The Complete Guide to Software Sales Terminology

Written by
Josh Jordan
January 10, 2022

If you’re a sales rep looking to develop your skills and earn a spot in the top 5% of sales professionals, the key is to start with the basics. We’re not talking about cold calling or learning how to draft an email. Start by learning the sales terminology that’s used by people in the SaaS industry every day.

Imagine you’re interviewing for your first SDR job and a hiring manager asks, “What do you think is the average ACV for B2B SaaS sales?” or “What role does UX play in our value proposition when bringing more qualified leads into your pipeline?” If you don’t know what any of that means, the next two or three rounds of interviews are going to be rough.

That’s why one of the most foundational things you can do to become a better salesperson is learn basic sales terms. Beyond that, specialized sales lingo can be confusing (especially when it comes to software sales). Even sales managers need to brush up on industry terms from time to time. So whether you’re looking to impress the other executives in the boardroom or you’re still wondering what SaaS means in the first place (don’t worry, you’re not the only one), this guide is for you.

Here are the most important sales terms you need to know, in alphabetical order so you can look up what you need.

Important Sales Terms You Need to Know

Find the first letter to look up the definition of a specific term, or simply browse the list to learn!

A

ABC – An acronym that stands for “always be closing.” It refers to the strategy of many traditional sales professionals who are always looking for ways to close a new deal. (See Clarity > Closing®).

ACV (Annual Contract Value) - This is the monetary value that each customer brings in each year.

Account Manager - A sales team member who is responsible for continued customer success and account maintenance after a deal is closed.

AE (Account Executive) - A sales representative that is mainly responsible for closing deals.

API (Application Programming Interface) - This is the connection between a client computer and a main server that allows a software program to process its main functions and display only what is relevant to the user interface. (See IaaS / UI).

ARR (Annual Recurring Revenue) - The amount of money brought in each year from a subscription or other sales model.

B

B2B – Business to Business (sales). This refers to companies who serve other companies with their products or services, rather than companies that serve consumers. (See B2C).

B2C –  Business to Consumer (sales). This refers to businesses that serve consumers directly rather than other businesses or large corporations. (See B2B).

BANT - A method for qualifying leads used by many successful sales teams. Stands for Budget, Authority, Need and Timeline. You can express this by asking the following questions about each prospect:

B - Do they have the budget to afford the product?

A - Do they have the authority to make the buying decision?

N - Does this company need the product?

T - How short is their timeline for obtaining a solution?

BDR (Business Development Representative) - This is an entry level sales position at many SaaS companies. These reps bring in new business opportunities and qualifying leads, usually followed by an AE coming in to close the deal. (See SDR).

Bootcamp - An intense sales training course that helps would-be sales reps gain the knowledge and tools required to succeed, usually in a B2B sales role. (See Science-Based Sales®).

Buyer’s Journey - The theoretical path your buyers take from stranger to loyal customer defined in specific stages. Each stage represents a key psychological point in the entire decision-making process. This is also the roadmap that sales teams will tap into when creating an effective sales process or methodology.

C

CAC (Customer Acquisition Cost) - The amount spent to acquire one new customer through sales and marketing. This is often compared to the customers’ lifetime value.

CAGR (Compound Annual Growth Rate) - Shows the annualized rate of increasing return over a given period of time. Expressed with the following formula: 

CAGR = (Beginning Value / Ending Value) ^ 1/time - 1 x 100

Challenger - A type of sales professional or methodology in which a sales rep engages with the prospect by taking an opposing or challenging stance toward the prospect’s worldview, assumptions or objections.

Churn – The rate at which customers leave a company, cancel their subscription to a service or stop buying a product.

Clarity > Closing® - Our mindset and philosophy of selling at Prehired, "always create clarity" and "always be helping."

Clawback - When a company subtracts a certain amount of money, usually as a negative balance against future commissions due to an adverse affect on sales or long-term deal value. Usually this is a penalty that happens when a customer cancels their subscription very quickly. If this happens, it’s usually a sign they weren’t a good fit for the company in the first place. (See Churn).

Cold Call/Email – The first outreach to a potential customer without any prior introduction or knowledge of your company or product.

Cold Lead - A prospective customer that would likely benefit from the product but may not be familiar with the company at all. Usually a cold lead shows great promise, but they have not made contact with a sales rep yet.

