What’s the difference between a contact, a lead and a prospect?
In sales, we use terminology that can confuse people who don’t traditionally come from this space.
This confusion can lead to a misunderstanding about what a business should focus on to increase success.
I hear all the time businesses saying, “we need more leads” (indeed, sales teams often say this too), and they are often interchanging their understanding of what a lead is with a contact and a prospect.
This can cause problems because you should communicate differently with contacts, leads and prospects, and each communication has a different objective.
Unfortunately, when you search online, you get a variety of different explanations with a lot of jargon still in place.
So, here is how I de-mystify the different terminologies so that any business-owner can understand them and understand better how to communicate with each type.
Contacts – Your Promoters and Potential Leads
Contacts are, basically, just that. They could be anyone.
Contacts are people you meet at any stage in your daily life whether at a party, at networking, on linkedin or on holiday. Wherever!
Some contacts could be leads but not all.
Rather than being tied down with thinking “would they want to buy my product” I view a contact as someone who could further your message and might, maybe, buy my product.
They might have a need for your service at some time or other, but they’re maybe not your typical ideal customer. That being said, they could still refer you, they could promote you, they could be an ambassador for you or they could turn into a lead. They could also be an existing customer, or a past customer – they all remain as contacts.
Therefore, it’s important to continue to communicate with contacts.
Objectives with Contacts:
To communicate and continue to promote, so they can promote you
To convert the contacts who would become leads into leads
As such, I earmark contacts for a weekly communication, for updates and for invites to any events I might be running.
Leads – Your Potential Prospects
Leads are different to contacts, they’re one step higher in the buying chain as there’s potential need there.
Maybe slightly differently to others, but because I come from a purely outbound sales background, I define a lead as someone who might have a need for my service, and I base this on my ideal customer profile which allows me to do at least an initial and basic qualification.
As such, any person I meet who fits that profile, for me, automatically becomes a lead.
Why do I do it this way? Well, because leads are the people you want to get into your sales process and therefore require a different approach. Generally, it’s at the lead stage that you begin to adopt a more focussed sales approach.
For example, you might research them more, you might take a deeper dive into what issues they might be having. You might seek to have a meeting, or you might try to help them understand why they might have a need for your service.
Therefore, you are going to communicate with leads differently and have a different objective for that communication using more targeted communication about what you may or may not know about the challenges they’re facing.
The only time this is different is an inbound enquiry. This is automatically a lead because they have identified, themselves, that they might have a need for your service.
Objectives with Leads
Adopt a more targeted, sales approach with communication
Help them identify that they might have a need for your service and that you could help
Convert them into prospects
Prospects – Your Potential Customers
Your lead has now entered your defined sales process and is now a prospect.
Your prospects are leads
whom you have qualified to have a definitive need for your service and, in my opinion,
are also leads whom you believe you have a reasonable shot of closing.
I feel that this is an important distinction and here’s why.
Prospects are the future life of your business. You can forecast your future sales based on where all your prospects are sitting in your sales process.
Therefore, if you think you have no chance of winning a lead, but consider it a prospect anyway, you are basically fooling yourself about your future chances of success.
Your main job with your prospect is to move them through your sales process, always being mindful that you’re only trying to move them to the next stage of the process, not immediately closing them.
To explain this more, imagine your process has 5 stages:
Discovery Meeting
Proposal
Presentation
Final Review
Close
If your prospect is at the discovery meeting stage, your only focus is to get them to proposal stage, not to get them to the closed stage.
The only time you are trying to get them to close is when they’re at the final review stage.
Prospects do sometimes close themselves, or advance themselves through the process skipping some steps, and that is fine. But it’s important that you remember that, if you’re managing a prospect, you’re simply moving them through your process to the next stage.
Your communication with prospects is therefore, going to be very different to that of leads. Lead communication might be more based on the hypothetical. Communication with prospects should usually be linked to things that have been said and be responsive to their requirements
Objectives with Prospects
Move them through your process
Move them one stage at a time (unless they move themselves)
Get them to the end of your process to close
Communication focussed on their individual situation and what they’ve actually told you
In summary
A contact is someone who could become a lead but also might never become a lead. However, they could promote your business, or you need them to at least remember your business. The objective with a contact is to provide interesting communications to either convert them to a lead, or so that they communicate with others.
A lead is someone who might have a need for your business and whom you could potentially sell services to. The objective with a lead is to get them to be a prospect and your communication is more targeted and takes a more sales approach, potentially dealing in hypothetical pains or gains.
A prospect is a potential customer. They have entered your sales process, you have qualified a definitive need and you think there’s a chance you can win it. Your objective is to advance them through your process and your communication will be highly focussed on their specific challenges and how you can add value.
If any of this still seems alien, remember you can always contact me and I’ll be delighted to help.
