What is a sales quote? How about a sales order or invoice? While battle-tested salespeople know these essential terms all too well, newly-minted sales reps may struggle to understand the difference between them.
Why should you care? If you don’t understand the difference between a sales quote and an invoice, you won’t be able to understand the roles they play and tell how they fit into the overall sales process.
In this article, we take a look at what each of these terms means and define some key concepts to make your sales journey easier. We’ll also talk about how the sales cycle works and what you need to be an efficient salesperson.
Key Definitions: What Is a Sales Quote vs. Sales Order vs. Invoice?
Selling a product to a complete stranger is no small feat. Depending on the complexity of your product or service, it’s often a long and testing process that involves several micro-steps as you generate awareness, build interest, and close deals with potential customers.
But before you get started in sales, there are a few key terms that you need to know by heart. Three of the most important ones are sales quotes, sales orders, and sales invoices.
Let’s take a look at what each of these means and how they all fit together to complete the sales process.
What Is a Sales Quote?
Not all products and services come with a rigid price tag. When you’re selling something high-end or custom-made, chances are that you’ll need to account for all customer needs and create an offer that’s right for their use case.
When that happens, you’ll want to send them a sales quote—an itemized breakdown of all potential expenses along with an aggregated total. The sales quotation can be fixed and final or it could be an estimate that’s subject to change.
During the quoting process, potential buyers can either accept or reject your offer, in which case further negotiations may be required. Once the customer accepts your quote, however, they’re officially agreeing to pay the quoted prices to access your product or service.
Sales quotes are especially relevant in B2B sales, where most offers tend to be customized and subject to negotiation. Since each transaction is usually worth thousands of dollars, it makes sense to not attach a fixed price tag to a product or service.
What Is a Sales Order?
A sales order is a document confirming that a buyer has expressed interest in buying your product or service for an established price. This usually comes after the sales quote—once the prospective buyer has had a chance to consider your offer and follow up on it.
Typically, sales orders are only used when there’s some kind of gap between the buyer’s acceptance of your offer and the delivery date. For example, restaurants use receipts to indicate that a client has placed an order for them while they wait for the food to be prepared.
Purchase orders aren’t final. It’s possible to cancel a sales order as long as you refund any advanced payments made by the customer. This gives businesses the time to reconsider if they can’t provide the service requested due to, let’s say, stock issues.
B2B businesses use sales orders the most often since each transaction involves creating custom solutions that may not be available immediately. Sometimes, sales orders are a way for B2B organizations to keep records without making a final commitment.
What Is a Sales Invoice?
Once an order has been generated and deliverability confirmed, it’s time for your sales team to request payment using a proper bill. The invoice is an official document that delivers the final price quote and requests a payment from the customer.
An invoice contains a price breakdown along with details on payment methods and terms. A sales invoice is created at the final stage of a transaction and serves as a way to make things official for both parties.
However, there can be more than one type of invoice. A one-time invoice is meant for a single transaction, whereas recurring invoices can be set up to bill customers for products or services they’ve subscribed to on a regular basis.
In the B2B industry, a sales invoice serves as a contract between the vendor and the client. It includes details such as payment terms, due dates, and money transfer methods. Once confirmed, it can even be used as proof of payment.
Where Do Sales Quotes, Orders, and Invoices Fit into the Sales Process?
The biggest difference between a sales quote, order, and invoice is that they’re required at different stages of the sales process. They also have different purposes and roles in the sales timeline.
- A sales quote is the first step in the sales process and contains everything a client needs to consider your offer.
- A sales order is the next step and represents the client’s acceptance of your offer.
- Finally, an invoice is generated to request payment and document transactions at the final stage of the sales process.
Depending on the nature of your business, your sales team may need to use either one, two, or all three types of documents during the negotiation process. Most businesses these days use sales management tools to automate the process of generating and updating these documents.
A Brief Guide to the Sales Process
Now that you know the difference between a sales quote, order, and invoice, let’s take a look at how they all fit into the overall sales process.
Typically, a sales process consists of seven to nine different steps: Prospecting, Qualification, Pitching, Presentation, Objections, Closing, and Nurturing. Here’s a quick overview of what each of these steps involves:
Prospecting: Sales prospecting, also called lead generation, is the first step of the sales process. Prospecting requires using a variety of inbound and outbound marketing techniques to bring in fresh leads on prospective customers.
Qualification: Once you have a bunch of leads to sort through, you should do your research and qualify them by assigning a score. Lead scoring allows you to see how likely you are to convert a given lead.
Pitching: Once you’ve identified sales-qualified leads, it’s time to initiate contact and pitch them your product or service. This is not a formal offer but a general overview of your product that can be used to gauge interest.
Presentation: Once you’ve pitched your product or service to a customer, it’s time to take things to the next stage by presenting them with an offer they can’t refuse. Your presentation might be conducted via a sales call, in-person demo, or simply an email. This is the step where a sales quote typically comes into play.
Objections: No matter how attractive your offer might be, there will always be prospects who have objections or concerns. Instead of being on the defense, it’s worth listening to these concerns so that you increase your likelihood of closing a deal.
Closing: By this point in the sales process, the customer has accepted your offer and placed a sales order to that effect. You can now make your agreement official by sending a sales invoice and requesting payment for the product.
Nurturing: What happens if you can’t close a deal? Perhaps these prospects aren’t a good fit right now, but things may very well change in the future. Rather than closing their account altogether, you can use lead nurturing to keep them in the loop and encourage them to reconsider.
Why Lead Generation Is the Most Vital Part of the Sales Process
It doesn’t matter if you run a newly-minted small business or an enterprise-grade corporation employing hundreds of salespeople, lead generation is by far the most important part of the sales process.
Here’s why lead generation is vital to your sales process:
- Simply put, lead generation is the first step to acquiring new customers. Without it, you can’t find potential prospects and you can’t close any new deals.
- Continuous lead generation helps you learn more about your customer base. As you gather leads from diverse social backgrounds, you can expand your knowledge and create better offers.
- Lead generation also helps grow your following as a brand. It enables you to develop sustainable customer relationships that can further promote your business.
- As you gain more leads and successfully turn them into customers, you also gather more customer reviews and can ask for more referrals. This helps build trust in your brand and provides you with a new source of warm leads.
- It goes without saying, but more leads mean more potential customers—which helps further your bottom line and boost your quarterly revenue. In the long term, it helps your business grow and expand.
Use Datanyze to Automate Lead Generation
Generating new leads is a long and complicated process, especially if your sales team is handling all the research manually. For every new lead, they have to vet a number of prospects, conduct lead research, gather contact information, and only then initiate contact.
The good news is there’s an easier way to generate leads—with automation. Lead generation software can automate the bulk of your research tasks, so your sales reps can go straight to connecting and pitching.
Datanyze is a lead generation tool for B2B organizations. Use the Chrome Extension to automatically gather professional information and contact data for individual leads while browsing LinkedIn—no more manually searching for contact details!
In addition to providing details such as job description, professional background, email address, and phone number, Datanyze also helps you organize and manage your leads within a smooth and intuitive dashboard.
Want to give Datanyze a try? Sign up for your free account today!