CPI/CPC (Cost Per Impression / Cost Per Click) - The cost paid by the company on marketing and sales initiatives based on each impression (view) or click on the ad.

CRM (Customer Relationship Management) - This is a type of software that allows reps to visualize their sales pipeline, customer personas and the stage of each deal in the buyer’s journey.

CRO (Chief Revenue Officer) - Usually the top sales position at any SaaS company. This person is responsible for 100% of the revenue for the business as well as training account managers and setting department goals. (a.k.a the coolest guy in the building).

Customer’s Journey - See Buyer’s Journey.

D

Decacorn - A startup company with a valuation of $10 billion or more. (See Unicorn).

Decision Maker - Any person who has the authority to make a buying decision at a company (which may be different people, depending on your product). When prospecting, try to get as close to this person as possible.

Demo - A standard sales video call in which the sales rep demonstrates the software product in action (usually live via Zoom or Slack). This helps the prospect get a feel for how the product works.

Discovery Call – One of the first calls between a sales rep and a lead or prospect. During this call, the sales rep (usually an SDR) asks qualifying questions to determine if the person would be a good fit for the product (see BANT). They will also attempt to learn about their pain points and how the product may be able to help solve challenges.

E

E-Commerce – The online sale of goods or services. Knowing this one ought to really impress your grandma.

Engagement – The level of interaction with an ad or social media post received from a target audience. This is usually measured in views, comments, likes, shares, saves, clicks or sends.

F

Fiscal Year - A standard 12 month accounting period.

FMV (Fair Market Value) - This describes a reasonable price that a consumer would be willing to pay for something in the market.

Forecasting - A process for estimating future sales and performance based on historical data. This is often used to make better business decisions.

Funnel - A sales model that diagrams the buyer’s journey in terms of the decreasing opportunities available at each stage. As stages progress, the sales funnel narrows until only a final percentage of your original leads become customers. (See Pipeline).

G

Gatekeeper – Someone who has the authority to control access to a feature, person, object or resource. They usually have the ability to make executive decisions.

GBU (Global Business Unit) - This is a specific unit or department in a multinational corporation that supports a single function in a global market.

Go-to-Market Strategy – A plan to leverage sales and marketing resources to establish a unique value proposition. This helps to obtain a competitive advantage in the marketplace.

Gross Margin - Measures the profit achieved after the cost of producing goods or services to be sold (COGS). It is expressed in the following formula:

Gross Margin = Revenue - COGS / Revenue

H

High-Touch Interaction - A type of sales interaction that requires multiple points of contact in order to close a deal. High-touch interactions are most common in B2B sales. (See Touch / Low-Touch Interaction).

I

IaaS (Infrastructure as a Service) - A B2B cloud computing service in which one company offers to host and compute another company’s data, security, backup and other similar resources over the internet using advanced APIs. (See API).

ICP (Ideal Customer Profile) - A resource that details demographics and key information about the people most likely to become long-term customers. (See Persona).

Inbound Sales or Marketing - Leads that are brought in, whether through submitted forms, referrals or word of mouth. This may also refer to customers who contact sales directly before a sales rep reaches out to them.

Inside Sales – High-touch B2B sales interactions performed by skilled professionals via email or phone call. This is different from Telemarketing.

IPO (Initial Public Offering) - The first sale of stock offered to the public from what used to be a privately held business.

K

KPIs (Key Performance Indicators) - The most important metrics to show success in achieving established targets.  These can be applied to a company, team or individual.

L

Lead – A person or company that has shown potential interest in something you can offer. Some leads have expressed interest in your company directly. Others may simply show signs that they could benefit from your product. (See Warm Lead / Cold Lead).

Lead Generation – A critical process in the sales cycle that helps a sales team find new leads within the target market. May include advertisements, marketing, content production, partnerships, referrals and more. These workflows are often automated by lead intelligence tools such as LeadIQ or ZoomInfo.

Lone Wolf -  A type of sales professional who relies on personal instincts to succeed in their role. This type of person is often fueled by his or her own self-confidence.

Low-Touch Interaction - A type of sales interaction that requires only a small amount of contact before a deal is closed. B2C sales interactions are typically low-touch. (See Touch / High-Touch Interaction).

