We even put together a guide to help you build your sales pipeline in a way that aligns with your sales process: The Step-by-Step Sales Process: How to Build and Manage Your Pipeline.
Once you start moving leads through your pipeline, you might wonder about the difference between leads vs. opportunities vs. prospects.
How do your contacts evolve as they move through the stages of your sales process? What qualifying actions must be taken in order to turn leads into sales opportunities into customers?
This article will explain how to define, qualify, and manage leads and sales opportunities as they move through your pipeline.
Leads vs. Opportunities: What’s the Difference?
In the world of sales, “leads” and “opportunities” can refer to the same group of contacts at different steps of your sales cycle. Understanding the difference between these two terms can help you take full control of your pipeline and sales process.
So, let’s get the differences straight.
A sales lead is a contact or account that you have yet to qualify. They might be a name on a list of contacts collected via research, third-party data, referrals, or inbound marketing – or maybe they responded to one of your cold emails.
Whatever the case, a lead may or may not be a potential buyer. You don’t know if they have the interest, budget, or authority to make a buying decision – and you can’t say for sure that they’re a good fit for your solution until you qualify them further.
A sales opportunity, on the other hand, is a qualified contact or account. They’ve spoken to your sales team, expressed interest in continuing the conversation, and maybe even agreed to hear a sales pitch or look over a proposal.
Think of opportunities as leads who’ve passed all your qualification criteria and graduated to legitimate sales opportunities.
Leads vs. Opportunities in the Context of Your Sales Pipeline
Let’s look at how leads and sales opportunities move through each step of your typical five-stage sales pipeline.
In the context of your sales pipeline, leads are generally found in the first and second stages: initial contact and qualification.
Stage 1: Initial Contact
When a new contact enters your sales pipeline, they almost always begin as a lead. Then, as they perform certain actions or check certain boxes, you can qualify them as a potential customer – and they can graduate to sales opportunity. Leads that don’t meet qualification criteria either remain leads or exit your pipeline altogether.
Stage 2: Qualification
Every company should develop a lead scoring model that makes sense for its specific products and goals. However, you can use a simple system like the BANT framework until you refine your own lead scoring model.
Based on BANT, you should ask qualifying questions that help you determine whether a lead has the right budget, authority, need, and timeline to make a purchase from you. Leads that express interest and meet your qualification criteria turn into sales opportunities.
Stage 3: Meeting
A meeting or sales demo gives you the chance to further qualify a lead to determine whether or not they’re a legitimate sales opportunity.
Sales qualified leads, or SQLs, are ready to have a more in-depth conversation with someone on your sales team – at which point they can be considered sales opportunities.
Stage 4: Proposal
Once you’ve completed your sales demo, it’s time to present an offer, negotiate, and send over a proposal.
Keep in mind that prior to closing, opportunities are likely to come to you with their questions, concerns, and even doubts. Instead of getting frustrated, remember that the finish line is in sight and every sales objection you address brings you one step closer to landing a new customer.
Stage 5: Close
This is the stage where sales opportunities either turn into customers or exit your pipeline as a closed-lost deal. If you successfully seal the deal, you can move the opportunity into the closed-won stage of your pipeline and celebrate a job well done.
Either way, you should move closed sales opportunities from this stage to the closed-won or closed-lost step to keep your pipeline neat and organized.
How to Qualify Leads and Move Sales Opportunities Through Your Pipeline
Do you know how to qualify leads and identify real opportunities?
Your qualification process should involve asking the right questions to find out the information you need to recognize leads vs. opportunities. This includes comparing prospect characteristics to your ideal customer profile and noting a prospect’s willingness to take certain actions.
Whatever the goal, lead qualification is all about finding evidence of intent to buy or potential intent to buy. This helps you figure out which prospects are worth your sales teams’ energy and are ready to enter your sales process.
If you need some inspiration for qualifying questions, here are a few questions to consider asking when trying to gage interest levels from leads and sales opportunities.
Ask your leads:
- “Are you the right person to speak to about this?”
- “Can you see yourself benefiting from this type of solution?”
- “Can we set up a meeting to discuss this further?”
- “I’d love to show you a live demo. Are you interested?”
Ask your opportunities:
- “Do you have a timeframe in mind for implementation?”
- “Are you still waiting on budget approval?”
- “What can I do to help move this process forward?”
- “Can I send over the proposal for you to review?”
A Note About the Confusion Surrounding Leads vs. Prospects
Another term that often gets thrown around with lead and opportunity, “prospect” can actually mean different things in different contexts. Understandably, this can create some confusion.
Some people think of a prospect as a target that’s even less qualified than a lead, while others think a prospect falls somewhere in between a lead and a fully qualified sales opportunity. To make things more complicated, plenty of sales reps use prospect and lead interchangeably.
So, what’s the definition of a prospect?
A prospect is any individual or company that matches one of your buyer personas. They fit into one of your customer profiles in terms of industry, company size, job title, revenue, etc.
This is the case whether you’ve already contacted them or not. Prospects don’t become prospects once you add them to your list – they’ve technically been prospects all along.
Think about it this way: a lead is not necessarily a prospect if they don’t fit your customer profile. As you research and learn about a lead, they may or may not prove to be a viable prospect. You must then qualify these leads or prospects to see if they are worthwhile opportunities.
Putting it All Together: How to Manage Leads vs. Opportunities in Your Sales Pipeline
Now that you have a better understanding of leads vs. opportunities, you’re more prepared than ever to take control of your sales pipeline. So, what’s next? It’s time to put your knowledge to work by optimizing your sales strategy and staying on top of things with Propeller’s lead management software.
So, yes, “prospect” and “lead” are certainly interchangeable in some cases because it’s possible to be both at once.