May 28, 2019

Lead vs. Prospect vs. Opportunity: Definitions That Define The Sales-Marketing Relationship

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Tags: CRM Marketing

Prior to digital marketing, everything was simple: marketing and sales knew their jobs and those duties rarely overlapped. No one had good customer information, and it was so easy to blame the other team for a lack of sales.

Glengary Glenn Ross the leads are weak gif

Now we have more information than we can handle about customers, but the lack of communication and misunderstandings between marketing and sales persist. Why is it still so hard to change a lead into a customer?

Marketing goes after the best leads they can find, and sales rejects those leads. If marketing doesn’t know why sales rejects their leads, and sales doesn’t know the kind of leads marketing is looking for, everyone is unhappy, everyone blames everyone else, and no one sells anything.

Glengary Glenn Ross unhappy face

The only cure for this is good communication. Everyone has to come together over

  • The definition of a lead
  • The definition of a prospect
  • The definition of a sales opportunity
  • Which actions on your website and company properties show a lead is interested
  • How to transition leads and prospects from marketing to sales to customer support

This article defines leads, prospects, opportunities, and discusses how each of those fit into the marketing and sales funnel. I hope that by attaching a definition to each of these designations, you’ll be better equipped to communicate with your team and ultimately convert more customers.

What is a lead?

A lead is a person or company that you know exists and who potentially fits your ideal customer profile. You know these people exist because you have some identifying information about them like a name, phone number, location, IP address, or birth date.

Because you only have one or two pieces of information about a lead, they will need lots of follow-up and you will need to collect more data on them before you try to sell to them.

What you can do with leads

Nurture them. Get as much educational content in front of them as possible to try to pique their interest. Then, try to get contact information and learn more about them through how they interact with your website, email, social media, or marketing materials.

What is a prospect?

Prospects are leads that have gone through an extra step or three that confirms their readiness to become a customer.

Prospects have expressed an interest in your product offering. They may only be in the research stage, but they’ve indicated they’re somewhat receptive to the marketing materials you have presented to them so far. A prospect has volunteered some budget, authority, need, or timeline (BANT) information that confirms they may eventually become a customer.

What you can do with prospects

Continue to nurture them. Prospects may be receptive to a wide range of marketing materials throughout the funnel. You have a prospect’s contact information, so you track your prospect’s interactions with your brand properties within your CRM, and build a lead score based on those actions.

What is an opportunity?

Opportunities are prospects that self-identify as having BANT qualities. Whereas a prospect may indicate one of these properties, an opportunity defines several.

Focusing on opportunities provides the most ROI for salespeople.

What you can do with opportunities

Call them, email them, get in touch somehow with a relevant offer. Use your lead scoring and brand property interactions to help define the right offer for an opportunity’s needs. Many sales teams get tripped up at this stage because they respond to an opportunity with their favorite products, rather than providing them an offer that meets their stated needs.

Using your customer funnel to clarify customer status

Your funnel is a visualization of the stages of readiness that each of your potential customers goes through before they convert. Defining your funnel gives your team an outline of what the ideal sales process looks like.

When you draw your funnel, you start with just three stages: top of the funnel (TOFU), middle of the funnel (MOFU), and bottom of the funnel (BOFU). These funnel stages should roughly match with the lead, prospect, and opportunity designations you’ve already made. Leads live in the TOFU, prospects align with the MOFU, and opportunities dwell in the BOFU.

By aligning your lead status with your funnel, you also define which customer touch points match with each of the funnel stages.

Also read: Blank Page Staring You Down? Here Are 3 Content Generation Tips for Engaging your Ideal Customer Profile.

Other Important definitions: MQL, SQL, SAL

The more granular you can get when you label the lead as they move through your funnel, the better you can understand their readiness to move to the next stage of your sales cycle.

An MQL is a lead who likely isn’t ready to buy—yet, but they will respond to being nurtured.

Consider using these definitions to better define your leads.

Marketing qualified lead (MQL)

An MQL is a lead that has interacted with marketing materials and has shown interest in the product, and the marketing team has identified the lead is ready to pass over to sales to begin nurture activities. An MQL is a lead who likely isn’t ready to buy—yet, but they will respond to being nurtured.

Sales accepted lead (SAL)

A SAL is a lead that marketing successfully passes to sales that fits the criteria of becoming a prospect. In general, sales visually accepts these leads because they match predetermined criteria, but the team has not contacted these leads yet.

Sales qualified lead (SQL)

A SQL is a lead that sales has interacted with identified as ready to become a prospect. These leads have shown enough interest that sales knows that follow-ups have a high probability of resulting in a sale.

The funnel and lead scoring

Lead scoring is an advanced sales technique that every company should invest in. It can be as low-tech as completing a checklist of qualifying actions for each lead, or as high-tech as an AI-powered CRM that gathers data from across your web properties.

Most marketing automation and CRM tools have some form of lead scoring feature that your team can configure to suit your funnel. Take the time to understand the types of behaviors that signal a person is moving toward making a decision and use those behavior signals to inform your lead scoring.

That means doing real customer journey research:

  • Get on the phone and ask customers what their journeys looked like. Have them walk you through the steps they took to make their decision.
  • Work backward from your conversions and forward from your landing pages.
  • Put a click tracking tool on your pages like Hotjar so you can see where folks are clicking into your tools.
  • Study your web analytics to learn where people go when they land on your top pages. In Google Analytics, you can use the Navigation Summary report to identify how your traffic moves through your pages.

The power of the SLA

When does a person or company become a lead become a prospect? Nobody knows this but you and your colleagues. Document—and stick to—a service level agreement (SLA) between your sales and marketing teams.

Your SLA defines the interactions that marketing documents before they hand the lead or prospect off to sales. The SLA should also include the types of nurture interactions, phone calls, and sales touches the sales team makes to follow up on a lead.

An SLA holds both sides to a basic level of service, and should be revisited every year at least once. It’s a framework that guides the minimum actions each team commits to for each lead, but it should also include enough flexibility for the team to renegotiate if they find that the tactics aren’t working.

Answer these questions when making your SLA:

  • What customer characteristics do you find in successful deals?
  • Do you need a verbal confirmation of readiness from a lead, or do other indicators work, too?
  • Is an interested hand-raise enough to begin calling, or do you need a more complete picture of interest?
  • Do you need full BANT qualification to pass a lead to sales, or can you work without one or two qualifications?
  • How do you define prospects that should be nurtured, and which prospects do you disqualify?
  • Once you find a lead, what do you do with them?

Moving forward quickly

Take the information you put together as your SLA and turn it into a strategy. Use your notes about how leads become customers and turn those notes into processes that sales and marketing can both agree on.

Some companies find that translating their funnels into a marketing automation or CRM software helps them stay organized, while others manage their funnels in spreadsheets.

However you organize your processes, make sure that you track how many conversions you make at each of your funnel stages throughout the month. This will help you understand where your marketing and sales efforts need some support.

If at the end of a few months you feel your lead generation efforts need a boost, contact us. We can help you gather leads at any stage in the funnel, and we can help you widen your audience to find more leads, prospects, and opportunities.

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