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Lead Management; Inside Sales

Understanding the Difference Between a Sales Lead and Prospect

Written By:

Stephanie Lanik;  Strategic Marketing Coordinator
Lead and prospect—two popular terms that you’ll often hear in sales and marketing. However, when it comes to defining them, most of us get it wrong. More times than not, the two are used interchangeably, even though they don’t actually mean the same thing.
Many businesses have their own company-specific definitions for these terms. Likewise, marketing automation and CRM systems also contribute their own—sometimes differing—definitions for leads and prospects. Which makes matters even more confusing.
What’s worse, is some companies can’t agree on whether a lead or prospect is more qualified in the sales process. Some say leads are qualified prospects, others say prospects are generated from leads, and some even think they are equal.

Have a Common Understanding of Both Sales Lead and Prospect

For the sake of unity, there needs to be a common understanding of the two terms at a company level. Continuing to use them without some sort of shared understanding can (and will) be damaging to all parties involved. What elements make a lead? What elements make a prospect? Where do leads and prospects fit in the sales process? Any and all companies need a clear answer to these questions.
To tackle the overall confusion, we share some clarifications of what actually sets these two apart from each other. This includes a specific definition of a lead and prospect. Ultimately, having a clear understanding will help you successfully outline your buyer journey and targeting strategies.

What is a Sales Lead? (TOFU: Top-of-Funnel)

“Lead” is a potentially broad term that has varying qualification levels in the sales process. The easiest way to wrap our heads around the term—a lead is at the start of the journey. It’s essentially any contact that has not been qualified or engaged.

A person first becomes a “top-of-funnel” (TOFU) lead after completing some kind of call to action or inbound web form. For instance, submitting a contact form or emailing in for a quote request. These are commonly referred to as marketing-qualified leads (MQLs) who have initiated communication with your brand. The lead’s engagement is usually minimal. So, although they may have expressed interest in your product or service, they aren’t necessarily ready to make a purchase.

The point is: a “Lead” isn’t a sure thing.

Once it’s become clear that a lead is a good fit for a company, they are considered sales-qualified leads (SQL). These leads have been qualified and even profiled by your sales team. Technically, a “sales-ready” lead is ready to be contacted by your sales reps. From there, the goal is to close the deal.

In a nutshell, sales leads are people who have provided basic information that suggests they are potentially interested in buying. Your main objective, once you have a lead, is to focus on learning more about them. One way to do that is by engaging (with them) in any form of two-way communication.

What is a Sales Prospect? (MOFU: Middle-of-Funnel)

In business terms, it’s a potential customer who’s qualified based on their buying authority, financial capacity, and willingness to buy. The non-business definition of a prospect, according to the Merriam-Webster Dictionary, is something that can develop or become actual.

As you can see, the word “prospect” is closely linked to an outcome. The verbiage around the term explains the potential for immediate growth and actualization. In other words, a prospect is farther along the sales process than both MQLs and SQLs. Likewise, they have an increased likelihood of reaching an outcome.

Spending Time on the RIGHT Leads

However, it’s important to understand that there is a fine line between what makes a true prospect and what doesn’t. Research from Sales Strategist, Mark Wayshack analyzed that 50% of the prospects are not perfectly fit to purchase your offerings. As a result, you’re wasting time and money on leads who aren’t qualified. Moreover, you’re potentially missing out on talking to prospects who do fit within qualification criteria.

So remember, you should clearly see how your product will solve a problem and create value for the prospect. If this is not clear figure it out or move on.

They MUST Meet the Criteria

Determining if a contact is a sales prospect is the first step in the selling process. So, in order for a lead to become a prospect, they need to meet three criteria:

  • Fit your target market.
  • Have the means (money) to buy.
  • Is authorized to make the buying decisions.

These factors must be determined if you want to be able to move your leads down your sales funnel.

All-in-all, prospects are qualified and interested leads who, through two-way interaction, have demonstrated they’re preparing to make a purchase decision.

The Clear Difference Between a Lead and Prospect in Sales:

With the two terms defined, it should be obvious that they are quite different in regards to the sales process. One evident indication being that sales prospects are further along the process than even the most qualified leads. However, beyond this point, there are two key distinctions between prospects and leads…

Engagement and Communication!

In sales and marketing, leads and prospects are two different categories of people—who require different types of engagement and communication. Leads are characterized by one-way communication, while prospects are characterized by two-way communication.
Sales lead: characterized by one-way communication. Essentially, they reach out to a company—through a form, sign-up, or email—and provide their information. Once the company has that information, they enter the lead into a nurturing process. Here’s where the lead receives one-way correspondence from marketing—who provide additional information and calls-to-action with hopes of driving further engagement. This type of communication is all about generating awareness. Should the lead choose to respond to this additional contact, then they become a prospect—as they have initiated two-way communication.

Sales prospect: created after a sales-ready lead is contacted by a rep. They’re ready for two-way communication with your brand, either through scheduled phone calls or in-person meetings. Typically, messages come from associated reps and are highly personalized to the recipient. Calls to action for prospects usually center on keeping the dialog going (scheduling a call, requesting a quote, etc.). This type of communication is all about turning their interest into a relationship—and moving that relationship through the sales funnel.

Key Points to Remember:

In the sales process, you gather leads first, qualify them into prospects, and then move them through the sales funnel. Understanding the difference between a lead and a prospect gets you one step closer to being inside the customers’ heads. Which in turn, will empower you to customize your communications and ultimately close more sales.
Sales Lead
  1. TOFU (Top-of-Funnel)
  2. Promising Sales Contact
  3. Unqualified Contact
  4. Different Levels of Qualification
  5. One-Way Communication
  6. Contacted in Large Groups or as Part of an Automated Program
  7. Mass Communication from General Source
Sales Prospect
  1. MOFU (Middle-of-Funnel)
  2. Linked to an Outcome
  3. