Defining Sales Funnel Leads and Prospects

Phil Dossett 09 January, 2018 Tags: Marketing, Conversion Optimisation, 

The sales and marketing industry has its own language and terms. What with inbound marketing, PPC and SEO it can get all quite confusing. Make matters worse, several of these terms are used interchangeably!

This is certainly the case with “prospects” and “leads”. I was busy setting an infographic about the many types of content marketing and realised I had to settle on my own definitions once and of all.

My Lead vs Prospect Hypothesis

Let’s get this out there first – I’m leaning towards a lead is name on a list – they could be out of the phone book or on a purchased list. I might have their email address or know where they live.

Because I have no idea whether my product is of interest to them they are just a name. To me, a prospect is someone I could sell to but until I know more about them or before I’ve engaged with them somehow, they are an unqualified lead.

If after more research, I found out that that lead was a marketing manager of a medium-sized finance company who happened to need a new website or a marketing automation platform, then they become a prospect.

Likewise, if that lead searched and landed on a service page for website design on Grand’s website, and downloaded our Website Planner and in the form ticked they were looking for a marketing agency then they become a qualified Prospect (with a capital “P”).

What the Experts Say

Without looking at my cards, I decided to consult sales and marketing experts, then google for definitions and then finally, consult a dictionary. Here are my results…

HubSpot

HubSpot are the gurus of inbound – their solutions and applications are second to none and their inbound marketing education is extraordinary.

HubSpot's Prospect and Lead Definitions
HubSpot's Prospect and Lead Definitions

Searching for a result with HubSpot took me to HubSpot Academy and a resources article titled What is the difference between a lead and a prospect? The answer:

  • A Prospect is a visitor who's IP address we have traced back to a specific company.
  • Lead is a Contact with a particular value in the Lifecycle Stage property who has converted on a form or has been added to your Contact database.

Salesforce

If any business knows the answer then surely heavy-weight CRM conglomerate Safesforce knows.

But things just got tricky – admittedly I only put in 30 minutes of research within their website but I didn’t come out with a definitive answer. If anything, they use the terms interchangeably. here's a few of their usage examples...

  • In one paragraph, in an article about Lead Nurturing, referring to “Place leads on nurturing tracks to ensure your company stays top of mind.”
  • And then in the next, “Use targeted nurturing tracks to send personalised communications to your prospects.”
  • And to really confuse me more, this blog on Marketing Tactics mixes the terms up… “Successfully converting leads to new customers is the lifeblood of most small businesses. Here are some best practices to help you increase prospects and focus on the right leads…”

To me, they define Leads and Prospects as the same thing and they're both something that comes before being a Customer.

Score from salesforce; one each!

Neil Patel

If I see an article written by Neil Patel, I read it. I’m a big fan of his and his philosophies on website traffic generation and SEO are well worth investigating.

What does digital marketing guru, Neil Patel have to say then?

Neil Patel's Lead & Prospect Definitions
Neil Patel's Lead & Prospect Definitions

In a Lead Generation Hacks blog, Neil clearly state’s “Leads are the qualified prospects who can become customers and ambassadors of your brand, if you play your cards right.” 

The Balance – Personal Finance Blog

Mindy Lilyquist also takes the question head on, with a blog titled, “What is a Prospect Versus a Lead?”.

She states that a lead is an unqualified contact. A prospect is a potential customer that has been qualified as fitting certain criteria. In most cases, a prospect:

  • Fits your target market.
  • Has the means (money) to buy.
  • Is authorised to make buying decisions.

She confirms that a lead is any potential client or customer you meet that hasn’t been qualified as a prospect.

If a lead matches your criteria that makes them worthy of putting in more effort to nurture or sell to them, then they are a prospect. It doesn't necessarily mean they have interacted with you but you have qualified them as fitting your criteria (e.g. they match your target market).

In Mindy’s terms prospecting is the act of gathering leads. Once the lead is qualified then they can be termed a prospect.

Think Advisor Blog

B2B Sales Coach, Anthony Lannarino agrees with Mindy. In his article “Is it a lead, a prospect or an opportunity?” he clarifies that a lead is simply the name of accompany or a person. They might be from a list your business has purchased or they may have even attended a webinar or downloaded an eBook from your website. When you identify that they have the kinds of problems and challenges around which you can provide value then they are a prospect.

Anthony goes on further to define an opportunity from a B2B perspective. Prospects become opportunities when they consider you a potential partner in helping make a change. Until they agree to explore change and consider you a partner, you’re still dealing with a prospect.

Oxford Dictionary

Surely a dictionary should carry some weight around this topic – so I looked up the Oxford dictionary for some definitions.

Definition of PROSPECT

A person regarded as likely to succeed or as a potential customer, client, etc.

Definition of LEAD (Noun)

Someone or something that may be useful, especially a potential customer or business opportunity.

Lead definition from the Oxford Dictionary
Lead definition from the Oxford Dictionary

One of the sentence examples used stuck with me…

“Companies need to be able to handle surges, otherwise the cost of generating leads is wasted and prospective customers who cannot get through may get such a bad impression of the company that they do not bother calling back.”

The way the Oxford dictionary defines it, marketing campaigns might generate leads but prospects are qualified as a person, regarded as likely to be a potential customer.

Verdict

I really want to follow HubSpot and Neil Patel here. They're icons within our marketing industry and their processes and applications are based on their approach that a lead is a qualified prospect.

But I’m swayed by my gut-feel and the definition supplied by a regarded dictionary – far be it for me to start changing definitions on a whim.

Leads vs Prospects – the winner is...
Leads vs Prospects – the winner is...

So, for me a Lead is a fresh, unprocessed, yet to be qualified, name on a list. They may have downloaded my Website Planner eBook but I still don't know if my business would add value to their quest or they’re about to DIY a website in Wix.

A Prospect has been qualified as a good fit for the services or products I offer. They meet the prospect criteria (target market, current need etc). I know this because I’ve called them and asked them, or they've answered specific prospecting questions in a form or taken certain actions on my website and perhaps met a lead score.

A prospect is worthy of more attention in a sales process. We want to nurture a prospect to the stage that they buy from us or request a proposal or presentation from us.

The definition fits equally well with B2C customers. A lead might have signed up to our newsletter on our ecommerce website or sampled our product at a trade show but they’re not necessarily a prospect until they demonstrate more commitment to purchase; viewed 5 products online, clicked numerous newsletter email links or abandoned a shopping cart.

Phil Dossett

Digital Strategist

Phill Dossett is the strategy director at Grand, helping clients succeed by implementing clever digital tactics; including conversion optimised website development, advertising campaigns and marketing automation.