Every customer or client starts as a complete stranger. It’s only through a consistent sales process that you can take a stranger and move them down the funnel, from lead to prospect, and into that hallowed place called conversion land.
The terms “lead” and “prospect” are just two of many terms used to describe the status of a business relationship. A lead is someone who may fit your target market but is not ready to buy just yet. Through your own research, you’ve handpicked (literally, or through automation) a pool of people who may fit your target market. If the lead is responsive to your offer, there’s a good chance they’ve become a prospect.
However, if they don’t respond, or if they’re unwilling or unable to buy just yet, they’ll remain a lead. If they continuously ignore your efforts to get in touch, these leads are sometimes called “cold leads.”
Leads vs. Prospects: Why Does it Matter?
In your sales and marketing, leads and prospects are two different categories of people — who require two different types of communication. Communicating with leads is all about generating awareness of, and interest in, your offering. To streamline this process, many businesses utilize appointment setters, which play a crucial role in reaching out to leads and scheduling initial meetings, moving them closer to becoming prospects. If you’re unfamiliar with the role of an appointment setter, here, you can read more about what is an appointment setter. Communicating with prospects is about turning interest into a relationship, and moving that relationship into the sales funnel.
So, let’s talk about communication. Leads are those you’ve engaged in one-way communication. They are:
- The strangers on your email list
- New connections you’ve messaged on LinkedIn
- Commenters on blog posts
- People who have liked or shared your social posts
- Names on a list you purchased from a marketing firm
Leads have the potential to become customers, but they haven’t spoken to you or your sales team yet. Communication is very one-sided.
Prospects, on the other hand, have engaged and indicated interest. For example, a prospect is:
- A lead you’ve spoken with on the phone
- Someone who has responded to one of your emails
- A lead who has clicked a link in an email to visit your website
- A person who fits your target market, who you’ve chatted with at a trade show
- Someone who has asked about your product or service in a social media thread
In terms of the sales funnel, prospects are a little farther down than leads.
From Lead to Prospect: Crossing the Line
If you want to attract more clients or customers, you’ll want to transform your leads into prospects. In sales, this process is called qualification, or prospecting. In order for a lead to become a prospect, they need to fit three criteria: they must match your target market, have intent to buy what you’re offering, and have the authority to make a purchase. These are the factors you have to determine in your research and your sales conversations in order to move your leads down the funnel, so let’s look closely at each.
They match your target market.
If you’ve done your marketing right, you’ll know the traits and characteristics of your target market. Historically, target markets were all about demographics — think middle-aged suburban women, millennial gay men, or urban teenagers. But the modern way to think about your target market is that they have a need or desire to buy what you’re offering. Therefore, someone goes from “lead” to “prospect” when you can pinpoint that they have some reason to seek out a product or service like yours.
Example: You’re a sales and marketing consultant for self-published authors. A lead would be someone who was interested in self-publishing — maybe they’re part of a Facebook group for self-pubbed romance authors — but they haven’t released a book yet. A prospect would be someone who has self-published a book on Amazon and wants to sell more copies but needs help with sales and marketing.
They have the intent to buy.
According to research, the thing leads want to discuss most in their first call is pricing. It’s for good reason: your offering doesn’t fall within their budget, it’s tough to convert them into a sale. However, a price-related objection doesn’t mean “no, forever” — it just means “no, for now.” If you nurture these leads over time, there’s a chance you can still transition them into prospects. If you run into this problem repeatedly, however, this could signal a problem with your pricing or your choice of target market.
Example: You run a small digital agency, and you have a lead: a solopreneur launching a new product. After a conversation, you learn that they don’t have the capital to afford your package — so they’re probably better off finding a more affordable service.
The have the authority to buy.
A prospect has to be the decision-maker for purchasing your solution — otherwise, they’re just a lead. In your sales conversation, ask a lead about their role, pain points, and goals are. It should become clear through their answers whether they have the authority to make a buying decision or not.
Example: You’re a freelance marketing video producer for nonprofit organizations. You’re in touch with a marketing assistant at a large nonprofit organization who is very interested in your service, so you schedule a phone call. On the call, you learn that the assistant has done research on the effectiveness of video marketing and really wants to hire someone like you. However, she reports to the marketing manager — who is in charge of hiring contractors. To convert this lead into a prospect, you’ll have to get the contact info of the marketing manager and schedule a call with them.
Moving leads through your sales funnel and turning them into prospects takes a focused approach. When you understand the difference between a lead and a prospect, you’re one step closer to getting inside the heads of your customers — empowering you to customize your communications and ultimately close more sales.