The difference between a lead, prospect, and sales opportunity
Sales are essential to business, but the sales cycle isn’t always straightforward. If you have a longer, more complex buyer’s journey, your sales team is likely juggling a handful of leads, prospects, and opportunities.
While some people use these terms interchangeably, they actually describe different types of prospective customers. In fact, mixing up these terms can cause confusion and lower performance, so it’s best to agree on terms before you start a new campaign.
Leads, prospects, and opportunities expect different things from your business, so it’s important to understand the differences between them and how your sales team should adjust to meet their expectations. Plus, agreeing on definitions beforehand will make it easier for sales and marketing teams to collaborate on the same campaigns.
By the end of this article, you’ll understand the difference between sales leads, prospects, and opportunities. We’ll also show you how to optimize your sales funnel and populate your pipeline with more qualified opportunities.
This post will explain:
- What is a lead?
- What is a prospect?
- What is a sales opportunity?
- Lead vs. prospect vs. opportunity
- How to turn a lead into a prospect
- Characteristics of a sales opportunity
- How to identify leads and prospects with the right software
What is a lead?
A lead is any person who could potentially become a customer. This is a very broad term that applies to the beginning stages of the sales and marketing process.
There are different types of leads, which can vary from company to company. For example, you might define the following types of connections as leads:
- People who subscribe to your email list
- New LinkedIn connections
- Followers who engage with you on social media
- People who visited your website
Leads take action to indicate interest in your brand, but they don’t always indicate interest in buying right away. Most leads are unqualified, which means they haven’t expressed interest in buying anything right now — and you have no proof that they’re a fit for your business. Even so, they’re familiar with your business and its solutions.
What is a prospect?
A prospect is a qualified lead. To qualify a lead, you engage with them in some way and realize that they’re a match with your ideal customer profile. At this stage, the prospect is interested in your brand, but they might not express interest in buying anything just yet.
Every business qualifies leads differently. For example, an instance of someone downloading your report might be a strong enough case for transitioning them from a lead to a prospect, but that may not be the case for another business.
There are different types of prospects, but here are some common examples:
- 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 spoke to at a trade show
- Someone who asked about your product on social media
What is a sales opportunity?
A sales opportunity is a prospect that’s interested in making a purchase.
Classifying someone as a prospect doesn’t account for where they’re at right now. Someone could technically be a prospect because they visited your booth at a trade show, but that doesn’t mean they have the budget to buy your product or service. It’s important to remember that even if someone fits your ideal customer profile, it doesn’t mean they’re a sales opportunity.
Sales opportunities demonstrate a clear interest in making a purchase. Again, you’re free to define what an opportunity is for your business, but key criteria usually include:
- Requesting a demo
- Requesting pricing
- Starting a free trial
- Sharing a decision timeline
Not all sales opportunities pan out, but all customers start as opportunities. This is a critical stage where your sales team swoops in to (hopefully) close the deal.
Lead vs. prospect vs. opportunity
Now that you know what leads, prospects, and opportunities are, it’s important to note the differences between them.
A lead is anyone who’s expressed awareness and interest in your brand. They’ve generally shown interest in your product or service, but there is no further data on whether they would actually fit your ideal customer profile — or if they would even benefit from your product or service. They could belong to an irrelevant industry you don’t serve or might not have a budget. While it’s important to catch leads and funnel them through the sales process, they aren’t quite ready to engage one-on-one with your sales team.
Prospects, on the other hand, are qualified leads that match your ideal customer profile. Instead of one-sided communication from a lead, prospects engage and communicate with you. That could be as simple as returning a phone call or checking out your website for more information.
But just because a prospect engages with you doesn’t mean they are ready to spend their money. They become a sales opportunity when they explicitly express interest in trying your product or making a purchase. At this final stage, your sales team can push for demos, quotes, and meetings to convert opportunities into paying customers.
How to turn a lead into a prospect
One of the hardest parts of the sales process is converting leads to prospects. Lead generation is helpful, but unless you turn leads into prospects, you’ll have a hard time gaining more customers or clients.
You’ll need to do lead qualification to populate your sales pipeline with more prospects. Qualification varies by business, but it generally involves three steps:
- Organization-level qualification. The first step is to ensure that the lead is in the correct industry. For example, if you serve the restaurant industry, a client in the beauty industry likely wouldn’t be a fit. At this stage, you need to ensure that the lead has a fundamental need for your solution.
- Opportunity-level qualification. Is there an opportunity for the lead to use your product or service? Do they even want it? At this stage, you need to demonstrate the benefits of your solution to the lead to gauge whether there’s an opportunity to work together.
- Stakeholder-level qualification. Are you speaking to the right person? Not all leads have the authority to buy your products or services, so you’ll need to connect with the right decision-makers to convert leads into prospects. If you target B2B audiences, there’s a good chance you’ll need to convert multiple leads from the same company to win an account.
Once you convert a lead to a prospect, you’ll need to position your business as an authority and a solution provider for their biggest pain points. Not all prospects will bite, but the ones that do will convert to sales opportunities.
Characteristics of a sales opportunity
Sales opportunities are the final stage of the sales process. This is where your sales team pulls out all the stops to persuade opportunities to convert. All sales opportunities share the following three characteristics.
1. Pain point
All products and services exist to solve a pain point or a need. The good news is that by classifying someone as a prospect, you’ve already figured out what they need. At this stage, you need to alleviate that pain point by matching it with your offerings.
The tricky part is that qualified opportunities might not explicitly share their pain points. It’s up to the sales rep to build a relationship so they eventually get this information from the opportunity. It can be as simple as asking, “What’s your biggest problem with the process you have right now?” or “Why would you like to learn more about our solution?”
Next, you need to understand if the potential customer is interested in solving the pain point. After all, even if someone has a problem, it doesn’t necessarily mean they’re ready (or able) to do anything about it.
Ask the potential customer how long they’ve dealt with the problem. If it’s been a few years, they’re likely used to dealing with the issue and aren’t in a hurry to fix it.
But if they share that they’re struggling to overcome the problem and need help, that’s a sign of interest. You can also gauge their level of interest by simply asking, “Do you want a solution to your problem?” or “When did you want to fix this issue?”
3. Are a good fit
After evaluating pain points and interest, the next step is to assess whether the sales opportunity the potential client presents is a good fit for your company’s solution. They might be interested in hiring you, but do you want to work with them? Can you get results for this potential customer?
Deciding whether an opportunity is a fit or not depends on your business. For example, if your solution is designed for large enterprise organizations and a startup company approaches you, your solution might not be a fit for them.
There are often fundamental mismatches between businesses and opportunities, and it’s a good idea to identify mismatched needs before you take someone on as a client. That’s the best way to prevent disappointment and ensure you have loyal, long-term clients in your business.
Identify leads and prospects with the right software
Knowing the difference between leads, prospects, and sales opportunities can help bridge gaps and improve communication between your sales and marketing departments.
When you’re ready to get started, evaluate the software you have for managing and tracking sales leads, prospects, and opportunities. Does it give marketing and sales a unified view of the sales process? Does it make it easy to pass off leads as they move through the funnel?
If it’s time to make a change, take a look at Adobe Marketo Engage. Marketo Engage gives sales and marketing teams the tools they need to manage the customer lifecycle, from acquisition to advocacy.
Boost engagement — and growth — with marketing automation.
Watch the Adobe Marketo Engage overview or take an interactive tour now.