information, read How to Create the Ultimate Sales Process Playbook.
Sales Champion
If you are lucky enough, your sales champion will help you pave the path to victory and add a new logo on your office wall.
What is a sales champion?
A sales champion is a prospect who truly understands the value your product will bring to their business. They will help you navigate the internal politics and processes to close the deal. Note that it doesn’t have to just be one person within the company.
Why is it important to identify a sales champion?
A sales champion will help you navigate the labyrinth of internal buy-ins you will need to get your redlines across before the month or quarter ends.
Since they have the inside scoop on their business, the champion also will be able to coach you on how to approach certain people and give you a better understanding of the internal process and pains that the company is navigating.
How do you find a sales champion?
There are two key steps to identifying your sales champion:
- The right sales champion has access to the key decision maker, truly believes in your product, can tell a good story about your product, and can demonstrate how your product helps their business. They can adeptly communicate the urgency and need for your product to their team.
- Confirm your target champion has influence and/or authority internally. They need access to key decision makers, but also must have the respect and esteem of their team. Make sure you’re not just picking up on not perceived influence or falling for a “yes” person.
Once you’ve identified your champion, support and coach them on how to sell internally and make this new relationship flourish.
For more information, read Do Your Sales Reps Know What a “Commit” Really Means?
Chief Revenue Officer
Every team needs a leader, and revenue operations is no exception. That’s where the chief revenue officer comes in.
What is a chief revenue officer?
The chief revenue officer (CRO) oversees the management of a company's revenue streams. The CRO is accountable for the entire revenue operations organization, which includes sales, marketing, sales operations and customer success.
What does a chief revenue officer do?
Successful CROs create and support sustainable and integrated revenue operations processes that allow the existing business model to grow and scale as the organization grows. By driving alignment among every department of the revenue team, CROs are able to create viable and continued revenue in both the short and long term.
Who reports to a chief revenue officer?
The CRO’s direct reports include:
- Sales executive management
- Marketing leaders
- Customer success management
- Sales operations executives
Why is having a chief revenue officer important?
The CRO position measures the long-term viability, success and health of the business. This role also drives efficiency and effectiveness among several major business segments — a process that can ensure cost savings and higher production value in both the short and long term.
What is an average chief revenue officer salary?
According to Glassdoor, the average salary for a chief revenue officer is $233,254 a year, with a high of $303,000 a year and a low of $129,000 a year. Salary depends on a variety of factors, including location, business market, and organizational size and age.
For more information, read CRO Spotlight: Q&A with Bill Binch, Pendo.
Cross-Sell
Cross-selling can fuel growth, save time and money, and reduce churn.
What is a cross-sell?
Cross-selling is a sales technique centered on inspiring customers to purchase products or services in addition to something they have already purchased or agreed to purchase. Examples include service add-ons and complementary products.
What is the difference between a cross-sell and an upsell?
Cross-selling involves offering the customer a related product or service, while upselling typically involves trading up to a newer or more robust version of a tool that’s already being purchased.
What are some cross-selling techniques?
Here are a couple cross-selling tips:
- Offer additional services that dovetail with the main purchase. For example, a new product release might offer a cross-sell opportunity. Review all your accounts periodically to see if they align with new product releases so you are prepared to cross-sell before the deal closes.
- Sell at the right time. Don’t try to cross-sell when your customer hasn’t had an opportunity to learn about your product, when they’re frustrated, or during customer service interactions. The best time to do this is at the end of the conversation, when your customer’s needs have been met and their trust has been earned.
Why is cross-selling important in Saas businesses?
Cross-selling accelerates growth. Clients are familiar with your product since they already use it, so they are more receptive to additional products and services. Cross-selling saves time and money, since you don’t have to work as hard as gaining a brand-new customer. Cross-selling also limits churn by acting as a competitive differentiator — you can provide a more comprehensive solution than other companies with less robust product offerings.
For more information, read Why Your Marketing Team Should Have Access to Sales Activity Data.
Churn
When customers churn, businesses lose that revenue stream and need to find new customers — which takes time, effort and money. While some churn is inevitable, reducing churn and retaining loyal customers is critical to any business’s success.
What is customer churn in SaaS?
Customer churn happens when a customer or subscriber discontinues their subscription or service with a company. In SaaS, this is especially detrimental because the vast majority of SaaS companies rely on a renewal service model to retain customers and create predictable revenue.
What is customer churn rate?
The customer churn rate is how many of your customers discontinue their subscription or service during a period of time, often a given year or quarter. To find your customer churn rate, take the number of customers who did not renew your subscription or service and divide that by the number of customers you had at the start of the quarter or year. It looks like this:
(Number of customers you lost last quarter) / (Number of customers you had at the start of the quarter) = churn rate
What are the causes of customer churn?
