There are many confusing terms within the professional landscape, but few are more confusing than leads, prospects, opportunities, and closes. Understanding the meanings of these terms, as well as the difference between them, is imperative to success in your career.
In this article, we will define each of these concepts and discuss what they mean in the context of business. Then, we will take a closer look at any differences between them, in order to best understand their importance.
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The Definition of a Lead
According to renowned entrepreneur Neil Patel, a lead can be defined as “[any] person who indicates an interest in your product or service”. This definition is very broad, but it essentially means that a person who shows any initial interest in your product or service becomes a lead.
The Definition of a Prospect
A prospect is essentially a lead that has been qualified. This means that they have shown an interest in your product or service, and they fit certain criteria that make them likely to go through with a purchase. The term ‘prospect’ is often used interchangeably with ‘lead’, although leads may be more broadly defined and can include both qualified and unqualified leads.
The Definition of an Opportunity
An opportunity is a more advanced stage in the sales funnel compared to a lead or prospect. It signifies that the sales team has successfully engaged with the prospect, assessed their needs and requirements, and determined that there is a strong potential for a successful conversion.
The Definition of a Close
A close refers to the final stage of the sales funnel, where a prospect agrees to purchase a product or service, effectively becoming a client. The term ‘close’ is used because it represents the closing of the sales funnel.
The Difference Between a Lead, Prospect, Opportunity, and Close
Now that we understand the definition of each of these concepts, we can explore them in depth and determine the key differences between them.
The most important difference is each of their positions in the sales funnel. A basic sales funnel comprises four sections: awareness at the top, followed by interest, desire, and action. The idea is to lead potential clients or customers through each part of the funnel until they eventually purchase your product or service.
The Difference Between a Lead and a Prospect
A lead is positioned at the very top of the sales funnel, where an individual first becomes aware of your business. Leads are usually unqualified, which means that they have not yet been evaluated or screened to determine their likelihood of becoming a client or customer, but they have potential to become prospects if they fit your client profile, budget, or purchasing authority. Leads are people who have visited your website, followed you on social media, or made any similar move to show interest, but they aren’t necessarily going to convert.
Prospects correspond with the second section of the sales funnel: interest. Once a lead is identified as a good fit and likely to make a purchase, it becomes a prospect, signaling that it’s worth investing time and resources to nurture the relationship and move them through the next part of the sales funnel.
The Difference Between a Prospect and an Opportunity
While a prospect may meet certain criteria that make them more likely to purchase your product or service, it doesn’t necessarily mean that they will. Only a fraction of people that are identified as prospects will ever move to the opportunity stage.
For a prospect to become an opportunity, they need to express a desire for your product or service. This means that not only are they interested in your business, but they have expressed a clear interest in your offering, have the budget and authority to make a purchase decision, and that there is a defined need or pain point that the solution can address. In a nutshell, an opportunity is a step away from becoming a client or customer.
The Difference Between an Opportunity and a Close
The final step in the sales process is to convert an opportunity into a close. An opportunity is vastly more likely to purchase your product or service than a lead or a prospect, but there is a final step to be completed before this happens.
In order to turn an opportunity into a close, you need to turn their desire for your product into action. Closing a sale often involves negotiating terms, finalizing contracts or agreements, and addressing any last-minute concerns that the prospect might have. Sales representatives use various closing techniques and strategies to persuade the prospect to commit to the purchase and sign the deal.
Our free foundations course offers a detailed guide on converting leads into sales, along with teaching the process of getting clients and managing projects as a freelancer or contractor.
Understanding the difference between leads, prospects, opportunities, and closes is crucial for business success.
These terms represent distinct stages in the lead life cycle, from the initial awareness and interest to cultivate a desire for your product to the final closing of a sale. By effectively navigating these stages and nurturing relationships with potential clients, businesses can improve their sales processes and increase revenue.