The consulting business has a unique language. This glossary of business terms can help you understand and be understood in the world of business and personal consulting.
Accounts payable: Money that you or your business owes to others.
Accounts receivable: Money owed to you or your business.
Accrual: An accounting term for the increase over time of expenses incurred by your business. They are accrued up until the time they are paid.
Acid-test ratio: A measurement of how well a business can meet its short-term financial obligations without selling any inventory.
Added value: The process of going the extra mile with a client. Added value also is used to describe when products and services include additional features beyond what is generally desired by the client at no additional cost.
Advocates: Those people in the client's organization a salesperson works with who support the recommendation being offered.
Agent: A person who has the authority or is empowered to represent a company or a company's products and services.
AIDA: Attention, Interest, Desire, Action.
Asset: Things of value. Tangible assets include cash, receivables, inventory, and buildings. Intangible assets include goodwill.
Atmosphere: The physical characteristics and surrounding influence of a business that is used to create an image in order to attract clients.
B2B: A sales organization whose primary effort is selling to and doing business with other businesses.
B2C: A sales organization whose primary effort is selling to and doing business with consumers, or with individual users.
Base salary: The guaranteed portion of a salesperson's monetary compensation. Base salaries reward salespeople for their accumulated experience and overall selling efforts.
Benefit: The value experienced by the client as a result of the purchase of a product or service. Salespeople who focus on communicating benefits and aligning those benefits to a client's business objectives increase the likelihood of gaining a sale.
Bill of lading: A contract between a freight company and a shipper regarding transportation that includes the exact contents of the delivery.
Blue law: Rules created to restrict particular activities to certain days or hours. Many blue laws have been removed from the books or are no longer enforced.
Body language: The gestures, body movements, and mannerisms by which a person communicates his outlook or frame of mind.
Bonus: In sales compensation, a type of incentive payment typically awarded when the salesperson or sales team achieves pre-determined financial objectives.
Brainstorming: A methodology undertaken by a person or a team to solve a problem or to generate ideas by rapidly listing a variety of possible solutions and approaches.
Brand: A name, term, or symbol used to identify the products and services of the selling organization and to differentiate them from those of competitors.
Break-even point: The point in business where the sales equal the expenses. There is no profit and no loss.
Brick and mortar: A business that is in a building as opposed to an online shopping destination, door-to-door sales, kiosk or other similar site not housed within a structure.
Business cycle: A sequence of economic activities typically characterized by recessions, recovery, growth, and at times, decline.
Business plan: A detailed document describing the past, present and future financial and operational objectives of a company.
Buyer: The person who purchases or procures a product or service. This person may also be the decision maker, but not necessarily.
Buying office: A central office where buyers purchase products or services for all businesses owned by the parent company.
Buying process: The steps a client organization or a buyer takes in making a purchase for a product or service.
Buying signal: A statement or indication from a prospect or client that suggests he is considering making a purchase.
Call: A visit or meeting with a client or prospect.
Canvas: Another word for the activity of prospecting for clients.
Capital assets: Long-term assets used to produce income, such as buildings and equipment.
Cash discount: A percentage reduction in price for payment within a specified period of time.
Cash flow: The movement of money in and out of a business and the resulting availability of cash.
Centralized buying organization: Company in which all buying decisions for all the locations in the company are made by one central office.
C-Level Executive: An executive in the organization whose title often is preceded by the word “chief,” e.g. CEO, COO, CIO, CFO, etc.
Close: The point at which the salesperson asks for a commitment to purchase the product or service being evaluated.
Closed questions: Questions that provide the client with a choice among alternatives. Often these are brief answer, yes-no questions.
Cold call: A visit made to an organization without having an appointment.
Commission: In sales compensation, a type of payment or revenue sharing resulting from achieving a sale or attaining a given sales level. Commissions are typically expressed as a percentage of the selling price for the product sold.
Commodity: Competing products or services that bear the same or similar characteristics.
Competitive advantage: Those areas deemed to have preferential value to a client versus a similar competitive product.
Confidentiality agreements: Agreements between two parties affirming that the information exchanged during a relationship is maintained within the confines of the agreement, and not shared beyond the agreement.
Consultant: Someone who sells advice to someone who needs it. The advice must be useful, of value, and assist the client in solving a specific problem.
Consultative selling: A selling methodology where the client is seeking advice from the selling organization.
Contact management system: The use of technology to track client contact information, activity, and history.
Contribution margin: The difference between total sales revenue and total variable costs. The term is applied to a service line and is generally expressed as a percentage.
Conversion ratio: Used in sales organizations where gaining sales is a function of taking away business from competition, this ratio is usually a measure of the number of targeted opportunities secured versus the number of opportunities pursued.
Conversion: The methodology used to convert a client's use of one product or supplier to another.
Corporation: A legal entity that can buy, sell, and enter into contracts as if it were a person.
Cost-Benefit Analysis: The method a client (or sales organization) follows to assess the viability of a recommendation, by examining the total amount of money, time, and resources used relative to the value being received.
