Sales Lead vs. Prospect: Definitions, Functions and Tips

It’s all in the communication. Regardless of how much research you may have done on a lead or a lead’s company, a lead is defined by one-way communication. Essentially, you’ve already reached out to your lead, but they’ve yet to reply. Don’t fret—the first part of your sales funnel is always (and should be) the biggest, and most leads won’t become prospects.

Qualifying leads as prospects and identifying which prospects are worth reaching out to is the second step in the sales funnel. The greatest dropoff in the sales funnel is generally this jump from leads to prospects, as qualification considers many factors, but most importantly the probability that a lead will eventually become a customer. A prospect, by engaging with your company, has indicated a level of interest; therefore, they are considered “qualified” as likely to become a new customer.

A lead is an unqualified contact, while a prospect is a qualified contact who has been moved into the sales process. To turn a lead into a prospect, walk them through the sales qualification process to assess if your company’s products or services are the right solution to their problem.

Prospects Vs. Leads: What’s the Clear Difference? | OneIMS

What is a prospect?

A prospect, also referred to as a sales-ready lead, is a potential client who has moved further down the sales funnel, which means that a sale might actually take place. Whereas a lead has provided basic contact information and may form part of the companys target audience, a prospect is a person who fits all the criteria that qualifies them as a potential client. The three most important criteria for a prospect are:

For example, if your company sells computers, a prospect would be a small-business owner who has just started their own company and has the means and the authority to buy computers from you. If the person who expressed interest in your product was, for instance, an employee who does not have the authority to make purchasing decisions, this individual would not count as a prospect.

To find out whether a lead could qualify as a prospect, a company needs to initiate further communication, whether through a phone call, an online form, a meeting or an email. By communicating with leads, a company strives to form a relationship that could potentially generate a sale.

What is a lead?

A lead is a person who a company has not qualified as an actual sales prospect yet. A company can find new leads in multiple ways, such as contacting names in a phonebook, conducting an internet search or reaching out to referrals.

A lead can also be a person who has responded to a marketing campaign. Leads are at the top of the sales funnel, meaning that a company is not yet sure whether they can become clients. Since a company only has the basic contact information for leads, the sales team needs to perform more research to determine if they could turn into clients.

During a marketing campaign, for instance, a company will market its products or services to a target audience, which is a group of people who may be interested in what the company has to offer. The company may try to reach this target audience through email or social media. A person who has responded to such a marketing campaign by completing a web form and providing their basic information, such as name, number and email address, then becomes a lead.

At this stage, a lead fits only one of the criteria that could qualify them as a prospect, meaning they form part of the companys target audience. However, a company needs to qualify a lead further before it can view the person as a prospect.

Lead vs. prospect

Here are the few main differences between the terms lead and prospect:

Different stages in the sales process

One of the main differences between leads and prospects is that a lead is at the top of the sales funnel and a prospect has moved further down the sales funnel. This means that there is a far better chance of making a sale from a prospect than from a lead.

Different levels of engagement

Another difference between a lead and a prospect is the level of engagement. Although a lead may have responded to a companys marketing campaign, no two-way communication has taken place. The company, in its effort to qualify leads and turn them into prospects, will initiate further communication by responding to the contact information a lead has supplied. If a lead responds to the company, two-way communication starts taking place, which a company can use to ascertain whether a lead could transition into a prospect.

Different methods of communication

A company uses different methods of communication for leads and prospects. Communication with leads typically involves contacting large, undefined groups that broadly fit the description of a target audience to gather basic contact information. Communication with prospects happens one-on-one, with a sales representative directly contacting a prospect and intending to keep the dialogue going to eventually make a sale. Also, whereas communication with leads is about creating a general awareness of what a company has to offer, communication with prospects is about nurturing a relationship that can eventually lead to a sale.

How to use leads

The basic aim when generating leads is to qualify them as prospects. Here are the two main steps when generating and working with leads:

1. Generate new leads

The first step you need to take is to generate leads. A company typically gathers new leads through marketing campaigns where they try to reach a target audience through social media or mass mailing. Those people who respond to such a marketing campaign and provide their basic contact details by completing a web form, or contacting the company in any other way, become leads. A marketing department could also generate leads by purchasing databases, going through phonebooks, doing an internet search or just simply talking to people.

2. Qualify leads

Even if a lead falls into a companys target audience, the company still needs to qualify them further before it can consider them prospects. To ascertain whether a lead could become a prospect, you need to qualify whether they are a good fit for your company. For instance, your target audience may be companies of a certain size or from specific industries. If the lead does not fall into these target categories, it may not be worth it to pursue them. However, a lead that fits the companys target audience should also have the means and the authority to purchase the companys goods or services.

Companies typically contact leads by using the details they supply during marketing campaigns to try to gather more information from them. A salesperson can, for instance, initiate further contact by inviting a lead for a cup of coffee, sending them some more information via email or speaking to them over the phone.

How to use prospects

Once a lead has moved down the sales funnel and becomes a prospect, the focus shifts to closing a sale. Heres how to use prospects:

1. Get to know your prospect

When working with a sales prospect, you need to find out as much information as you can about them. Details, like specific challenges and needs, how much they know about your products or services and their budget, will assist you in tailoring your approach to align with the needs of the client. During the process of obtaining more information, you should strive to build a relationship with your prospective client, as people are more likely to buy from individuals they trust.

2. Generate interest in your product or your service

Once you have gathered detailed information about your prospective clients, you can show how your product or service can improve their business or lives. At this point in the sales process, you are not marketing a product to a mass audience but addressing the specific needs of a prospective client. If a prospect recognizes the value your product or service holds for them, they will become more interested in what you have to offer.


Who comes first lead or prospect?

The main difference between a lead and a prospect is that your lead has moved beyond one-way communication and has now engaged with you. Such two-way communication suggests that the lead has real potential to buy from your business. This is when the lead becomes a sales prospect.

How does a lead qualify as a prospect?

To qualify a lead, ask questions to discern whether the customer is a good fit. Establish whether the customer meets the demographics for your product and whether your lead is a decision-maker. Qualifying can take place during an initial cold call, during a sales presentation, or both.

Is a lead a customer?

It’s an entity with unverified information and unverified intent that has purposefully contacted your dealership. In other words, leads are just words without context. A customer is an actual person or business with verified and sufficient information that has purposely been in contact with your dealership.

What is the difference between prospect and customer?

I know that a Prospect is someone that we didn’t make any business with him yet, but that potentially we will. And I also know that a customer is someone to whom we already sold a product and a service.

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