Sales Definitions

Bridge Wiki Media

 

Common Sales Language is one of the most important aspects of your Sales Methodology and ultimately the company sales culture. The sales team is comprised of people who have sold for other companies using a variety of sales process and forecasting terms. You would be amazed how many meanings terms like “commit” or “pipeline” have around the world. Sales success results from effective teamwork and you’ll get much better results when the team shares a common language. Don’t take it for granted. Be precise.

 

A
B
C

Cadence

Forecast Call cadence is 3-4 key metrics the sales team reports on in a structured setting such as the weekly sales forecast call. Examples include Quota, Current Quarter Pipeline, Forecast and Quota Coverage and Next Quarter Pipeline. Activity metrics may also be used, especially for business development teams. Consistency and clear expectations are keys to building accountability into your weekly routine.

Cadence can also refer to macro structure consisting of weekly forecast call, monthly operations meeting and quarterly business review.

 

Cloud Computing

“The practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than a local server or a personal computer.”

Term originated as marketing-speak derived from “cloud” diagrams commonly used to represent a network. The result is a sharing of resources, flexibility and economies of scale as in, “We have a SaaS business model that leverages a distributed cloud infrastructure”.

Consultative Selling

A generic sales methodology that puts emphasis on understanding the customer problem first. Through questions and dialogue the sales team aims to present a customized solution to a customer that meets their unique technical, economic and political needs.

(See also- Solution Selling)

 

Commit

Every executive and sales manager wants commitment and accountability. The origin of “commit” as a forecast term was a hardware manufacturer that needed to closely manage orders in progress to optimize their supply chain on a weekly basis. Unfortunately, “commit” became the most widely abused term in enterprise sales forecasting. Particularly when selling to net-new customers, deals would be “committed” 10 seconds before the order was in hand. Not an especially useful leading indicator.

The preferred usage is to “commit” a forecast amount as opposed to transactions.

 

CRM

(Customer Relationship Management)

Software system which manages data during the entire customer life cycle of management business processes and provides functionality to enterprises in sales, marketing and customer service (Gartner)

  • Sales Force Automation  |  Sales Cloud (SFDC)
  • Marketing Automation  |  Marketo, Eloqua, Marketing Cloud (SFDC)
  • Service Management  |  ServiceNow, BMC, Service Cloud (SFDC)



D
E

Enterprise

Term used to describe the business market for technology that implies a level of scale and complexity. Enterprise software and SaaS are both sold to this segment.

Technology market segments:

  •  Enterprise (small-medium-large and implies a level of IT sophistication)
  • Small-Medium Business
  • Consumer

 

Entrance Criteria

Before an Opportunity will be accepted as a Qualified Sales Opportunity and enter the pipeline, certain conditions must be met.  Minimum Lead Score, variants of BANT, Customer Profile or other evidence the opportunity is qualified for the company to invest its time and resources.

 

Exit Criteria

Specific action step in a Sales Process that is required to “exit” one stage and move on to the next. When customers initiate “late stage” activity such as request for pricing, exit criteria discipline ensures the opportunity remains in the appropriate sales stage and reduces overly optimistic forecast close dates. See Verifiable Outcomes.

 

Exit Strategy

The method by which a venture capitalist or business owner intends to get out of an investment that he or she has made in the past. In other words, the exit strategy is a way of “cashing out” an investment. Examples include an initial public offering (IPO) or being bought out by a larger player in the industry.

Source: Investopedia

 

Experience Points

Gamification concept that rewards a “player” for verifiable lessons learned by successfully carrying out elements of the company sales strategy. This mechanic is especially useful for new hires engaged in their first sales cycle because working through a live deal is still the best learning experience available.

 

F

 

Forecast Amount

Answer to the question: “Based on your pipeline and experience in the territory, where will you most likely finish the quarter?”

  • Underpinned by the sum of all Current Quarter Forecast opportunities
  • Assumption is you are “committed” to achieving your forecast

 

Forecast Deals

Qualified Sales Opportunities designated as “in the forecast”

  • Deals that create the most likely path to your forecast dollar amount
  • Typically, the very strongest deals in the Sales Pipeline
  • During first 8 weeks of the quarter, deals will move in and out of this category (portfolio approach)

 

Forecast Range

Expressed as:

  • My forecast is $3M
  • My Range is $2M to $4M

Related terms:

  • Worst Case = Commit = Low end of the range
  • Most Likely = Forecast
  • Best Case = Forecast + (select) Upside and Stretch = High end of the range



 

Gamification

The deliberate use of game design, elements and mechanics in an enterprise sales context. Gamification is not playing games nor limited to sales contests and leader boards. Concepts may be utilized in both internal and customer-facing applications.

 

H

Hashtag

Enter #SalesOperations in the Twitter Search Box to view recent posts on the topic.

 

Hockey Stick

A phenomena that plagues CFOs in enterprise technology companies resulting in 70% of more of sales booking in the final 5 days of the fiscal quarter. The shape of the curve on a sales graph looks like a hockey stick lying on its side.  A SaaS business model can smooth out revenues, but the pattern persists for new sales. Theory is enterprise buyers have been trained to negotiate at quarter-end to obtain leverage and get the best deal. Of course, a problem much worse than a hockey stick is when that spike at quarter-end does not occur at all. Be careful what you wish for.

 

I

Information Symmetry

Most relevant information is known to both the prospective customer and the sales person. Daniel Pink describes the opposite condition (Asymmetry) as the used car sales person of 20 years ago when the customer had little or no information.

