What Are Common Sales Terms? A Guide to 23 Essential Jargon Examples

Understanding common sales terminology is fundamental to effective communication and success in the business industry. Mastering sales jargon ensures clear communication between teams and clients, directly impacting deal velocity and customer relationships. This guide defines 23 essential terms, from basic acronyms to advanced strategic concepts, providing a foundational lexicon for anyone in a commercial role.

What Are Sales Terms and Why Do They Matter?

Sales terms are specific words, phrases, and acronyms used to describe aspects of the selling process, such as metrics, customer stages, and business models. Using a shared vocabulary prevents misunderstandings and streamlines collaboration between sales, marketing, and customers. For example, clearly defining a lead versus a qualified lead ensures marketing passes genuinely interested prospects to sales, improving efficiency. This common language is crucial for setting goals, analyzing performance, and executing strategies.

Key Business Models & Revenue Metrics

This category covers the fundamental structures of commercial transactions and how success is measured.

What are the primary business models?

• B2B (Business-to-Business): This refers to transactions where a business sells its products or services to another business. Sales cycles are often longer and involve multiple decision-makers.
• B2C (Business-to-Consumer): This describes transactions where a business sells directly to individual end-users. Strategies often focus on broader marketing appeals and faster conversion.

How do companies track revenue performance?

• MRR and ARR: MRR (Monthly Recurring Revenue) is a key metric for subscription-based companies, representing predictable revenue earned each month. ARR (Annual Recurring Revenue) is simply MRR multiplied by 12, providing a long-term view of revenue stability and growth. These metrics are vital for forecasting and valuation.
• Profit Margin: This is a profitability ratio calculated as net income divided by revenue. It reveals what percentage of revenue a company keeps as profit after accounting for all expenses. A higher margin indicates greater financial health.
• Quota: This is a sales target or objective that a representative or team is expected to achieve within a specific period, typically a month or quarter. Quotas are used to measure performance and often tie into compensation.

The Sales Funnel & Customer Journey

The sales funnel is a model that maps a potential customer's journey from first awareness to final purchase. Understanding its stages is critical for targeted engagement.

What happens at the top of the funnel (TOFU)? The TOFU (Top of the Funnel) is the awareness stage. Here, potential customers, or leads, first identify a problem and begin searching for information. Content like blog posts and educational videos is effective at this stage to attract attention.

How do you nurture leads in the middle of the funnel (MOFU)? At the MOFU (Middle of the Funnel), a lead has defined their problem and is actively researching solutions. They are considering different options. Effective content here includes case studies, product brochures, and webinars that position your offering as the best solution to their specific pain point—the core problem they need to solve.

What actions drive conversion at the bottom of the funnel (BOFU)? The BOFU (Bottom of the Funnel) is the decision stage. The lead is ready to buy and needs a final push. Actions here are highly direct, such as live demos, free trials, or consultations aimed at closing the deal.

Core Sales Processes and Tools

This section defines the daily activities and systems that enable a sales team to function effectively.

How do sales teams find new customers? Prospecting is the active process of searching for and engaging potential new customers. This can involve cold calling, email outreach, and networking. The goal is to generate new leads.

What is the role of a CRM? A CRM (Customer Relationship Management) system is software that helps organizations track all interactions with current and potential customers. It centralizes contact information, communication history, and deal stages, making forecasting (predicting future sales) more accurate and helping manage the entire pipeline.

How do teams ensure alignment?

• Smarketing: This term describes the strategic alignment between the Sales and Marketing departments. When these teams are aligned on goals and definitions, lead quality and conversion rates improve.
• SLA (Service-Level Agreement): In a sales context, an SLA is a formal agreement between sales and marketing outlining expectations, such as how quickly sales will follow up on a new lead (Sales Qualified Lead or SQL) and the volume/quality of leads marketing will provide.

Practical Strategies for Growth

Beyond basic definitions, strategic concepts help businesses scale sustainably.

What is the difference between a lead and a qualified lead? A lead is any person or company that shows initial interest (e.g., by downloading an ebook). A qualified lead has been vetted and meets specific criteria indicating a higher likelihood to purchase. An MQL (Marketing Qualified Lead) is deemed ready by marketing, while an SQL (Sales Qualified Lead) has been validated by the sales team as a genuine sales opportunity.

How can you increase revenue from existing customers? Up-selling is the practice of encouraging a current customer to purchase a more premium or advanced version of a product they already own, thereby increasing the value of the account.

Is the sales funnel the only model? Many modern teams are adopting the Flywheel model. Unlike a linear funnel, the flywheel is a circular model that emphasizes creating a seamless, frictionless customer experience. The goal is to build momentum where satisfied customers naturally lead to more referrals and repeat business, creating self-sustaining growth.

To effectively apply these terms, focus on three actions: First, ensure your entire team aligns on definitions for key terms like "qualified lead." Second, use your CRM to track metrics like MRR and conversion rate to guide strategy. Finally, adopt a customer-centric approach, whether using a traditional funnel or a flywheel model, to identify and solve real pain points.