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Article 10 min read

Lead vs. prospect vs. sales opportunity: What's the difference?

The terms lead, prospect, and opportunity are often used interchangeably, but they shouldn't be. We’ll go over the differences, discuss best practices, and more.

By Donny Kelwig, Contributing Writer

Last updated July 28, 2022

Lead vs prospect

In marketing, the terms lead, prospect, and opportunity are typically thrown around interchangeably. But they have distinct meanings and uses that are important for anyone in sales to understand.

In this article, we will explain what separates a lead, a prospect, and an opportunity; discuss best practices and strategies for converting a lead into a prospect; and break down the stages and characteristics of an opportunity.

What is a sales lead?

A sales lead is a person or contact who is at the top of your sales funnel and hasn’t been qualified yet. They have made contact with your company in some way; they are aware of your business, and your business is aware of them. However, it is not yet clear how interested or viable they are as a paying customer. Lead generation is an important starting point in your sales process.

What is a prospect?

A prospect is a person or contact who has been qualified and is moving down your sales funnel. It is likely that this person would benefit from your product and is already interested in it. A prospect is in your pipeline and has been identified as someone who is responding well to nurturing and is likely to buy.

What is a sales opportunity?

A sales opportunity is a qualified prospect that has a high likelihood of becoming a paying customer. There should be a clear pain point that your product or service can address, and the prospect should be interested in what you have to offer. Your sales reps should be able to tell that this opportunity is a good fit for what your company is selling, and they should feel that there is a good chance of closing the deal.

The importance of differentiating leads, prospects, and opportunities

The importance of knowing lead vs. prospect, three fingers pointing up

It’s vital for your business to distinguish between leads, prospects, and opportunities as you encounter different potential customers.

Lead vs. prospect

Leads are people at the very top of your sales funnel. While they are aware of your company and your product, they have not been qualified and it won’t be clear how promising they are as a potential sale.

Alternatively, prospects are leads who have been qualified and deemed likely to buy. Essentially, prospects are potential customers who are further along in your sales process than leads.

How to turn a lead into a prospect

To convert a lead into a prospect, you must walk them through the sales qualification process. This process will help you assess if your product or service is a good fit for the needs of this potential customer.

The lead qualification process has three stages:

  • Organization-level qualification


    At the organizational level, make sure the lead meets the criteria of your buyer persona or ideal customer profile. If you’re selling B2B, see if the overall organization matches key characteristics you are looking for, such as company size, industry, and location.
  • Opportunity-level qualification


    At the opportunity level, you must determine if the prospect could, in actuality, implement your company’s offering. Would they truly benefit from using your product or service? If the answer is yes and you are feeling like the lead is a good match, proceed to the stakeholder level.
  • Stakeholder-level qualification


    At the stakeholder level, you know this prospect has an interest in and a need for your product or service. Now, you need to find out if this contact has the authority to make the final purchasing decision. If they do not, you’ll need to identify and involve a stakeholder who does have that power and proceed with them toward closing.
    Once a lead has moved through the qualification process, you can consider them a qualified prospect.

Lead vs. opportunity

Comparing a lead to a sales opportunity is an even wider gap than comparing a lead to a prospect. As discussed, a lead is an unqualified person at the top of your funnel, whereas an opportunity is a qualified prospect with an extremely high chance of closing. Leads and opportunities are essentially at opposite ends of the sales funnel.

You want to qualify leads, thus making them prospects, and then nurture those prospects into promising opportunities. The journey of lead to prospect to opportunity is a pathway to success.

Stages of a sales opportunity

Stages of a sales opportunity, hands holding hourglasses

Stage 1: Prospecting

The first stage of a sales opportunity is prospecting or qualifying. You can’t get anywhere before identifying an opportunity exists and gauging how genuinely viable it is as a potential sale.

In the prospecting stage, your main goal is to make the right call in deciding whether this potential opportunity is worth your time, effort, and resources. Ask yourself first: Is there an opportunity? If so, look at the consumer behavior and evaluate honestly if you can win it and if it’s worth winning. If this opportunity seems like a good fit for your company, proceed.

Some opportunities are going to be clear-cut and easy to assess, but others may require finesse or additional time and evaluation. Maybe this customer does not yet know their budget, or maybe their timeline to purchase is somewhat far in the future. Even if a potential deal doesn’t exist yet, it’s important to keep track of long-term opportunities. Don’t forget or neglect consumers who need help or extra time to decide.