Churn can happen for a variety of reasons. Here are a few common causes:
- Price. If the customer’s budget has shrunk, or they find another, more cost-effective solution, they may opt out of renewing your product.
- Poor fit. Sometimes a customer will shift strategies or decide the product does not fit into their current strategy anymore. Or your marketing or sales teams may advertised a feature or function that was not ready at the promised date, so that the customer is unable to get proper value out of the product.
- Customer experience. SaaS contracts can last for years, so having a good partnership between customer and seller is important. The customer wants to feel like their needs are being met and that they are a valuable part of the community. Without that, they might fail to see the value you provide.
- External forces. No matter how good your customer support or product may be, if a recession hits or a customer enters bankruptcy, they can churn. Smart sales teams factor churn into their business models and take steps to anticipate and mitigate it.
For more information, read Top Sales Metrics to Identify At-Risk Deals.
Customer Relationship Management (CRM)
Sales reps are swamped with opportunities they have to manage in order to hit their sales goals for the month, quarter and year. Customer relationship management (CRM) solutions help track those relationships to ensure accurate sales forecasts and a predictable revenue stream.
What is CRM?
CRM is a type of technology used by sales teams to keep track of all the relationships and opportunities that they have with current and potential customers.
Why use CRM?
Imagine each sales rep has 50 opportunities. Now imagine having to manually track those relationships. Doing this manually in spreadsheets is time consuming, not to mention prone to errors and missing data. It’s also much harder to glean insights and deeper analysis from the data without the benefit of automation and historical tracking.
CRM tools make it easier to manage all opportunities in a single, universally visible platform. The easier it is to manage these opportunities, the easier it becomes to focus on selling and increasing profits.
What does CRM do?
CRM systems offer sales reps a place to compile and track data that is critical to their business. The following are examples of data that would be entered into CRM:
- Contact’s name
- Contact’s email and phone number
- Meeting dates
- Account names
- Won-lost opportunities
- Notes from prior meetings and customer engagement
For more information, read How to Supercharge Your Revenue Process with CRM and Clari.
Customer Retention
Customer retention is becoming an increasingly important metric for gauging sales success. Closing a sale is important, yes, but ensuring your customer is happy enough to keep coming back is where the real work begins.
What is customer retention?
Customer retention can be defined as the number of customers who stay with your company during a certain timeframe. Customer retention programs ensure that your clients recieve all of your product’s value and form positive relationships with your company.
Why is customer retention important for SaaS companies?
As companies increasingly turn to subscription-based models, retaining current customers becomes jas important as, if not more important than, winning new business. That’s because subscription-based models facilitate more predictable revenue, which allows companies to grow and frees them up to invest in improvements and research.
How do you increase customer retention?
We believe in a double moat method of keeping customers happy. In other words, you should surround your customer not only with a good product, but also with good customer relations. After all, if you have a great product but poor customer relations, your customer is more likely to leave. And you could have great customer relations but a subpar product, which could also result in churn.
This is where the customer success team shines. This department focuses on ensuring customers achieve their desired outcomes while using your product or service and aligns the company’s and the client’s goals to produce a mutually beneficial relationship.
For more information, read 3 Powerful Metrics to Boost Your Revenue Confidence.
Data Entry
Data entry is a cornerstone for managing your business. That’s because visibility into sales data is critical for the entire revenue operations team.
Why is it important for reps to enter data into CRM?
Sales reps must log data in CRM so they can manage their opportunities properly, accurately forecast sales and contribute to the long-term success of the business.
Why is data entry important for revenue operations?
When CRM sales activity data is surfaced in a meaningful way, it can be useful for the entire revenue operations team. Marketing can see how much activity and engagement there is on a specific account. If that prospect has stopped responding, marketing can launch targeted campaigns to get them to re-engage. Sales leaders can see where their reps are spending too much or too little time.
What types of data should reps enter into their CRM?
The following sales data should be logged into and tracked via CRM:
- Opportunities created
- Contacts created
- Prospect job changes
- New accounts created
- Closed-won deals
- Closed-loss deals
How much time, on average, do reps spend entering data into CRM?
Entering data into CRM is important, but it’s also massively time consuming. Clari's sales leadership estimates that the typical sales rep spends up to 20 hours a month on data entry. That’s time that could be better spent selling.
How can you automate data entry?
By leveraging AI and automation, Clari automatically captures CRM data and assigns contacts to the correct opportunities. It is not uncommon for reps to set aside hours out of their week to clean up their data. With Clari, sellers are able to escape the purgatory of data entry and spend more time selling.
For more information, read How to Automatically Track Sales Activity Data.
Discovery Call
Discovery calls can be one of the most important conversations of the sales cycle. With a proper discovery call, you can be ready and able to meet your buyer’s needs.
What is a discovery call?
