The sales department is the lifeline of every small and big organization. It drives revenues and helps in the growth in a constantly changing environment. The sales system has its own set of jargons that sound very simple like lead and prospect. You will find a lot of business doing the mistake of using them interchangeably. But they are more than mere synonyms.
Today, we will talk about the most prominent words in the sales funnel which are often confused- leads and prospect! Yes, you might be thinking you already know how to play with these words because your daily goal is to put both of them in the sales funnel. But are you sure you know the similarity and differences between the two very clearly? ‘Lead ‘ and ‘prospect ‘ are two terms that everyone comes across in a business scenario. Surprisingly, many assume various definitions and have different understandings of the two words although the terms are used regularly. Continue reading to have your sales team have a solid grasp on leads and prospects which are their main assets.
What is the need for understanding leads and prospects so closely?
To make things more complicated, marketing automation and CRM systems contribute their own – sometimes differing – definitions for leads and prospects. In fact, many sources can’t even agree on which of the two is more qualified; some say leads are qualified prospects, others say prospects are developed from leads, and still others say prospects are equivalent to sales leads. Before answering such questions, let us know why we need to actually know!
Understanding of sales funnel.
We could definitely talk the whole day and even a whole month to flat lay the need for boosting sales. So, we will skip to the more important part of how we move along the sales process. As a result, you must know all the minute differences between prospect and leads. Sales funnel sets the position of leads and prospects to take the right action. In a nutshell, you will only close the sales once you are thorough with the terms. The following figure explicitly shows the position of leads as well as a prospect.
Effective demand generation and marketing campaigns.
In addition to this, demand generation is a very crucial foundation to attain a thriving sales number. This means you need to know your potential market and your target market for creating awareness about your product and service. You can design your demand generation tactics only when you have a clear understanding of who are your prospects and who are your leads. After this, you are responsible for delivering the most optimal marketing campaign for your sales department. Marketing campaigns are the major predictors of who will fall into which category. Many of the business today use marketing automation in marketing campaigns to attract a large number of leads for converting them into prospects.
Still, the following questions would definitely come in every business person’s minds –
What constitutes a lead?
What constitutes a prospect?
Where do leads and prospects fit in the sales process?
Companies need clear answers to these questions for an equal understanding of the topic for the betterment of the company. So, let us look at them one by one.
What is a Lead?
A Lead is the name of a company or a person which might be on one of the company’s purchased lists or they might be on a list of people who attended your webinar. You do not have the permission from Leads to add them to your mailing list. They are in the initial phase of the sales process. So, you do not know leads very closely. They are slightly interested in your product or service but you do not know how and why to tap them. They do not show a specific time of when the sale will be finalized with leads. Therefore, leads are just your in-between customers which you are not yours and you cannot also leave them.
Types of Leads
- Offline Leads: Offline Leads are generated by the sales executive physically, not from any source of the internet.
- Online Leads: Online Leads are generated by the website or any other internet-based source through the ‘contact us’ forms, social media, sign-ups, etc.
- Sales Qualified Leads: When you tap a lead, you get access to the basic information of the lead like email address and name. Information diggers can help you know their age, gender, sex which are enough to categorize them. Such leads are called sales qualified leads or (SQL) as they are profiled by the sales team.
- Unqualified Leads: Such leads refer to the random searches where the lead is not clear of what solution he/she is looking for. Also, they have no idea about the offerings of the company. You cannot easily nurture their information so it is rarely possible that they end up as customers in the sales cycle.
- Market Qualified Leads: These comprise of those leads who have the highest potential of being converted into customers. Marketing Qualified Leads or (MQL) is highly interested to know your brand and your products.
What makes up Leads?
- Business Cards- gives an abstract idea to your potential customers about your offerings.
- Purchased Contact Lists- You can obtain a list of customers to tap from a commercial third-party.
- Some Referrals like your ex-colleagues, friends, clients.
- Business Data you extract from sources like the Yellow Pages or Google
- Respondents to cold calling and emails have great potential if you can pitch in the right manner.
- Inbound Marketing strategy helps you attract and engage leads. When potential customers land on your website, the sales team can initiate engagement tools like chatbox and emails.
What is a Prospect?
A Prospect is a potential customer who has indicated interest in your goods or services, but that goods or services being offered is not always necessary.
Basically, a Prospect is a person or company that has the kind of problems or challenges around which you can create value. Also, you have to disqualify them if you cannot create value for them, or if they will never perceive the value you create.
In a nutshell, a Pros
- fit your target market.
- Should have the means of money to buy.
- They should have the authorization to make the buying decisions.
What makes up Prospects?
- Web visitors opting into your website in order to receive information such as an Ebook
- A request to join your newsletter list
- Inbound phone calls requesting information or to set up an initial appointment and
- Emails asking a question about your product or service
What can be your reaction towards Pros
Research from Mark Wayshack analyzed that 50% of the prospects are not perfectly fit to purchase your offerings. We have taken the trouble to lay down the best approaches for extracting the best out of your prospects. Around 57% of the business marketers consider that prioritizing the need for prospects boosts the sales generation process.
- Talk to prospects about their needs
The prospects are looking for a solution to their problem. Your sales team should converse with them so as to assure that their product will fulfil their need.
- Explain to them the pricing model
When the prospect is very on closing the deal, it will b foolish of you to beat around the bush. Talk straight to them and convince them about their optimum ROI. You should not forget to offer them discounts and subscriptions to intensify their purchasing decision.
- Stay calm
Be patient in tapping the prospects again and again. Sometimes, they make take longer to get converted. Till then, you are not expected to give up.
Do not confuse Prospect with Prospecting!
If you intend to lead a sales team in the future, then you should not confuse the word Prospecting with Prospects. Sales Prospecting is the whole process of finding leads when the sales process is initiated. Sales Prospecting, remembers three criteria while aligning the marketing campaign for attracting more and more customers.
- Prospecting should be done while focusing on the customers who belong to your target market.
- Their intention should be clear about what they want to purchase from you.
- They should have a clear authority as well as responsibility to close the sales deal.
Differences between Lead and Prospect:-
Leads haven’t yet risen to the level of being a Prospect because you can’t tell from their activity whether they are a Prospect. To find that out, you have to pick up the phone and call them up.
Prospects are created after a sales-ready lead is contacted by a rep. The Lead has to engage in dialog with the rep in order to be elevated to the status of Prospect. This cou
ld take the form of a chain of email messages, a phone call, or a meeting.
It should be noted that, if you call a Lead and they don’t have any kind of problems or challenges then they are not qualified to be a Prospect.
Key points to remember the difference between lead and prospect:
- Leads are the promising sales contact whereas Prospects are more closely linked to an outcome.
- Leads are information-based and they’re indefinite whereas Prospects are definite.
- Prospects are characterized by two-way interaction whereas Leads are characterized by one-way communication.
- A Lead is a Contact with a particular value for your company, who has been added to your Contact database whereas a Prospect is usually expecting you to send them more information to help them make a buying decision or they may just want you to court them a little more in order to build a stronger relationship.
- Leads have various levels to cross for being labeled as qualified. However, prospects are qualified as soon as they are seen with purchase intent.
- Leads generally receive information about your company through general sources like cold calling, business card, etc. Prospects are your potential customers so they receive your special communication efforts from one of your salespeople.
So, now you can answer that a “Lead” may or may not know you or your product or the service you are offering, and has not granted you the rights to contact them, However, a “Prospect” is a lead that has now provided you with some information for you to initiate contact with them either through a business card, email or phone number.
Hence to conclude, we could say that “A Lead can be a Prospect but a Prospect can not be a Lead.”