Even the most seasoned salesperson sometimes has trouble giving a clear definition of lead vs. prospect. The sales world is filled with jargon, but it can be really useful to learn it, even for small business owners who also double as a sales team.
This article will explain the core differences between leads and prospects, but also how knowing what each term is can help boost your sales strategy, from optimizing your sales funnel to lead scoring.
The Easy Definitions of Lead and Prospect
When a salesperson is prospecting, they are trying to turn leads into prospects. This lets you understand a key difference between the two terms:
Leads come before anything else. They are your starting point. They can be names on a list, referrals, or visitors on your website. They can be people waiting in line at a grocery store. In short, it can be any living person that you know you can reach out to.
Prospects are leads that fit one of your criteria. It can be anything, from a demographic to a shown interest in your product or service. It can be a click on a specific website page.
Why It’s Important to Differentiate Between the Two
One of the biggest mistakes make – and this is especially true of small businesses – is that they don’t allocate enough time to the right leads.
This is where lead nurturing is an important step, and one often sees wasted time and opportunity by focusing on the wrong people.
Knowing who your leads are and who are your prospects will help you be smarter with your sales pipeline.
What About Prospect vs. Opportunity?
Your lead has now been qualified into a prospect. The next step? Confirm they are a true sales opportunity. It’s simply the next step in the sales funnel, and while it may seem obvious to every salesperson, the definition of a prospect vs. opportunity can be a sticky point.
The reason? There is simply no universal definition that will fit the ideal opportunity for every company. And yet it’s primordial that every salesperson in your team uses the same criteria to define them, as it will help avoid confusion.
This is once again why it’s so important to have a clearly defined sales pipeline before you begin any campaign. For a guide on how to do it, please see this other Act! 365 resource.
Prospect or Suspect?
We’ve now covered the key differences between a lead, prospect, and opportunity. A handy definition to add to this list is that of a suspect.
It’s not the kind of person you want to encounter during your sales process: a suspect is also known as a timewaster, i.e., someone who sticks around without any intention of purchasing anything.
So why are there suspects in your sales funnel?
They might show interest only because they are bored or trying to prove something to someone at work.
They want your downloadable resources but nothing else
They are competitors trying to reverse engineer your sales process
This is where using lead scoring can help sort the wheat from the chaff as early as possible. Using qualifying questions in your lead capture form can also help.
The biggest trouble suspects will give you is wasting time and effort on them. The sooner you can tag them as such, the more you can allocate your resources where they really matter: on genuine prospects.
Examples of Good Qualifying Questions to Prospect Leads
We’ve already covered lead scoring models in detail, and you’ll find most of the questions for qualifying leads are similar. Of course, they need to be adapted to your own business, but common examples you’ll find include:
Lead age: excluding leads in non-appropriate age groups is a fast and easy way to start segmenting your prospects.
Gender: This is something B2C companies can use for certain products. For B2B, it’s usually unimportant.
Location: Consider adding a qualifier based on specific markets for products/services in set languages.
Income: another important criterion for B2C companies, to help you see if the lead can and will afford your product or service.
The Income criterion also translates in a B2B context, but it has more to do with purchasing power and purchasing authority. These are examples of questions you can ask to qualify potential leads.
Job title: will the user have the final say on the purchase? Or will they need to speak to someone else at the company?
Company size: Is it too small? Or too big to need your offer?
Industry: is it relevant to your product or service?
How to Organize Leads vs. Prospects
As we’ve already mentioned, sorting your leads into suspects, prospects, and people not worth pursuing will save you a lot of time and effort in the long run.
Don’t forget lead nurturing features: can you create an email campaign? Easily send your contacts towards the right static content?
Then there are the features pertaining to the quality of the software itself: it should be easy to use for the whole team, have a simple interface, and offer an attractive pricing structure for your ROI.
Extra features like easy contact update, filtering and scoring, and simple team management will also make it a valued ally in your mission to qualify leads into prospects.
Lead vs. Prospect - Key Takeaway
To summarize, it’s very easy to understand the difference between a lead and a prospect. Leads are at the top of your funnel. When you qualify them (through scoring or questions), they can become prospects.
This qualifying process can be as simple or as complex as you want. Either way, it’s important to put it in place. And it doesn’t have to be difficult at all if your lead management software can do most of the work for you.