You may have been told in the past that you need lots of leads for your business. Maybe someone else told you that you need to be focusing on prospects, because those are the people most likely to buy from you. It may have left you wondering: What’s the difference between a lead and a prospect?
When thinking about a lead vs. a prospect, they are very similar. In general terms, a lead is someone who has engaged with your business in a low-level, one-way format. In contrast, a prospect has engaged in two-way communication or put forth more effort, indicating a higher probability of becoming your customer. It comes down to how likely they are to buy from you.
What is a lead in sales?
A lead is defined as a person who has engaged minimally with your business. They may have the potential to be a lifelong, happy customer; but it’s also possible that you will never sell anything to this person.
Here are some examples of ways you might generate leads:
- You meet someone at a live event
- Someone visits your website and opts in for a free ebook download
- An individual reads your blog post and subscribes to your newsletter
- Someone follows you on social media
- Someone receives a cold call or email from your business
What is a prospect?
A prospect is a lead who has shown actual interest in your products or services. They will have engaged with you in some meaningful way and they will also fit the persona of your target customer.
Here are some scenarios that would qualify someone as a prospect:
- They filled out a contact form on your website
- They comment on your social media posts
- They open your emails and respond to your calls to action
- They start a trial of your product or service
A prospect is someone who has seen your business and is interested in learning more. They are ready to actively engage with you, so it’s important to set up marketing systems to guide those prospects through your sales funnel to the point where they become customers.
Lead vs. prospect: which is better?
It’s good to capture leads in your business, but your goal should be to quickly evaluate those leads and determine whether they might also qualify as prospects. You’ll then be able to focus more energy on nurturing prospects since the expected benefit is greater.
Think of it this way: You may have hundreds of leads in a single quarter, but if none of them ever move along the buyer’s journey and make a purchase, then that number has no value. On the other hand, you may only have 15 qualified prospects in that same amount of time, but they are all more likely to make a purchase. In this scenario, it is better to have 15 prospects who are highly qualified than to have 100 unqualified leads.
Not all leads are created equal and revenue growth often comes down to prospecting vs. lead generation in your business.
How to focus your activities towards prospecting vs lead generation
If you think of every person who interacts with your business as falling into a funnel, leads are at the very top of that funnel, and many of them will stay there forever. What you want are people who will move down the funnel to the point where they come out of the bottom as paying customers.
How to target qualified prospects in your sales and marketing activities
When someone first interacts with your business, learn as much as you can about them
When a site visitor signs up for your email list, track how they arrived at your site, which links they clicked and which signup form they submitted. Record everything possible about their preferences.
Pro tip:
It’s helpful to have a Customer Relationship Management (CRM) system with lead scoring functionality, like Keap, that can help you prioritize your leads and prospects automatically by these factors and more.
Track their customer journey
Pay attention to what caused someone to join your list, and also the next interactions you have with them. Again, a main difference between a lead and a prospect is that a lead never takes another action beyond that initial sign-up. If they keep interacting and engaging with your marketing efforts, they’re a good candidate for qualifying as a prospect.
Keep your buyer persona in mind
If you sell a product or service with a higher price tag, don’t focus your marketing efforts on people who aren’t ready to pay that price. For example: let’s say you sell consulting sessions at $1000 per contract, online courses for $250, and ebooks for $20. If someone only ever buys your ebooks, never clicking on the emails advertising your courses, they’re unlikely to ever spend $1000 on consulting. That doesn’t mean you should stop sending them emails, but it does mean that the majority of your time and energy shouldn’t be spent on marketing to those types of leads.
As another example, if you only want to work with larger companies, then you need to focus on the people who are decision-makers in larger companies. Don’t focus your efforts on solo-preneurs or people who work for smaller businesses.
Tracking your leads and nurturing them to become prospects may sound like a lot of effort, but a powerful CRM with sales and marketing automation (like Keap) can actually do the heavy lifting for you. If you’re interested in segmenting leads vs. prospects in your business and following up with each person automatically, investing in a CRM with sales and marketing automation is a wise move.
Keep track of contacts at all stages in the sales pipeline
If you’ve been looking at your email list and trying to sort leads vs. prospects, it’s time to set up the tools to help you figure it out. Keap’s sales pipeline software allows you to establish your sales pipeline, identify and track your leads through every step of the sales funnel, and most of all help you determine leads vs. prospects for your business so that you can focus your energy on the people most likely to purchase your products and services.
Try building out your own sales pipeline in a free trial: try Keap today!