J



K
L
M

Marketing Fluff

In most interactions with a sales team, prospective customers expect specific information pertaining to their industry, company and situation. Unfortunately, in an effort to be comprehensive and applicable to a variety of situations, sales collateral is often too generic or high level to be useful in a live selling situation. This is a major factor in why sales people are often reluctant content creators and one of the more common sales-marketing alignment friction points. Content collaboration and a feedback loop are recommended.

 

Marketing Qualified Lead

A contact / inquiry / lead deemed worthy to be handed off to sales based on agreed-upon criteria such as customer profile. Sales should have the ability to reject an MQL and return it to marketing stamped with a specific reason code to complete the feedback loop. The term MQL was made popular by Sirius Decisions Demand Waterfall.

 

N

 

 

O

 

On-Premises

Frequently misspelled and mispronounced as  “on-premise”. On-premises solutions are distinguished from Cloud or SaaS solutions in that the customer is licensed to possess and run the solution in its own data center utilizing its power, network, hardware and software stack.

 

P

Platform as a Service (PaaS)

Category of cloud computing that provides a computing platform and a solution stack as a service. The customer creates, deploys and configures the software application which then runs on the providers networks, servers, storage and other services.

Source: NIST (National Institute of Standards and Technology)

 

 

Pipeline

All Qualified Sales Opportunities in a specific time interval (e.g. current quarter)

 

Pipeline Rate

New Leads Converted to Opportunity / All New Leads Created for a specific fiscal period yields a conversion percentage that indicates lead quality and the effectiveness of early stage sales tactics.

 

Political Capital

Every employees has a metaphorical bank account that contains a measure of their ability to influence decision-making within the power structure of an organization. Their relative “balance” is a measure of power and influence. Pursuing some projects can be either very costly or very rewarding in terms of political capital.

“Conserve your political capital, if we miss this quarter, you’ll need it.”

 

Push

Sales Pipeline metric that measures how many times that an Opportunity Close Date has been changed from one quarter (current quarter) to the next. Changing the close date within the forecast quarter is deemed acceptable and an opportunity that has “pushed” into a future quarter multiple times is a big red flag and risk factor. Accounting for Push is important to all Pipeline building metrics to avoid double and triple counting.

 

Q

 

Qualified Interest

A prospect has demonstrated an interest in the company or its offerings based upon their actions and other qualifications such as job title and employer. Sometimes referred to as a marketing qualified lead and often sent  prematurely to field sales as a “lead”.

 

 

Qualified Sales Opportunity:

Definition varies by market niche, but is always very specific. The Opportunity record  is the “atomic building block” for all sales metrics.

Basic Example:

Sales is actively engaged with the prospect and is invested in an active sales cycle based upon:

        • Budget                Identified buying process
        • Authority           Access to decision-maker
        • Need                    Compelling reason to buy
        • Timeframe        Prospect describes a time-bound decision cycle

 

R

Revenue Recognition

An accounting principle under generally accepted accounting principles (GAAP) that determines the specific conditions under which income becomes realized as revenue. Generally, revenue is recognized only when a specific critical event has occurred and the amount of revenue is measurable.

For most enterprise technology businesses, income is recognized as revenue when the company delivers or performs its product or services. In some instances, not until payment is received. Refund, warranty or return language in a contract can delay revenue until after the return period expires.

Source: Investopedia




 

S

Software as a Service (SaaS)

Software delivery business model in which software and data are centrally hosted on the internet (or the cloud if you prefer) and accessed via a thin client or web browser. SaaS has popularity due to its lower costs due to hardware, software maintenance and upgrades. SaaS is now a core element of nearly all enterprise technology companies.

Source: NIST (National Institute of Standards and Technology)

 

Sales Qualified Lead (SQL)

 

Sales Win Cycle

Opportunity Age Report for Closed | Won only.

 

Solution Selling

A now generic approach to sales methodology in which the sales person will identify or “diagnose” the customer problem pain points before proposing a solution. Author Michael Bosworth initially branded the approach in 1983.  An updated field sales guide and training is currently offered by consulting firm Sales Performance International.

 

Spreadsheet Jockey

Individual who has taken a relative strength – mastering aspects of MS Excel such as pivot table and charts – and turned it into a weakness by failing to present data in a clear, meaningful way based upon business context.

 

Stretch Deal

Very large opportunity that would otherwise distort the pipeline dramatically

  • Large:                  over $1M
  • Binary:               All or nothing
  • Probability %    Set to 0% or 1% until final stages

These Opportunities should be thoroughly qualified given the amount of resources required to win. The Stretch category seeks to avoid an overly optimistic weighted pipeline / forecast.

 

 

U

Upside Deals       

Qualified Sales Opportunities not in the forecast

  • Typically those deals not quite as strong as forecast
  • Deals that would back-fill any forecast deals that stall
  • During the quarter, these deals will at some point be qualified “up or out”

Upside Amount

Answer to the question: “How much upside do you have?”

  • Sum of all upside deals

 

 

 

V

 Verifiable Outcome

An objective element of sales process that requires engagement on the part of the customer. A leading indicator that has a binary result. The event either happened or it didn’t and yields evidence of achievement. Delivering a proposal is one example. Conducting a proposal review meeting with a prospect is a better one.

 

W

Weighted Pipeline

A “top down” check against the integrity and strength of the sales forecast calculated as the sum of Opportunity Amount ($) multiplied by Probability (%).

The illusion of a scientific method and associated CYA can be tempting, but Weighted Pipeline is a validation of the forecast and should never be considered a substitute.

 

+Neal Murphy +ESO