That said, avoid committing to deals that aren’t promising or don’t suit what you have to offer. It’s okay if many opportunities are removed from your pipeline at this stage. It’s better to reserve your efforts for the right ones. Best-in-class companies close just 30 percent of sales qualified leads.

Stage 2: Discovery

Once you identify a good opportunity, it’s time to find out the customer’s specific situation. Listening to the needs and wants of each customer is critical. The best sales reps ask questions that are going to reveal important information about pain points, and then they talk about their offering in a way that specifically meets the customer’s interest.

You may have general information about the opportunity from the prospecting stage, but in discovery, it’s time to pin down those specifics. What’s their budget? Their timeline? What specifically do they need that you’re able to offer them? Again, it’s okay if at this point you realize the opportunity is not a good fit and must be removed from the pipeline.

Stage 3: Proposal made

If the metaphorical lights are all looking green and you’ve got yourself a great sales opportunity, it’s time to make an offer or proposal! This can come as a formal quote, or you can offer a range of pricing options. The key is to give the customer all the information they need to make a decision about purchasing from you.

There may be additional convincing to do at this point. Perhaps you need to send along a proof of concept, demo, or video. Or, maybe you need to arrange a reference visit, along with sending the gist of your offer. Listen carefully to your potential buyer, and use your judgment to assess what they need in order to commit to doing business with you.

Stage 4: Closing

The fourth stage is where final negotiations on your deal happen. Ideally, you want to leave this stage with a signed contract and logistical details (such as manufacturing or delivery plans) hammered out and agreed upon.

Closed lost

At any point in these stages, a deal may be lost or abandoned. If you’ve made it to closing but cannot seal the deal, that’s okay. Every loss is still a learning opportunity. Assess why the deal did not work out, and then take action to improve your process for the next customer. If this opportunity went with a different company, investigate why and see how you can compete better in the future.

If the timeline or budget shifts and a potential customer can no longer commit at this moment, it may not be reason enough to abandon them entirely. Stay in touch—their situation may change in the future, and with proper nurturing, they might convert into a paying customer the next time around.

Closed won

Of course, the best outcome is a successful deal. Go celebrate! But remember: This can still be just the beginning of a great customer relationship. Follow up with this customer and check in on their satisfaction with the deal. Happy customers are more likely to buy from you again in the future, presenting great cross-sell or upsell opportunities. They can also be a good source of referrals, positive reviews, or case studies.

Common characteristics of sales opportunities

  • A pain point


    All sales opportunities stem from a lead that has some sort of problem (or “pain point”). Without a pain point that needs addressing, it’s unlikely leads will come across your company at all.
    That said, not every potential customer is completely transparent or self-aware. It is the job of your sales team to identify and verbalize the potential customer’s pain point if they cannot or will not express it themselves. Here, qualification skills are invaluable for your sales reps. It takes experience and intuition to identify a prospect’s needs and get them to admit to them via carefully constructed qualification questions.
  • Interest


    Another characteristic of a good sales opportunity is the expressed interest of your prospect. Just because someone has a problem does not mean they are explicitly interested in solving it. Issues that have been endured by a person or company for a long time can seem bearable. Prospects may not see the point in incurring an expense to solve such a problem.
    Therefore, it’s very important to pique the interest of your prospects. Give them explicit reasons for why now is the time to address their pain point and why you are the one who can solve it. Have clear pitches on what sets you apart (your unique selling proposition), and create the energy that motivates your prospects to seriously consider making a purchase.
  • A good fit


    Sometimes, you’ll encounter a prospect who has a clear, explicit problem and the interest to solve that problem immediately. This situation may seem like it’s a great sales opportunity, but that’s not always the case. If your company is not a good fit for the prospect, this person or business does not represent a sales opportunity.
    For example, if you offer business solutions for companies with hundreds of employees, and you are approached by a small business made up of only a handful of people, this isn’t a sales opportunity. Just because the problem and the interest may align with your company, does not mean you are a good fit. You should not pursue leads and prospects who will ultimately not benefit from your product or service.
    If you do pursue poor fits, you’re likely to do more harm than good, even if you make the sale. If a prospect’s needs do not align well with what you have to offer, you may generate customer complaints and displeasure. Even if these prospects are convinced to purchase, they may end up posting poor reviews, damaging your word-of-mouth reputation, and costing you more money in the long run. It’s smarter to stick to the people your business is built to help.

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