A discovery call is the initial conversation you will have with a prospect. This call is meant to understand your buyer’s current priorities, processes and pain points so you can better understand how you can assist, and ensure that you and potential buyer are a good fit.
The discovery call is a conversation, not a pitch. The more you are able to understand what problems your prospect is facing, the better you’ll be able to see how your product can solve their needs.
Why are discovery calls important?
Discovery calls are the single most important conversation you will have during your sales cycle. can be the difference between your prospect feeling like they are being sold to versus feeling like they are being helped.
Experienced salespeople understand that asking the right questions and listening is far more valuable than continuously talking. With a proper discovery call, you can ultimately be in a position of power, ready to solve your buyer’s needs and wants.
What are some common discovery call questions?
Asking open-ended questions and digging deeper with each response will generate a solid discovery call. Here are a few sample questions:
- Tell me what piqued your interest in having this conversation.
- What is your current role at your company?
- What are some important current initiatives within your role, department, or company?
- What challenges are you experiencing?
- What are you currently using or what have you previously used to solve your pain points?
- What would it mean for you to have something that could [insert your company’s value proposition here]?
Discovery call best practices
Discovery call formats can vary, but here are a few best practices for a successful experience:
- Ask questions that qualify your prospect.
- Make sure to include questions that help you qualify this lead.
- Use the funnel technique.
- Ask what their pain means to them, their department or their leadership, as well as to the whole company. This will give you both the micro and macro picture of where the challenges lie for this business.
- Always include next-step questions.
- Take note of what your prospect is telling you and repeat any key takeaways back to them.
- Weave into the conversation how your product can help with their key issues to help solidify next steps.
For more information, read How to Create the Ultimate Sales Process Playbook.
Gatekeeper
Before you can pitch your product, you need to reach the buyer. Enter the gatekeeper.
What is a gatekeeper in sales?
In sales, gatekeeper describes a person who responds on behalf of senior-level employees. Often, this person is an executive assistant or a secretary charged with screening out vendors whom senior leadership does not have time to speak with.
Gatekeepers often get a bad reputation from salespeople since they are paid to stonewall, but there are ways to befriend gatekeepers and earn an intro to their managers.
How can you get past a gatekeeper?
Sales leaders can coach their reps on tactics and techniques that can help them convince gatekeepers to let them through to senior leadership. A few tips:
- Always be kind. Don’t be rude, offensive or condescending to gatekeepers. They have a job to do too, and kindness and empathy go a long way. Trying to browbeat them into submission will not work.
- Engage with them on a human level. Make small talk, get to know them, and be genuinely interested in how they’re doing. Send them follow-ups that show you were listening to what they had to say and care about the work they do.
- Engage on social media. Follow them on LinkedIn and comment on the things they share. If they know that you will go the extra mile for them, they’ll go the extra mile for you.
- Add value. Make sure they know the reason for your call and why they and their managers should care about what you’re calling about. Gatekeepers are used to generic sales pitches, so you should have insight into the company they work for and connect your product with their business initiatives.
- Be persistent. Remember that gatekeepers are paid to say no and save their bosses time. Polite persistence is key to getting through.
For more information, read How to Create the Ultimate Sales Process Playbook.
Go-to-Market Strategy
If you want to succeed, you need a go-to-market strategy. But the strategy requires effective alignment among all members of the revenue organization to be successful.
What is a go-to-market strategy?
The go-to-market strategy is a list of rules and steps that define your value proposition and guide all of your company’s messaging about a specific product or business plan. The GTM is an organization’s plan to deliver a unique value proposition that differentiates it from its competitors.
How do you build a go-to-market strategy?
The first step in developing an effective GTM strategy is to identify the target market for your product or service. This can mean disrupting an already established industry or breaking into a previously unexplored space.
The next step is to define and understand the value proposition of the product or service. What will this service provide to its prospective customer base, and how is it different from the status quo? Once this is determined, a decision surrounding the correct pricing strategy must be made.
Next, infrastructure must be put in place to facilitate the execution and scaling of the GTM strategy This means planning marketing campaigns, distribution models, and support services.
The three prongs of a successful go-to-market strategy
Successful go-to-market strategies address three key factors:
- Your customers. Providing a service that delivers value to a customer is an essential part of a successful GTM strategy. You can drive customer retention and brand loyalty by developing a product that creates value and comes with an exceptional customer experience.
- Your competition. In order to maintain the effectiveness of a GTM strategy, you must important to understand the strengths and shortcomings of the competition. This means constantly staying on top of changes within the competitive landscape, as well as understanding your customers’ values and beliefs and ensuring they are reflected by your organization.
- Your company. As previously stated, a company’s mission and values are critical in maintaining a successful GTM strategy. Architects of the GTM strategy must ensure that the customer’s needs are met and their values are embodied by the company and product, as well as make sure the customer experience is in line with these values.
For more information, read The New Era of Alignment: Revenue Operations.