Cost of sales: For sales compensation purposes, the percentage calculation of total sales generated by the sales force divided by the total compensation costs of the sales force.
Coupon: A promotional tool in the form of a document that can be redeemed for a discount when purchasing goods or services. Coupons feature a specific savings amount or other special offer to persuade consumers to purchase specific goods or services or to purchase from a specific business.
Cross-selling: A methodology in selling where a client need lends itself to a possible need for another product or service.
Client profile: A document that outlines the critical information about a particular client.
Client relationship management (CRM): The process used internally to manage client relationships.
Decision maker: The person most responsible for deciding the outcome of a salesperson's or selling organization's proposal.
Demographics: Characteristics of a specific group of people, such as potential clients.
Demonstration call: A client call involving a salesperson and a manager, in which the manager's role is to teach and show the salesperson a technique or approach the salesperson wishes to improve.
Desire: A longing, a wish. Strong desire drives ambition and performance.
Differentiation: The process of distinguishing services or products through design.
Direct marketing: The process of marketing directly to an end user. The most known form of direct marketing is direct mail.
Discount: A reduced amount (typically from standard price) that is offered by the seller or the selling organization to encourage purchase of a product being offered.
Distributor: An indirect sales channel that markets or sells a product or service. Distributors are used by selling organizations to capitalize on the distributor's local presence and capacity to support the manufacturer.
Double entry: An accounting system that requires two balancing entries, a debit and a credit, to be made for each transaction.
Draw: In sales compensation, a cash advance in anticipation of future sales performance.
Durable goods: Products that can be used frequently and have a long life expectancy, such as furniture, jewelry, and major appliances.
E-Business: Conducting business via the Internet.
Economic benefit: The financial value of a product or service. This is tied closely to the term ROI, or return on investment.
Electronic shopping: Shopping over the Internet or through a TV cable channel.
Elevator speech: Sales slang for a short, 20-second overview of who your company is, what it does, and what you do, with the intent of gaining an individual's interest to learn more and seek further discussion.
Empathy: The ability to communicate and understand someone else's situation and feelings.
Employer identification number: Also known as a Federal Tax Identification Number, is used to identify a business entity.
Executive summary: Often considered the first page or first several pages in a business plan, summarizing the key issues, solution and value a client will receive by implementing the recommendation.
Farmer: A slang term in sales referring to a salesperson whose primary job is to maintain and grow business with existing clients, versus acquiring new clients.
Feature: A characteristic of your product or service. The distinct parts of your product or service that can be described.
Focus Group: A small group selected to participate in open discussions on a topic, in order to solicit the participants' opinion about that topic or area.
Forward stock: Merchandise that is kept on the selling floor.
Free on board (FOB): Shipping term used to indicate who is responsible for paying transportation charges. FOB factory means the buyer must pay shipping from the factory.
Gatekeeper: The person who controls access to someone you are trying to meet with.
Goal: The end toward which a salesperson or sales organization is headed. The ability to set and execute against ambitious yet realistic goals is considered the essential foundation to a sales organization's success.
Golden Rule Selling: Selling as you want to be sold. Applying what you know as a buyer to becoming a better seller. See The Everything Sales Book by Dan Ramsey (Adams Media, 2009).
Goods: Tangible products for sale that can be held or touched.
Grade labeling: Product labeling that includes a quality rating for the product.
Gross income: Total income derived from a business.
Gross leasable area (GLA): Total floor space available for sales.
Gross margin: The difference between the cost of goods sold and the price at which they were sold.
Gross profit: Profit calculated after deducting all costs of merchandise, labor, and overhead.
Hot buttons: Those areas that can be used to position solutions to align with a decision maker's most important criteria for selection.
Image: The impression clients have of a company or service.
Incentives: Any form of compensation or reward made to a salesperson or sales team to influence sales results: bonuses, commissions, trips, catalog award points, etc.
Influencer: An individual who has sway over how a decision is made, but is not the direct decision maker.
Inquiries: Those individuals or organizations who contact your organization to find out more about what you do. When qualified, they become a qualified lead.
Key performance indicator (KPI): The primary measures an organization uses to determine its own internal performance.
Key players: The men and women inside an account who are essential to the selling organization gaining a positive decision.
Keystone pricing: A method of marking merchandise for resell to an amount that is double the wholesale price.
Leave-behind: A sample or piece of written material about your product or service that you leave with a client during or at the end of a call.
Level of influence: The degree of influence an individual has on the decision-making process.
Liabilities: Amounts that a business owes to suppliers and other creditors.
Loss leader: A product or service that is discounted significantly from list price and used, typically for a limited period, to influence buyers to purchase other products.
Loss prevention: The act of reducing the amount of theft and shrinkage within a business.
Margin: The difference between the cost of a product and its selling price, expressed as a percentage or dollars-per-unit.
Markdown: Planned reduction in the selling price of an item, usually to take effect either within a certain number of days after seasonal merchandise is received or at a specific date.
Market area: Geographic area from which a business draws its clients.
