An Enterprise Software Glossary, Part II

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Commonly Used Acronyms (CUA)

Enterprise start-ups are often faced with this fundamental question: how can they establish an effective, repeatable, and scalable sales model? We are working to expand upon the Enterprise Sales Guide, a definitive guide to best enable our portfolio and community with an area of focus in enterprise technology sales. In doing so, we have created a glossary of terms and principles, specifically for enterprise technology sales terms and principles.

See below for some of the essential enterprise technology sales terms that have been added to our internal enterprise glossary. Please let us know in the comments section if you have any terms to add.

  • ABM (Account Based Marketing) - Also known as key account marketing, ABM is a strategic approach to business marketing based on account awareness in which an organization considers and communicates with individual prospect or customer accounts as markets of one.

  • ACV (Annual Contract Value) - ACV a customer value metric that is the annual revenue paid to your company by a specific customer, regardless of multi-year contracts. ACV would be identical to TCV if your contract term was 1 year.

  • AIDA (Awareness, Interest, Desire, Action) - A method of motivating people to buy by gaining their attention, interest, desire for the product, and then inspiring them to take action. AIDA is often used in direct response ads, and can be surprisingly effective in cold emails.

  • ARPA - Average MRR (monthly recurring revenue) per account. Across all accounts, the mean amount of revenue per month.

  • ARR (Annual Recurring Revenue) - Used most often in businesses where contracts are one year in length. ARR = 12 x MRR (monthly recurring revenue).

  • Buyer - A contact at an enterprise. They may not always make big decisions, own the company, or dictate when they buy the product, but day-to-day sales are often closed through buyers on the shop floor.

  • Buyer Persona - A term used by marketers for fictional, generalized profiles of ideal customers. Having a buyer persona is absolutely necessary to help a company set goals, and understand how to attract and convert those leads into potential customers. A complete buyer persona profile includes approximate age, job description and pain points.

  • CAC (Customer Acquisition Cost) - The total sales and marketing expense associated with acquiring a single customer. These expenses should include both variable and fully burdened fixed costs (including sales/marketing salaries, commissions, overhead, etc).

  • CCR (Customer Retention) – A metric used to measure customer retention and value. CR = (# customers at beginning of measurement period – # customers at end of measurement period) / (# customers at beginning of measurement period).

  • CMRR (Contracted Monthly Recurring Revenue) – CMRR is a cash management metric, exactly like MRR but is the subset of MRR that measures only the MRR that is bound by a contract. This is ultimately what you should be driving towards in order to increase your insight and visibility to future cash flow. As you build your business around CMRR, you can build a “Just In Time” business model, turning marginal increase in CMRR, coupled with marginal decrease in MRE, into increased revenue.

  • Churn - Also known as "churn rate". Churn is the percentage rate at which customers stop subscribing, using, or paying for a certain product/service. It's vital to know your churn rate to understand your buyer's behavior and which features aren't being fully utilized.

  • CLTV (Customer Lifetime Value) - The total revenue that a customer will pay your company until they stop purchasing, renewing, or using your products or services. CLTV is similar to TCV with the addition of projected growth, contract renewals, and additional purchases from a customer. For example, if a customer contracts a 24-month agreement with an initial TCV of $169,000, then is projected to add 50% to the contract in the initial term, you can anticipate an initial term value of $253,500 ( $169,000 + $84,500). If the customer is expected to renew for an additional 2-year term at the increased contract value ($253,500), and grow an additional 25% during the second term, the CLTV would be $633,750 ($253,500 + 253,500 + (253,500 * .25%) = $633,750).

    Assuming your goal is growth, a good guideline is that your CLTV should be 3 or more times greater than your CAC (higher is better). A common mistake is to measure your CAC against TCV, a much more conservative measure of profitability, than CLTV. To understand and use CLTV effectively, you must truly understand your customer, their attrition rates, and upsale/downsale patterns – otherwise you can get yourself into trouble.

  • Cold Calling – The process of approaching prospective customers either by telephone or face-to-face “cold,” or with no introduction or prior contact.

  • Demand Generation – The focus of targeted marketing programs to drive awareness and interest in a company's products and/or services. There are multiple components of a stepped demand generation process that vary based on the size and complexity of a sale.

  • Discovery Call - The first call a sales rep makes to a prospect, with the goal of asking them questions and qualifying them for the next step.

  • Enablement - Sales enablement is the process of ensuring that all customer focused employees have the information and skill set to sell. Sales enablement involves understanding and eliminating the gap between business strategies and their actual execution. This can be done by training sales teams, exploring new platforms, and thereby increasing revenue.

  • Funnel - A buying process that employees lead customers through when purchasing products. The sales funnel is divided into what are referred to as stages that take a customer from awareness to action.

  • Gate Keeper - Someone who screens your attempts to approach the person who makes the buying decisions.

