What is a sales lead? Defining every stage of the process

We won't bury the lede: Sales leads are people or entities interested in your product who might purchase from you in the future. Generally, a sales lead has interacted with your company in some way and displayed a level of interest. This usually means you have at least a little bit of information about each lead so you can follow up.

Most sales leads fall into one of two categories:

Business-to-Business leads: B2B leads are generated by companies that sell their products or services to other companies. A few examples could be a company that sells software to a law firm or provides machine parts to a manufacturing plant. The sales process is usually more lengthy and complicated as purchase prices are often much higher. With these deals, there's typically a chain of command to navigate since the sales lead you initially speak with may or may not be the final decision-maker.

Business-to-Consumer leads: B2C leads are people who are buying a product or service for themselves. This could be someone buying a book on Amazon or shopping for groceries at Walmart. B2C sales are often easier to make as the purchasing power typically lies with the individual doing the shopping, and price points are generally much lower than a B2B sale.

Businesses sometimes use different terms for sales leads, such as marketing qualified lead, sales qualified lead, prospect, or potential customer. Let's unpack those.

What is a qualified lead?

Regular leads become qualified leads when they express a certain level of interest and are considered viable customers of your product or service. Most companies have a threshold their leads must pass to be considered a sales qualified lead.

Think about it like this: You could go on Facebook, click on random people, and send them a message about your product or service. Clearly, this would be a massive waste of time and shows that just because you can contact someone doesn't mean they're a real lead for your business.

On the other hand, imagine a website visitor who clicks on a link to fill out a loan application. They take 5-10 minutes to answer all of the questions and then click "Submit." That's a much more interested lead!

For some companies, even that might not be enough. Perhaps someone fills out a loan application, but right off the bat, the company can see that they don't have enough income to qualify for a loan. Despite the time they took and the interest they showed, it doesn't make a lot of sense to have a sales rep reach out.

Companies often measure marketing qualified leads (MQLs) to help measure their marketing department's effectiveness and determine who the sales team should prioritize following up with.

Different types of sales leads

Not all leads are created equal, and many companies use slightly different terminology. Here are a few different types of sales leads:

Prospect

Most companies who use the term "prospect" define it essentially the same way people define "qualified lead." Prospects go beyond simply visiting a website or sending in their email address for more information. They've usually taken a few smaller steps or one large step (such as having a conversation with a sales rep) to become a viable customer.

Marketing qualified leads

This gets a bit hazy, as many companies blur the line between marketing qualified leads (MQLs) and sales qualified leads (SQLs). An MQL is a metric generally set by the marketing department to measure the quality of leads they send to the sales team. An SQL is a sales team metric that's often established after an initial conversation with a lead to determine their actual level of interest. SQLs are often used in a two-part sales process, meaning they have a conversation with a "setter" first and then a second conversation with a "closer."

Hot, warm, and cold leads

Your very best leads are often called "hot leads." They're qualified sales leads who are likely to buy in the near future. A warm lead recently became a lead and is actively engaged in the information-gathering process. Cold leads used to be warm leads, but now, a certain amount of time has passed, and your product or service is no longer top-of-mind.

Lead generation overview

Lead generation looks different at every company, but the first step for a sales leader is almost always to figure out where and how to generate one qualified sales lead after another.

Drawing leads in happens organically for some business models. For example, if you open a grocery store in a densely populated area, the people who live in that neighborhood will start shopping there. However, even grocery stores still send ads and coupons in the mail, trying to get you in the door more often and perhaps joining their loyalty program.

On the other hand, there are companies that spend millions of dollars on conversion and leverage dozens of strategies to generate leads. Think about Apple or Comcast.

Companies with more robust lead generation tactics engage in two types of sales lead generation: inbound and outbound. Inbound sales teams take sales calls and follow up via email with people who initially reached out to their business — to people who came inbound. Maybe they saw a billboard, read a social media post, or downloaded a white paper, and then contacted your business.

Outbound lead generation means sales reps actively generate leads by introducing your product or service to people who haven't expressed direct interest yet. Some examples are cold calling, emailing, visiting workplaces, sending physical mailers, and more.

Many companies strive for both inbound and outbound lead generation. For example, most online businesses have a website with plenty of information, but also spend money on ads to find and capture leads where they're already browsing online.

Let's consider a few different business models and how they might find their leads.

Examples of businesses with varying lead generation tactics

A dental software company

If a business makes software for dental offices, each closed-won deal will likely mean a lot of revenue. Naturally, generating these top-dollar leads is more hands-on. This could look like a sales rep visiting dentists' offices, cold calling dental practices, or mailing information. Sales leaders at this SaaS organization would also likely want an excellent website, complete with an invitation to watch a demo or schedule a consultation.

A personal trainer

An individual who wants to coach 10-20 people will probably do much of their prospecting on social media. They could create a Facebook page and invite their friends to join, and much of their business would likely be generated via word-of-mouth marketing. If the business grows and the trainer wants to bring on more coaches, running paid ads would likely become an option.

An online informational product

An individual or company that leverages their expertise to create informational products — like courses — will likely focus on generating a huge quantity of leads, maybe by building a robust email list. Over time, they'll learn what percentage of leads will eventually purchase, so they'll focus on bringing in enough leads to meet their revenue goals.

An optometrist

A lot of an optometrist's business comes from proximity to those in need (similar to our grocery store example from earlier). Often, their leads are people who are already customers. For example, someone comes in for an eye appointment to check their vision. The customer will be asked to give a medical history and contact information — which allows the office to follow up with reminders to return for visits, refill a contact lens prescription, or check out a sale on glasses frames.

Sales cycle overview

After a lead is generated, then the sales cycle begins. Converting sales leads to customers can take anywhere from seconds to a few months; it varies wildly depending on the business. For example, seeing an email from Amazon about a new book from your favorite author may result in an instant sale. On the other hand, a business looking to lease out a building may work with the same sales prospect for months or years.

To calculate the average length of your business's sales cycle, add the length of time it's taken for all of your existing customers to close, and then divide that by the total number of existing customers. Understanding this number can help you know when to throw most of your resources at the sales lead.

Let's say 90% of sales happen within three days. It probably makes sense to have your sales team move on to warmer leads after that period of time and let marketing try to re-engage colder leads with automated tools.

Technology in the sales process

Almost all businesses rely on technology to automate tasks during their deal cycles. For example, sales teams often use dialers that automatically pull up their list of leads and dial the next one. This way, a sales rep doesn't have to decide who to call next and type in the numbers themselves. Companies with robust sales organizations use dozens of services to help track, organize, and optimize the sales process.

The marketing team is often involved as well, sending emails and SMS messages that range from appointment reminders to testimonial videos featuring happy clients at a strategic point in your lead's journey.

Use Streak to organize and market to sales leads

A vital part of a sustainable sales lead generation process is having a way to manage your sales pipeline. If you generate a lead and that information gets lost in the shuffle of your inbox, to-do list, or notebook, you may as well not have generated that lead in the first place.

That's why a customer relationship management (CRM) tool like Streak is so valuable. It integrates directly with Gmail, so you don't have to introduce a whole new platform to your sales force. It automatically creates a separate page for each of your leads, displaying their contact information, as well as any past emails, calls, or interactions you've had.

Plus, you can create and send a personalized mail merge to segments of your leads in just a few moments, all from your Gmail inbox.

Ready to track, organize, and market to your most qualified leads more effectively than ever before? Try it for free today.