Bussiness/Sales Terms and Definitions

Obstacles

a thing that prevents or hinders progress when you disagree with them ,this happens before you solicit the sale. Example: "why'd you hop on the call today" → i just wanted to find out a little bit more about the program

Objections

When the Customer/Client Disagrees with you. Examples: " I don't want to buy right now" → I totally understand what are the main criteria thinking through

Churn

The measure of how many customers stop using a product

Customer Surplus

The amount of value someone received in excess of what they paid for

LTGP (Lifetime Gross Profit)

Lifetime is how many times a customer will pay, so for service business it is how long 1 client will stay with you. Figure out like this: How many customers did you have at the beginning of the month, of these people how many of those people did you have 30 days later, 100 people→90 people 10% Churn

1/10%Churn will equal the average lifespan of 10 months. Gross Profit is how much extra cash do you have left over from each customer. Example: If one client costs 1k a month and 1 employee costs 4k a month, therefore 1 employee can handle 10 customers. 10k-4k= 6k gross margins. If you divide 6k/10 customers that means each customer is worth 600 per month. If the average customer stays for 10 months that means that the LTGP each customer is actually worth 6k

CAC(Cost to Acquire Customer)

CAC is the cost of obtaining customers through advertising/labor and many other costs. Let's say that the cost of obtaining customers in a 30 period timeline is 100,000 to get 83 customers . That means each customer costs 1204 and if the LTGP is 6000 per customer that means there is a 5:1 LTGP-CAC ratio. Make sure it is greater than a 3:1 Ratio when picking a business model

ROIC (Return on Investment Capital)

How much money does it cost us to expand the business? If I was scaling a brick and mortar location you would have to factor a new location, employees, and products.

Payback

Time it takes to recover the cost of acquiring a customer. You can shorten this time period by 1) getting them to pay first and last month upfront, 2) Charging a fee in addition to recurring revenue, 3)Upsell (Optional), 4) Financing ( third party bank/partner who makes interest on payments, fronting the whole amount owed)

Sales Velocity X LTGP/LTV

Sales Velocity represents the speed at which your business is making sales LTGP (Long-Term Gross Profit) signifies the average profit you make from each customer LTV (Lifetime Value) is the total amount a customer is expected to spend with your business over their lifetime. By multiplying the number of customers per month by the LTGP and LTV, you get an estimate of your monthly revenue. This calculation gives you an idea of your business's potential growth and future earnings.

Sales Velocity/Churn

Sales Velocity divided by Churn helps you understand how many customers your business will be serving at its maximum capacity. This calculation ensures that your business remains sustainable and scalable over time, without experiencing a breakdown or decline in customer base.

TAM(Total Addressable Market)

How many people can you potentially sell? Which equals = #of Potential Units X LTGP/Risk

Macro Perspective

Analyzing broad factors like market trends and industry dynamics that influence sales strategies and outcomes to make informed strategic decision-making

Micro Perspective

Focusing on individual sales tactics and interactions within the sales process Ex: specific customer interactions, sales techniques, prospecting methods, negotiation tactics, and individual salesperson performance

When-then fallacy

a logical error in thinking where one assumes that if a certain condition or event occurs, then a specific outcome will inevitably follow. ex: "When I make more sales calls, then I'll definitely close more deals,"

ROI

Return on Investment

Prospect

A potential customer who has shown interest in your product or service but has not yet made a purchase

Lead

An individual or organization that has expressed interest in your product or service and provided contact information, often obtained through marketing efforts or referrals.

Pipeline

The series of steps or stages that a potential customer goes through during the sales process, from initial contact to closing the deal

Qualification

Qualification

The process of determining whether a lead or prospect meets the criteria to become a viable sales opportunity, including factors such as need, budget, authority, and timeline (commonly referred to as BANT).

Value Proposition

A statement or proposition that communicates the unique benefits and value that your product or service offers to potential customers, often addressing their specific needs or pain points.

Objection Handling:

The process of addressing and overcoming objections or concerns raised by prospects during the sales process, typically related to price, features, or perceived risks.

Closing

The final stage of the sales process where the salesperson asks for the prospect's commitment to purchase the product or service.

