Selling is crucial for any business, but the sales cycle can often be unclear. If your buyer’s journey is lengthy and complex, your sales team is likely struggling to manage a mix of leads, prospects, and opportunities.
Although these terms are sometimes used interchangeably, they actually refer to different types of potential customers. Confusing these terms can lead to misunderstandings and decreased team performance, so it’s important to establish clear definitions before launching a new product or campaign or when setting new team goals.
Leads, prospects, and opportunities each have unique expectations from your business. Understanding these differences and how your sales team should respond to them is essential. Additionally, having agreed-upon definitions will facilitate better collaboration between the sales and marketing teams.
By the end of this blog, you will understand the differences between leads, prospects, and opportunities. It will also guide you on optimizing your sales funnel and filling your pipeline with more qualified opportunities.
This blog will cover:
- What is a lead?
- What is a prospect?
- What is a sales opportunity?
- How to turn a lead into a prospect
- Characteristics of a sales opportunity
- How to identify leads and prospects with software
What is a lead?
Leads belong to the early stages of the sales and marketing process. Generally speaking, a lead is anyone who might become a customer. Leads can already be aware of your products or services and might even already show some interest in it. However, leads are unqualified, meaning they haven’t shown a clear intent to purchase, and there’s no further information to determine if they fit your ideal customer profile or would benefit from your offerings. They might belong to an industry you don’t serve or lack the budget. While capturing leads and guiding them through the sales process is important, they aren’t ready for direct engagement with your sales team.
Leads can vary by company, but examples include:
- People who subscribe to your email list
- New LinkedIn connections
- Followers who engage with you on social media
- People who visit your website
What is a prospect?
The biggest differentiator is that a prospect is a qualified lead. You qualify a lead by engaging with them and determining that they match your ideal customer profile. At this stage, the prospect is interested in your brand but may still not be ready to buy yet.
Unlike leads, prospects engage and communicate with you. This could be as simple as returning a phone call or visiting your website for more information. Each business has its own criteria for qualifying leads. For instance, downloading a report might qualify someone as a prospect for one company but not for another.
Common examples of prospects include:
- A lead you spoke with on the phone
- Someone who replied to an email
- Someone who clicked on a link to visit one of your channels
- Someone you met at a conference or other event
- Someone who inquired about your product on social media
What is a sales opportunity?
A sales opportunity is a prospect who is interested in making a purchase and sends out actual buying signals. Being a prospect doesn’t necessarily indicate readiness to buy immediately. For example, someone might be a prospect because they visited your booth at an exhibition, but they might not have the budget avialable to purchase your product or service. Even if someone fits your ideal customer profile, it doesn’t mean they’re always a sales opportunity.
Sales opportunities indicate a clear intent to make a purchase. While you can define what constitutes an opportunity for your business, key criteria often include:
- Requesting a demo
- Asking for pricing
- Starting a free trial
- Sharing a decision timeline
Not all sales opportunities will result in a sale, but every customer begins as an opportunity. This stage is crucial, as it’s where your sales team steps in to (hopefully) close the deal and potentially even upsell.
How to Turn a Lead into a Prospect
One of the most challenging parts of the sales process is converting leads into prospects. Lead generation is valuable, but without successfully turning leads into prospects, gaining more customers and consequently more revenue will be difficult. Organizations focussed on so-called ‘product-led growth’, have a sales proces in place that is able to convert leads into prospects mainly without any involvement from a sales team having interaction with leads. This is exceptional and at this point almost only realistic for companies active in SaaS. The majority of organizations still heavily rely on the interaction with the sales team, especially for upseling and in case of more complex and larger scale sales.
To populate your sales pipeline with more prospects, you’ll need to qualify leads. Qualification varies by business but generally involves three steps:
- Organization-Level Qualification: The first step is to ensure the lead is in the appropriate industry. For instance, if your business primarily serves the Healthcare industry, a lead from the beauty industry might not be suitable. Up to you to decide if you will follow up on a lead that is not in your focus industry. At this stage, it’s crucial to confirm that the lead has a fundamental need for your solution.
- Opportunity-Level Qualification: Determine if there is an opportunity for the lead to use your product or service. Do they have an interest in it? At this stage, you need to demonstrate the benefits of your solution to gauge whether there’s a potential for collaboration.
- Stakeholder-Level Qualification: Ensure you are speaking to the right person. Not all leads have the authority to make purchasing decisions, so it’s essential to connect with the key decision-makers. In B2B scenarios, you might need to engage multiple leads from the same company to secure an account. Our sales in one day trainings cover the ‘Decision-making units’ and how to deal with them effectively.
Once a lead is converted into a prospect, position your business as an authority and a solution provider for their primary pain points. Not all prospects will convert, but those who do will become sales opportunities for the sales team to pursue immediately.
Characteristics of a Sales Opportunity
Sales opportunities represent the final stage of the sales process, where your sales team aims to close the deal. All sales opportunities share the following characteristics:
- Pain Point: Every product or service exists to solve a specific pain point or need. By classifying someone as a prospect, you’ve already identified their need. At this stage, you need to address that pain point with your offerings.
The challenge is that qualified opportunities might not explicitly share their pain points. It’s up to the sales representative to build a relationship and uncover this information. Simple questions like, “What’s your biggest challenge with your current process?” or “Why are you interested in learning more about our solution?” can be very effective. More about questioneing techniques will be shared in our online open training on closing deals.
Understanding the differences between leads, prospects, and sales opportunities can help bridge gaps and improve communication between your sales and marketing teams.
- Interest: Next, determine if the potential customer is interested in addressing their pain point. Just because someone has a problem doesn’t mean they’re ready or able to solve it. Ask how long they’ve been dealing with the issue. If it’s been a while, they might be accustomed to it and not in a rush to fix it. However, if they express that they’re struggling and need help, that’s a sign of interest. You can also gauge their interest by asking, “Do you want a solution to your problem?” or “When did you want to fix this issue?”
- Fit: After assessing pain points and interest, evaluate whether the potential client is a good fit for your company’s solution. They might be interested in working with you, but do you want to work with them? Can you deliver results for this potential customer?
Deciding if an opportunity is a fit depends on your business. For example, if your solution is designed for large enterprises and a startup approaches you, your solution might not be suitable for them. Identifying mismatched needs early on helps prevent disappointment and ensures you have loyal, long-term clients.
