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July 30, 2024
Ron Tuch
If you don't know the difference between a lead and a prospect, chances are you've been using these terms interchangeably (and incorrectly!). Leads and prospects are two distinct types of potential customers.
Leads and prospects both require specific actions from marketing and sales teams to turn them into legitimate sales opportunities. So, it's important that everyone involved is aware of their key differences to avoid miscommunication complications.
Raising awareness about these differences is also essential for effectively structuring your sales funnels. After reading this article, you'll understand the difference between leads and prospects and have a few tactics for turning them both into sales opportunities.
In a nutshell, leads are contacts who show interest in your business. If they qualify, they become prospects who then hopefully turn into genuine sales opportunities.
A sales lead is an individual or business that has shown a clear interest in your product or service. It can be someone who subscribes to your email list, actively engages with you or your brand on social media or visits your website regularly. Sometimes these folks are marketing qualified leads (MQLs) who are legitimately interested in becoming clients, but you don't know precisely when. But this isn’t always the case…
A lead can also be an unqualified contact; that is, someone who has engaged with your company and is familiar with your business, but they aren’t necessarily buying anything right now.
Since unqualified contacts aren’t primed to buy, the marketing team handles these leads. Their job is to engage with these leads and continue to inform them of your business’s value.
Communication at this stage is limited to providing general content, as you still need to learn more about the lead. The purpose is to interact with all potential clients simultaneously through various channels, aiming to collect more and more information about them.
In short, leads are the contacts who are at the very earliest deal stages within your sales funnel. If they qualify as a sales prospect, they'll move further down the funnel.
Also known as a Sales Qualified Lead (SQL), a prospect is a lead who is likely to become a paying customer. They are in the initial stage of the buying process, so they're the foundation of your sales pipeline. The people who qualify as prospects are those who, after careful assessment, meet the criteria of your ideal customer profile (ICP).
Up until this point, marketing teams typically handle all lead interactions. However, at this stage, that changes. Normally a sales rep takes the reins and communicates with prospects until the closing stage.
If prospects have responded well to lead nurturing efforts, during this phase, there's two-way communication. Sales reps answer prospects' specific questions, interacting with them via one-on-one channels with customized calls to action, and moving them to middle-to-late stages of the sales funnel.
Sales opportunities are prospects who have been thoroughly qualified and are prepared to make a purchase decision. In other words, a sales opportunity is a prospect who should be given the utmost attention.
Opportunities are qualified prospects, which means they are highly likely to become paying customers. At this stage, the sales team has precisely identified the potential client's business pain points, and both parties are optimistic that your product or service can solve them.
Nurturing is no longer necessary here, so sales managers and reps are the only ones communicating with opportunities. Plus, at this stage, more nuanced and high-touch interactions are necessary. Since this is when potential customers are the closest to making a purchasing decision, sales opportunities are placed farthest down in the sales funnel.
It isn't always easy to determine whether a prospect is an actual opportunity for a sale. So, the best way to make that delineation is to establish (and stick to) a strategy. Regardless of your approach, three things must be true to call a prospect a true sales opportunity:
It's only possible to close a sale if your product or service solves the potential customer's problem. Without a clear reason to buy, most people won’t.
Even when prospective customers don't explicitly share their pain points, you should proactively try to discover their problems and show how your business can solve them.
However, just because the prospect has a problem doesn't necessarily mean they're willing to solve it. So, it's also essential to make sure the potential customer is interested in your solution. If the sales prospects aren't interested in solving a pain point, your time and effort will be better invested in those ready to listen.
Suppose your product or service offers the right solution to the potential customer's pain point, and they're interested in solving it. Even so, they may not fit your target market. To illustrate, your product may cater to large businesses, but the prospect's company size may be smaller.
Bypassing this assessment and closing a sale that isn't a good fit may lead to unpleasant consequences and churn down the line. You don’t want to create unhappy customers who might negatively impact your business.
Now that you know the difference between leads vs. prospects, it's time to learn what to actually do to generate more sales opportunities for your business.
The first step is to identify leads who are likely to become customers. By doing so, you can invest your time only in viable leads and eliminate unqualified ones from the sales process.
To find out essential information about a lead, ask open-ended questions about the challenges they face and the improvements they need.
Then, to determine whether they fit your buyer persona, you should evaluate their needs and ensure your solution caters to them. It's also equally important to assess whether your pricing fits within their budget during this stage.
Just like a growing plant needs nutrients to blossom, a lead needs to be nurtured to become a paying customer. To make this happen, you should provide leads with the information they need, when they need it.
Segmenting leads saves you time in the long run. For example, leads whose needs match your typical buyer persona are far more promising than those one-off anomalies who don’t quite fit the mold of your typical customer. So, gathering all of the “typical” leads into the same category allows you to focus your nurturing efforts on them because historically, they’ve turned into customers most consistently.
Listening to people makes them feel appreciated and valued. Nurturing a lead is about showing sincere interest. To foster a relationship based on trust, encourage dialogue with leads. Ask and answer questions, seek opinions, and actively listen to their thoughts.
Overall, the main point of nurturing a lead is to build a meaningful relationship based on understanding and open communication. Earning the trust of your leads allows you to learn more about their issues, needs, and objectives. With this information, you can tailor the perfect sales approach and increase your chances of this lead becoming a loyal customer.
Free trials, samples, and demos are essential for leads to see how your solution could solve their problems in practice. This hands-on experience lets them truly grasp your value and, consequently, increases their interest in your product.
Following up often is key to maintaining a lead’s interest in your product or service. There are ways to do it effectively without coming on too strong or pushy.
Out of sight, out of mind. By maintaining regular communication, your company is highly likely to stay at the top of your potential customer's mind. Send regular, personalized emails and newsletters with valuable content about your business or industry.
Address all the inquiries and requests your leads may have. Responsiveness shows potential clients that they can rely on you now and in the future.
Always keep your promises. A HubSpot study from 2017 revealed that only 3% of people consider sellers to be trustworthy, so it's vital that you show credibility to earn trust. If you said you would send a proposal, schedule a meeting, or make a call on a certain day and time, honor that commitment.
Nurturing leads means building a relationship with them, regardless of whether they are ready to buy or not. They may not be ready to make a purchase now, but if you've built a strong relationship with them, they're more likely to become customers in the future.
The lead qualification and nurturing processes are vital in generating sales opportunities for your business. Similarly, a CRM tool is vital for managing all customer data in one easy-to-access place. With Streak, you can keep track of the whole sales process directly from your Gmail inbox.
Each sales lead has a dedicated workflow where sales and marketing teams can manage contact information and interactions. Streak also allows you to easily tweak your sales pipelines and workflows as your strategy evolves. There's even a tool that informs you when, where, and how often an email was viewed, allowing you to know exactly when to send follow-ups.
Want to see it for yourself? Request your 14-day free trial of Streak today to elevate your sales efforts and organize your most qualified leads more effectively. It takes 30 seconds or less to get set up.
A prospect is a sales lead who has been qualified, so there is no difference between a prospect and a qualified lead.
No. Prospects and leads aren't interchangeable terms. Leads are contacts who have shown an interest in your business, while prospects are leads who you know are a good fit for your product or service solution.
Lead generation involves attracting contacts to your solution. The marketing team does this. Prospecting involves qualifying and nurturing leads, so they turn into genuine sales opportunities. The sales team does this.
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