Upselling

The practice of persuading a customer to purchase a higher-priced or upgraded version of the product or service they are considering, often by highlighting additional features or benefits.

Cross-selling

The practice of selling additional products or services to existing customers, often complementary or related to their initial purchase.

Sales Funnel

The visual representation of the customer journey through the various stages of the sales process, from awareness to purchase, with the top of the funnel representing a larger pool of potential prospects and the bottom representing converted customers.

Sales Target/Quota

The specific goal or quota set for a salesperson or sales team to achieve within a certain period, typically measured in terms of revenue, number of sales, or other key performance indicators.

Value-Based Selling

An approach to selling that focuses on understanding the customer's unique needs and demonstrating the value and benefits of your product or service in addressing those needs, rather than solely on price or features.

Customer Relationship Management (CRM)

A software system or tool used by sales teams to manage interactions with current and potential customers, track leads and opportunities, and streamline the sales process.

Sales Forecast

An estimate of future sales revenue or performance, typically based on historical data, market analysis, and input from sales teams, used for planning and decision-making purposes.

What does the 'C' stand for in the CLOSER acronym?

Clarify Why They Are There

What does the 'L' stand for in the CLOSER acronym?

Label Them With A Problem

What does the 'O' stand for in the CLOSER acronym?

Overview Their Past Pain

What does the 'S' stand for in the CLOSER acronym?

Sell Them The Vacation

What does the 'E' stand for in the CLOSER acronym?

Explain Away Their Concerns

What does the 'R' stand for in the CLOSER acronym?

Reinforce Their Decision

What are the two types of SOP (Standard Operating Procedures) in sales?

On the Call SOP:

Refers to the methods and practices that sales professionals follow while actively engaged in a sales call. This includes greeting the customer, asking qualifying questions, presenting the product or service, handling objections, and closing the sale.

Off the Call SOP:

Refers to the procedures and routines that sales professionals follow when they are not on a call. This includes activities like preparing for calls, updating customer relationship management (CRM) systems, following up with leads, planning sales strategies, and conducting post-call reviews.

Sales Traps

Sales traps occur when the salesperson becomes overly detailed and loses sight of the primary objectives of the conversation.

ROAS

(Return On Advertisement Spend) Ratio Comparing the revenue generated on the cost spend on ads

Theory of Constraints

The idea that there is one "BIG THING" that is limiting the company's growth

TAM (Total Addressable Market)

The total potential revenue opportunity for a product, service, or solution within a specific market or industry

Anchor Prices

It is the initial price presented to a consumer that serves as a reference point for evaluating the cost of a product or service.

Example If a luxury watch is priced at $5,000, consumers may perceive a mid-range watch at $1,000 as more valuable

Time To Value

The time It takes for your customer to reach a significant value/stone after purchasing your product. Related to an Activation Point that occurs, that has a high correlation of them staying later. Example: If a customer working out 5 times in a month is more likely to stay for the next 8 months.

Time to Onboard

How quickly between the time a client purchases until they are a live/active customer

Renewal Rate

What Percent of customers keep buying the product/service in a given time period

COGS

COGS (Cost of Goods Sold) refers to the direct costs associated with producing or delivering the products or services a business sells. It includes expenses directly tied to the production process but excludes indirect costs like marketing and administrative expenses.

Formula:

COGS=Beginning Inventory + Purchases During Period−Ending Inventory

Reframing

A quick, strategic response that shifts a prospect’s perspective after resistance, making them more open to your next step toward the sale.

AHT (Average Handle Time)

The average total time for one customer interaction, including talking, holding, and after-call work (ACW)

FCR (First Call Resolution)

The percentage of customer problems solved completely during their very first contact.

CSAT / NPS (Customer Satisfaction / Net Promoter Score):

CSAT measures happiness with a specific interaction (e.g., "How satisfied were you?"). NPS measures overall loyalty (e.g., "How likely are you to recommend us?").

Cost per contact

The total cost of running the contact center divided by the number of customer interactions.

Occupancy

How much of an agent's available time (when they are logged in and ready) is spent on actual call-related work (talk time + hold time + After Call Work), as opposed to being idle or on break

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