LTV  - Stands for Lifetime Value. This describes the total profit the company earns that can be attributed to a long-term relationship with a loyal customer.

LTV:CAC – Ratio between customer Lifetime Value and the Customer Acquisition Cost. Knowing this helps ensure profits outweigh expenses spent to acquire the customer.

M

Margin – The price difference (i.e. the markup) between production/bare costs and the final selling price. (See Profit Margin / Gross Margin).

Marketing Automation – Tools that use behavior-based strategies to optimize marketing messages. These tools deliver marketing content to mass audiences with nuance at the most appropriate times.

MVP (Minimum Viable Product) - When a product or digital interface has just enough features for people to use it. This is not the last stage in product development. This is only where the product begins to show traction with initial customers. Users can then provide feedback for improvement until the product meets the needs of the target market.

N

Niche – A specific and often small market segment made up of particular people, unique needs and certain pain points.

NPS (Net Promoter Score) - This is a metric on a 10-point scale that measures customer satisfaction with a solution (product or service). This is done via a 1-question survey that asks how likely the customer is to recommend the company or solution to a friend. For example: On one end of the scale might be a detractor who doesn’t recommend the solution and wouldn’t buy it. In the middle would be a passive customer who may buy the product but not promote it. On the opposite end of the scale is a promoter, who would both buy the product and recommend it. In a software sales context, NPS is a good indicator of customer loyalty. Any customer with a low NPS may churn very soon. A customer with a high NPS likely has a higher lifetime value and may be open to upsells or to sending you referrals.

O

Objection - Any obstacle to closing a deal. Usually, objections are reasonable. Many can be overcome by understanding the true need of the prospect and seeking to creatively solve those problems.

Outside Sales – Salespeople who conduct most of their business out in the field/in person rather than remotely. (See Inside Sales).

P

Pain point – Any challenge or need expressed by a prospective customer in achieving their own success (in whatever area). Identifying pain points is a key stage in any good sales methodology. It allows the prospect to feel heard and gives you an opportunity to establish your product or service within their narrative. You can then overcome objections by showing how your product or service can solve their challenges (i.e. address their pain points).

Persona - A detailed profile of your company’s ideal customer. Personas first note key demographic information and company position. Then, it breaks down the hypothetical needs, challenges, and personalities of each person. (See ICP).

Pipeline - A sales model that allows teams to continuously bring in new leads and close deals to ensure a consistent revenue stream. This is often called a Sales Pipeline or Sales Funnel.

Profit Margin - The ratio of revenue to cost of earning. This figure shows what percentage of a company’s revenue is actually net profit. You can calculate it like this:

Profit Margin = Revenue - Cost / Revenue

Prospecting – The act of looking for potential clients or customers. This is the first step in the sales cycle. To do this, reps need to leverage multiple channels for research and finding contact information for new leads.

Q

Qualification - The process of discovering if a lead or prospect is a good fit for your product, usually through phone or email conversation. This is most often the main job of an SDR or BDR. (See BANT).

Qualified Lead – A potential customer that is likely to buy your product or service based on certain identifying factors. (See Qualification).

Quota – Any goal that a sales rep is expected to meet within a specific time frame. (See KPI).

R

Ramp-Up - The initial process of getting a new sales rep up to speed. When new reps join your team, they will gradually increase in skill and familiarity until they consistently meet expectations.  Average ramp up time for a SaaS sales rep is about 3-6 months.

RFP (Request for Proposal) - A formal request from a customer for your company to submit a proposal or bid to offer your software service.

ROI (Return on Investment) - A popular way to measure profitability of an investment in terms of cost and end value. A positive ROI means the investment has made money so far. A negative ROI means it is losing money. (See CAGR).

S

SaaS (Software as a Service) - A specific model of tech sales in which support and access to a software platform is sold as an ongoing subscription. (See IaaS).

Sales Methodology - A specific approach to driving sales through effective action at different stages in a sales process. These are the specific workflows that produce the best results when applied across the buyer's journey. This is all driven by your sales techniques and philosophy. (See Sales Process). 

Sales Process - A roadmap that identifies deals and opportunities from start to finish in the Buyer’s Journey, usually defined in stages such as prospecting, qualifying, connecting or closing. (See Sales Methodology).

