None of these varying definitions are inherently wrong. What’s most important is that the sales and marketing organizations agree on a common set of definitions and expectations for each category. With that consistency in place, it’s far easier to measure success, identify problems with your pipeline, and work constructively to improve throughput of the overall pipeline.
That said, let me take a quick shot at how I define both groups.
I believe that a lead should be defined as a qualified prospect who proactively wants to learn more. When I say “qualified”, I mean they’re an ideal individual and/or company to sell to (i.e. they are the type of prospect who typically has a problem that you can solve). When I say “learn more”, I mean that they’ve come to you asking for something. It can be a demo, a question, a white paper, something that proactively engages them in a conversation.
There is a big difference between a lead and a list. Handing your sales team a set of companies and contact information to cold-call isn’t a lead. That’s a list. Coming back from a trade show with a couple hundred names of badges you scanned is a list too. Unless they’ve somehow engaged you proactively, and have asked for a response, it’s not a lead.
In general terms, when a lead progresses to the point where they’re talking to you about a near-term purchase possibility, the lead can become an opportunity. Most organizations I’ve worked with have slightly different definitions of what qualifies as a new opportunity, but most often they have these characteristics in common:
- There’s an agreed-upon timeline to purchase
- A decision-maker is directly involved or is aware of the solution & timeline
- Budget is available or has been identified
- The buyer has agreed to and is working on next steps on their end
- There’s a catalyzing event or urgency driver internally that makes the purchase a priority
If you’ve converted a lead into an opportunity, it means you have an expected close date. It means you’re beyond wishful thinking and prospecting, and have a mutually agreed-upon plan with the prospect to get the thing done, to make a decision one way or another.
As I’ve said, how you specifically define leads and opportunities in your organization may vary. But what’s most important is that you get that definition on paper, make sure all involved parties are on board, and that you manage the operation of your sales pipeline based on it moving forward.
The result is not only better reporting and expectations, but far more efficient and productive salespeople.