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TSIA Expand Selling research is designed to help our member companies grow revenue from their existing customers. However, this can’t happen without effective collaboration between Sales and Services, which means that there needs to be some shared understanding between these two functions.
To help you improve cross-functional collaboration, I’m going to provide some insight into the language and world of Sales so that the non-salespeople within your organization can better understand their challenges, specific KPIs, and identify opportunities for better communication. This way, all of your internal teams can work together more effectively to not only grow revenue, but also improve customer outcomes.
A big part of collaborating with Sales is learning their language, which is key to understanding what makes them tick and establishing credibility with them as someone who is familiar to their world. I’m going to share some terms that are commonly used in the world of Sales. Some may or may not be familiar to you, but they’re commonly understood by people who have “carried a bag.” Speaking of which…
This term simply refers to being in Sales. It harkens back to when salesmen would carry what they were selling around as a demo, but people now use it as a euphemism for being a quota-bearing salesperson. In fact, when salespeople want to devalue a non-salesperson’s experience, they often say “They’ve never carried a bag.” The implication, of course, isn’t that the person in question is lugging around a purse or briefcase, but that the non-bag carrier doesn’t understand their world and therefore isn’t credible to them.
Payment above and beyond base salary for Sales. Commission is usually based on a percentage of the deal closed, margin, or other factors and can be paid out quarterly or annually. For most sales execs, commission makes up 40-50% of their total compensation. The transition to XaaS and subscription-based models has caused real crises in commission payments, as the bulk of the customer payment is no longer received Net 30 from the signature.
The projected amount of sales that a rep, manager, or company is expected to close. These are deals that are actually expected to come in, which means that Sales is very much on the hook for these deals for that quarter or year. This is customarily done by applying a percentage-based algorithm to the projected dollar amount of the deal(s) rather than simply guessing, though the Sales manager can adjust as the reality of the sales cycle dictates.
The revenue target that each Sales rep or manager is responsible for securing. Something to keep in mind: Quotas are not the same as an MBO, but are hard numbers; revenue targets for new revenue that doesn’t exist right now. Usually, quotas are assigned annually. Salespeople don’t always have to hit their quota by themselves. For example, in many cases, deals can come through channel partners but can still be counted towards their quota.
A more conceptual view of the pipeline, this is the journey an opportunity goes from being a prospect or a lead on to becoming a closed deal. The funnel describes the progression of deals through the sales process more than what any individual is working on, and looks like this:
(Click image to enlarge.)
What the sales funnel looks like.
What the sales funnel looks like.
Leads are what everyone’s looking for. It’s a hand raise from a prospect or other indication of an interested prospect that could turn into a sales opportunity with a good chance of closing. Leads can come from Marketing, Sales Development reps, or increasingly from Services.
Qualifying a lead means that you’ve validated and confirmed that there’s a reasonable chance that it could turn into an opportunity that is worth spending time and effort to bring to closure. This process is called “Qualification”. Once a lead is qualified and converted to an opportunity, that’s generally where it hits the forecast and the salesperson is held accountable for closure.
This term deserves a bit more of a deep dive, because at the end of the day, leads are the lifeblood of your sales cycle. Recently, I’ve noticed some discrepancy in what Sales considers to be a “lead” and what others think it should be, so I want to take a minute to explain our own perspective at TSIA on not only what a lead is, but also what a lead is not.
Generally, for a Lead to become a qualified opportunity, it needs to meet the BANT criteria, which is an acronym Sales is all too familiar with, but non-salespeople may not be. It means that each of the four aspects below has been clearly outlined and identified:
The transition to from a traditional Transactional model to a recurring-revenue Contractual model has put immense pressure on Sales organizations. For one thing, the deals that make it all the way through the funnel to closure are shrinking. Increasingly, business buyers, rather than IT departments, are making the purchasing decisions. Therefore, they’re only buying a portion of your offerings to meet a very specific need. If you don’t have a plan and a process to grow customers after that initial purchase, reps and companies will miss their revenue targets. This is where Services teams can play a big part in finding and driving upsell opportunities.
In my next blog post, I’ll take a deeper look into the challenges that Sales teams are facing right now and what that means for the Services leaders who depend on their Sales counterparts to make their numbers. We’ll even provide some tips on how to help yourself by helping Sales, some of which you can hear about in my on-demand webinar, "A 30-Minute Crash Course on the World of Sales". In the meantime, take these steps to better understand Sales and get to know what makes them tick:
Post Date: November 1, 2018
Find out how Sales, Services, and Customer Success can work together.
Steve Frost is the vice president and managing director of revenue research and advisory for TSIA. He also serves TSIA’s vice president of expand selling and subscription sales research. Throughout his career, he has held various leadership and business development roles at companies like Google, Netscape, and Loudcloud, helping them define their go-to-market strategy and business development tactics. Steve is dedicated to helping technology organizations grow their services, subscription, and XaaS revenue by optimizing their practices for growth throughout the customer lifecycle.
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The Technology & Services Industry Association (TSIA) is dedicated to helping technology and services organizations large and small grow and advance in the technology industry. Find out how you can achieve success, too. Call us at (858) 674-5491 or we can call you.