Lead vs Prospect vs Opportunity: What's the Difference?

A lead is a person or organization that fits your ideal customer profile and could eventually purchase your product or service. Once you contact and qualify them as a fit, they become a prospect; you then open an opportunity for them, which is the deal you'll move through your sales pipeline to close. Understanding where your potential customers sit in your pipeline helps you to make informed decisions that’ll get them into a buyer mindset.

Lead vs Prospect: What’s the Difference?

A lead enters your pipeline in the lead generation step of your sales process. They represent anybody who fits your ideal customer profile (ICP) but has had little to no direct contact with your business. The lead becomes a prospect when you qualify them for fit and interest in your product or service — in other words, when they’ve shown that they're “sellable."

For example, if a lead responds to your email to request more information or takes another action that signifies buy intent, and they also give promising answers during a needs assessment and discovery call, you can now mark them as a prospect. As a lead becomes a prospect, they also move from the lead generation stage into the lead qualification stage.

What Is a Lead?

A lead is anybody who fits your ICP and has either given you their contact information through inbound lead generation, or has it publicly available for direct outreach. However, there are typically multiple types of leads that help you segment your sales pipeline to follow up with the most important contacts. To make the most out of each lead, it’s important to know which type of lead they are.

Below, we'll define a marketing lead (aka a marketing qualified lead, or MQL), a sales lead (including both a sales assisted lead, or SAL, and a sales qualified lead, or SQL), a cold lead, and a bad lead.

Leads generated by marketing go through each stage — MQL, SAL, and SQL — while those generated directly by a salesperson skip the first stage and are immediately a sales lead.

What Is a Prospect?

A prospect is an SQL that has undergone a discovery call with a salesperson, who has decided they're highly qualified and worthy of nurturing. If a prospect first goes through both the MQL and SAL levels, the seller will likely have a good amount of background details on them, but the discovery call is the best way to learn as much relevant information as possible. This information will help the seller nurture the prospect and try to close the deal.

How to Turn a Lead Into a Prospect

We’ve outlined the basics of handling certain leads and prospects, but now is the time to take you step-by-step through the process of converting a lead into a prospect. The steps include scoring the lead, conducting a needs assessment, following up, and hosting a discovery call. These steps are specific enough to determine what your goal is with each contact, but broad enough to ensure that you can customize them to fit your industry. Let’s take a closer look at each.

1. Source & Score Leads

One of the ways to improve your conversion is to score your inbound leads. The marketing team conducts lead scoring by giving each lead a point-based score that takes into account how likely they are to make a purchase. The factors they consider typically include demographic/company details, engagement with your company, and online behavior.

These are the sequential steps to score your leads:

• Identify Ideal Lead Demographics: Determine the demographics that make up your ideal lead, such as age, gender, job title, company size, and location.
• List Behavioral Data Points: Make a list of the activities that show interest in your product or service, such as lead magnet downloads, website visits, or social media engagement.
• Assign Point Values to Each Data Point: Associate many points to behaviors and demographics that have shown to contribute most to a purchase, and few points to those that aren't as impactful but still show that a lead is interested and/or a good fit.
• Set Score Thresholds: Create tiers and assign actions to them so you know what to do when a lead reaches a certain point level; for example, send a marketing email once they reach 60/100, then make a sales call when they get to 80/100.
• Track and Score Leads for Qualification: Use lead scoring software, a spreadsheet, or a simple pen and paper system to keep track of points that leads earn, and take the associated actions as they reach your thresholds.
• Evaluate and Refine the System: Use the data you collect to continuously improve your scoring system so it becomes more accurate over time.

Lead scoring is the responsibility of the marketing team, but it's a good idea for marketing and sales to work together to create and refine it. For example, if sales finds that they're receiving poor fits, communicate this to marketing so the MQLs they pass along can be better fits in the future.

2. Initially Qualify Leads via a Needs Assessment

The goal with your initial contact is simple: qualify your lead’s interest and ability to purchase your solution. This can be done over an online or live needs assessment. When you set up the needs assessment, ask some basic qualification questions. You can include as many as you’d like, but remember to frontload the important ones to keep your lead on the phone or encourage them to finish the written assessment.

Consider asking questions like these on a needs assessment:

• Source: Where did you hear about us?
• Need: What are your business's current goals or priorities?
• Product Interest: Which of our products caught your eye?
• Solution: How do you see the product helping to solve issues your team faces?
• Timeline: When were you looking to make a purchase?