  • IC (Internal Champion) - Someone who helps promote your deal within an organization.

  • Leads - Prospective customers to approach with your product. For example, an organic food distributor learns through word-of-mouth that a new health food store is opening soon.

  • Lead Qualification - Process by which leads are graded on their potential. The process involves asking a few questions in order to figure out if the lead's problems fit with the offered solution and whether or not they have the ability to buy. A qualified lead is a prospect.

  • LTV (Lifetime Value) - Prediction of the profit gained over the course of the entire future relationship with a customer.

  • Margin - The difference between the cost price and the sell price of a product. Everyone has a margin they like to work with, and for products to be appealing, they need to be able to meet this margin without out-pricing themselves in the market.

  • MQL (Marketing Qualified Lead) - Someone who is interested in our product that has a need to be filled and has the ability to buy within a six month period.

  • MRE (Monthly Reoccurring Expenses) - The anticipated reoccurring expenses including payroll, services, facilities, materials, depreciation and all other operating expenses that can be assigned to a given month. This metric measures the predictable monthly expense.

    MRE is an expense management tool. It tells you what your monthly spend is anticipated to be. It is different than a cash analysis because it is based on committed expenses, not spent cash. Use it to compare to MRR for short term spend decisions. The anticipated difference between the two gives you insight into investments that can be made to support short-term growth opportunities. Looking into your TCV growth, you can spend cash that you will earn within the next three months with a very high degree of accuracy without risking your business – You can spend your TCV growth today.

  • NPS (Net Promoter Score) - A customer satisfaction metric that measures, on a scale of 0-10, the degree to which people would recommend your company to others. The NPS is derived from a simple survey designed to help you determine how loyal your customers are to your business. To calculate NPS, subtract the percentage of customers who would not recommend you (detractors, or 0-6) from the percent of customers who would (promoters, or 9-10).

  • OTE (On Target Earnings) - The amount of money a sales rep is promised to earn if she hits her sales quota. It's comprised of the base salary and sales commission.

  • Pipeline - A document containing all your prospective customers, arranged according to the stage in which they are in your sales or purchasing process.

  • POC (Proof of Concept) - A POC is done with a potential customer. As a venture fund, a POC is a great signal ahead of an investment, and the POC is mandatory to do the investment.

  • Procurement - The process of finding, agreeing terms and acquiring goods, services or works from an external source, often via a tendering or competitive bidding process. The process is used to ensure the buyer receives goods, services or works at the best possible price, when aspects such as quality, quantity, time, and location are compared, while minimizing risk, such as exposure to fraud and collusion.

  • Prospecting - When inside sales reps make outbound calls or send outbound emails to leads in hopes of creating opportunities for account executives. Prospecting can involve cold-calling as well as reaching out to nurture leads that have gone cold. Prospectors, also known as sales development reps (SDRs) can help achieve predictable ROI by creating a steady stream of opportunities for account executives. This can be highly effective because it frees account executives from having to prospect for their own leads. Instead, they can spend their time selling to sales-ready prospects that have been qualified by sales development reps.

  • Sourcing - A talent acquisition discipline, which is focused on the identification, assessment, and engagement of skilled worker candidates

  • RFI (Request for Information)- A document (often questionnaire) used to obtain information from potential providers before a solicitation document (RFP) is issued. The RFI is a formal document issues to the market place to find providers or check that service levels of existing providers are in line with best market practice. The RFI is sent to as many people as possible, the results are aggregated, and the then reviewed as a team prior to a RFP.

  • RFP (Request for Proposal) - A Request for Proposal is a more structured evaluation and selection process than an RFI, wherein enterprises solicit companies to submit competitive business proposals for a painpoint they are attempting to solve.

  • SDR (Sales Development Rep) - A type of inside sales representative that solely focuses on outbound prospecting.

  • SLA (Service Level Agreement) - A contract between two departments that aligns goals and defines agreed-upon expectations. A Marketing SLA, for example, outlines expectations the Sales team has for Marketing with regards to lead quality and lead quantity.

  • SQL (Sales Qualified Lead) - The sales team affirming that it’s a good lead with a potential opportunity. The next step after SQL could be Opportunity, where the AE decides to move them to the next meeting, which kicks off a multi-stage sales process.

  • TCV (Total Customer Value) - The total sales number committed in the contract or service order by the customer. For example, if a customer contracts 24 months at $6,000/month, plus $25,000 of professional services, the TCV is equal to $169,000 = (($6,000 x 24) + $25,000).

    This is the measure of initial customer value. This number is most commonly used to pay commissions, build internal support/processes/systems and project infrastructure/product delivery needs. This metric is your crystal ball into your future, enabling you to manage operational requirements without overspending or under-resourcing as you grow your customer base.

Are we missing any? Please let us know in the comments!

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