Science-Based Sales® - Our proprietary sales training curriculum at Prehired that is guaranteed to give people everything they need to join the top 10% of effective software salespeople. It was created from countless hours of research and interviews from the best sales professionals in the SaaS industry.

SDR (Sales Development Representative) - A junior-level sales position at most SaaS companies that is mainly responsible for qualifying leads to fill the sales pipeline. Those deals are then sent to an AE for closing. (See BDR - Business Development Representative).

SEO (Search Engine Optimization) - A marketing strategy used to boost a webpage’s performance on search engine results pages using SEO elements such as keywords, links, titles, tags and more.

Sequence - An ordered series of attempts to make contact in a sales relationship that has proven to be effective in producing customer engagement and/or closed deals. (See Touches).

SLA (Service Level Agreement) - The agreement between a software service provider and a customer that provides details of the service promised. Usually this agreement outlines the required level of quality and availability of certain features for the duration of the customer’s subscription. (See SaaS).

Social Selling – Using social media as a way to interact with prospects by providing value through content.

SWOT Analysis – A framework used to develop an intelligent business strategy. It works by identifying the Strengths, Weaknesses, Opportunities and Threats of a company.

T

Telemarketing - Low-touch sales interactions that make use of heavy scripting, cheap sales tactics and high volume outreach to sell products via phone calls, usually to consumers (not businesses) and disturbing people during dinner. This is different from Inside Sales.

Touches - Any attempt to make contact with a lead or prospect via phone call, email, social media message or other channel. (See High-Touch Interaction / Low-Touch Interaction).

U

UI (User Interface) - Sometimes used interchangeably with UX, UI refers to the specific layout and functionality of all features within a website or software program.

Unicorn – A startup company with a valuation of $1 billion or more.

Upsell – The act of offering an upgrade to a prospect that is usually a more expensive package than the original agreement. This is used to increase revenue and customer lifetime value. (See LTV).

USP (Unique Selling Proposition) - The one (or main) factor that sets a product apart from its competitor products in the market. (See Value Proposition).

UX (User Experience) - This describes the feeling of an interaction with a brand, website or software platform (usually by the customer). Things like simple navigation, brand engagement that felt natural and friendly, and intuitive design can all describe a positive user experience.

V

Value Proposition – A statement that captures the unique value of your product in terms of utility, worth or other benefits that your customers stand to gain by purchasing your product. (See USP).

VP of Sales - A high-level sales position that is mainly responsible for growing the sales department and increasing sales for the company. This person is in charge of hiring (and firing) employees and developing better processes for success. This person is usually second in command to the CRO.

W

Warm Call/Email - The act of contacting someone via phone call or email after already having prior contact with them, whether through an event, referral or another connection method.

Warm Lead – A prospect that has already shown significant interest in the product and will probably not take as much convincing as a total stranger would require. (See Cold Lead).

White Hat – A way to describe good, ethical and lawful behavior (and sales tactics).

White Label – A product or service that can be bought, re-labeled and sold under a different brand name.

Learning the ABCs of Sales

There you have it — a list of most of the terms you need to know to hold an intelligent conversation with your prospects or other people working in the tech sales industry.

While this list should give you a great start, there is still so much more to learn about software sales. As technology continues to develop at an incredible pace, sales professionals are coining new terms and re-inventing strategies all the time.

To stay up to date on the most effective terminology (and ace your multiple rounds of interviews), you’ll need more than a glossary. You’ll need to know how to use all the essential tools and techniques native to the SaaS industry.

At Prehired, we train people to become the best candidates possible for software sales positions. In addition to our highly acclaimed curriculum (see Science-Based Sales®), our members receive lifetime career support from our community of other Prehired members.

Check out our other membership benefits and start your 6-figure software sales career in just 12 weeks. Apply today.

Josh Jordan

As Prehired's Founder & CEO, Josh Jordan is leading the mission to help 10,000 people launch 6-figure software sales careers by the end of 2024.

How? With Prehired's Science-Based Sales® process -- born from helping dozens of software companies build their sales teams...

...and then consulting with hundreds of Software Sales Managers on exactly what they wanted new hires to know...

...and then helping hundreds of regular folks break into software sales in 12 weeks, on average.

Josh created Science-Based Sales® to help nearly anyone succeed in software sales, because it creates clarity for prospects. No killer closer instincts, charisma or kissing up to decision makers needed.

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