Each of these serves its own purpose, and they help inform the rest of the process. Asking all of them will get you all of the necessary information to mark a lead as an SAL. You'll know how they heard about you and which goals they're trying to accomplish, or pain points they're trying to solve, plus what they like about your solution. You’ll also get an idea of a timeline of when they’d like to buy and any other additional details you request.

3. Follow Up & Set Appointments

Now that you have an SAL, set defined dates for discussing the sale further. At the end of your qualification quiz or call, always offer a range of dates and times for a follow-up appointment, or tell them a salesperson will get in touch with them.

Here are a couple ways to initiate a follow-up:

• Online Needs Assessment: “Thank you for submitting your needs assessment. Our team will be in touch shortly with next steps.” Then, have a salesperson reach out immediately to continue qualifying them, or let them know if you can't help them.
• Live Needs Assessment: “I understand you don’t have the time to get too deep here; can we set an appointment between 1 p.m. and 3 p.m. sometime this week to talk more?”

If the lead doesn’t agree to a set follow-up appointment time, be sure to follow up proactively. This process can differ between industries, but generally, you’ll be calling the lead and sending an email at least every other day. Typically, you’ll do both in tandem, and stop after 3–5 attempts.

4. Hold a Discovery Call

Have a 20- to 30-minute discovery call with each SAL to ensure they're qualified enough to nurture. On the call, ask questions about key details such as their budget, decision-making power, needs, and timeline for a purchase.

These are the specific steps to follow in order when holding a discovery call:

• Research Your Lead: Search for details that will allow you to write a script that's personalized to your lead.
• Write a Discovery Call Script: Craft a script that starts with a strong opening and introduction, preplanned framework questions that will help you qualify them, and a statement to close the call and lay out next steps.
• Build Rapport and Make Introductions: Introduce yourself and your business, and mention something about them that you found in your research to make them feel comfortable.
• Set an Agenda: Give the lead a heads-up regarding your plan for the rest of the call, and tell them the main purpose is to determine whether you're the best company to help them with their goals or pain points.
• Ask Discovery Call Questions: Ask the questions you preplanned before the call according to your chosen qualification framework (e.g., the BANT framework will prompt you to ask about their budget, authority, needs, and timeline).
• Close the Call: Decide whether you believe they're qualified or unqualified. If you disqualify them, recommend another vendor or ask for a referral if possible. If you qualify them, continue with next steps according to your sales pipeline (e.g., schedule a demo).
• Record and Follow Up: Note the key information you gathered in your CRM, and create an opportunity for them if you decided they're qualified.

If you qualify them as an SQL on the discovery call, immediately mark that status change in your sales CRM and move the lead into your lead nurturing stage of your sales process.

Prospect vs Opportunity: What’s the Difference?

A prospect is an SQL that you've qualified via a discovery call. They've now left the lead generation stage and entered the lead nurturing stage. At this point, you open a sales opportunity for them in your sales pipeline; this is the deal you'll try to close. Creating this opportunity will help you focus on the potential customers that are most likely to convert.

What Is a Sales Opportunity?

A sales opportunity is a deal you open for a prospect that has shown significant interest in making a purchase and has a high degree of fit based on your discovery call. Opportunities are associated with your highest priority prospects — those who indicate the best odds of converting. Since their level of interest is highest, nearly every piece of correspondence will come with an offer to close at this point — you now have ample reason to reach out more often with an offer.

How to Turn a Prospect Into an Opportunity

Translating a prospect into an opportunity simply means opening an opportunity for qualified prospects. If you use sales pipeline software or a CRM, you'll have created a record for the lead before this point; to open an opportunity, you'll add the new info you've learned to the record and move it to the first stage of your pipeline's lead nurturing step. Then, you'll use that new info to help you close the deal.

Here's an example of a Pipedrive sales pipeline that lists stages from qualification to negotiations. The salesperson who owns the opportunity would move the deal through each stage by nurturing the prospect:

Once you open an opportunity, start discussing the deal size, terms, and other specifics so you can sell your product or service as a solution to the needs you've learned they have. Treat these prospects as a top priority, since they're likely to purchase your product or service.

Bottom Line: Lead vs Prospect vs Opportunity

While the terms "lead," "prospect," and "opportunity" are sometimes used interchangeably, we hope this article makes clear how and why you should differentiate them. Each term should invoke a different response and represent a different part of your sales process. Now that you can properly identify leads, prospects, and opportunities, read our article on creating a sales pipeline to organize your lead generation, qualification, and nurturing efforts even more.

This article was written by Trey LaRocca and updated by Allyssa Haygood-Taylor.