Market penetration: The ability to enter and gain a share in a specified market, generally measured in percentage terms.
Market share: An organization's portion of the total market, typically expressed as a percentage.
Marketing calendar: A tool used by businesses to show what marketing events, media campaigns and promotional efforts are happening when and where, as well as the results.
Marketing: The process followed by organizations to satisfy the needs, wants, and demands of their clients through the application and promotion of products and services that satisfy those client requirements.
Markup: The amount added to the cost price of a product or service to determine its selling price.
Mission statement: An organization's purpose for being. Mission statements typically communicate what an organization values.
Needs analysis: The process of formally evaluating a client's needs and requirements.
Net lease: Lease in which the tenant pays the base rent plus property taxes. Also known as a single net lease.
Net-net lease: Lease in which the tenant pays the base rent plus property taxes and building insurance. Also known as a double-net lease.
Net-net-net lease: Lease in which the tenant pays the base rent plus property taxes, building insurance, and maintenance. Also known as a triple-net lease.
Networking: The process of developing and maintaining alliances externally and internally with a wide variety of contacts that can provide information, insight, help, and access to others.
Niche market: A unique segment of the market a selling organization is targeted toward. This unique segment, if served well, can provide areas of distinctive competitive value.
Objection: A term often used in sales when a client challenges or rejects a salesperson's idea or suggestion, or when the client communicates issues that will prevent the sale from moving forward.
Open-ended questions: Questions that encourage the client to respond freely. They include questions with what, why, and how that require more information from the client than a simple yes or no answer.
Operating expenses: The sum of all expenses associated with the normal course of running a business.
Opportunity: A situation, need, condition, or circumstance where you have the potential to meet a client's business requirements.
Partnership: Two or more people own a business together.
Price: A price is the monetary value placed on a product or service.
Pricing practices: The methods and strategies an organization uses to price its products and services in the marketplace.
Probability: The likelihood that a given event will occur.
Problem analysis: The process of examining the symptoms, conditions, and possible causes of a problem in order to define alternatives for possible resolution.
Process: A series of steps bringing about a desired result.
Profit margin: A ratio of profitability calculated as earnings divided by revenues. It measures how much out of every dollar of sales a business actually keeps in earnings.
Pro-forma: The process of preparing a hypothetical income statement for a client, based on a given set of assumptions.
Project management: The science and discipline of planning, organizing, overseeing, managing and tracking projects in an organization.
Proposal: An offer that is made, both verbally and in written form, between the selling organization and the client organization in order to initiate business activity.
Prospect: A potential buyer or client for your products and/or services.
Prospecting: The process of searching for and finding qualified clients for your product or service.
Qualify: The process of assessing whether or not a client or an opportunity represents a potential fit for your product or service.
Referral: A client's direction or recommendation to another party, internal or external, that may benefit from your product or service.
Request for proposal (RFP): Used by clients to assess who will respond, and evaluate solutions being posed.
Retention: The science and practices used to keep a client.
Return on investment (ROI): The amount, expressed as a percentage, earned by an investment.
Returns percentage: The relationship between returns and allowances, and sales, calculated by dividing returns and allowances by gross sales.
Run of paper (ROP): A newspaper advertising term referring to an advertisement that may be placed anywhere within the paper.
Run of schedule (ROS): A broadcasting advertising term referring to an advertisement that may be placed anywhere within the broadcast schedule.
Segmentation: The division of a market into separate units with similar characteristics.
Service: A product/service mix that offers only a service, with no accompanying product needed or wanted, such as an insurance policy.
Sole proprietor: One person (or a married couple) who owns a business.
Stall: When a client avoids making a decision and, in essence, puts the sales process on hold.
Strategic selling: A selling methodology considered by some to represent the most complex type of sale, because of the number of people who are typically involved in the sales process, or the nature and scope of the relationship.
Strategy: The planning of all the resources available to a company or a salesperson to achieve a stated goal or purpose.
Supportive services: Free services offered to clients to increase convenience, make shopping easier, and entice clients to buy more.
Suspect: A prospect that has not been qualified as a potential client yet.
Target market: The set of clients or organizations that you deem most viable for your product or service.
Test market: The process of evaluating the appeal of a product or service by selecting cities, clients, and locations in which to introduce the product or service, and monitor how receptive the intended users are to it.
Testimonial: A verbal or written expression of the value a client received by having used or purchased your product, service, or overall solution.
Trade credit: An open account with suppliers of goods and services.
Trade discount: A discount on the list price given by a manufacturer or wholesaler to a retailer or service business.
Value: The relative worth, utility, importance, or financial benefit that is assigned by a buyer to the product or service an organization sells.
Vertical market: A market characterized by certain unique characteristics.
White paper: A document, typically less than 12 pages in length, that describes your organization's point of view in areas that may be of interest to the client.
Widget: An unnamed product or service used as a hypothetical example.
Word of mouth: A powerful method of selling products by creating interest, desire, or incentives on the part of current users to promote the use of your product and service to others.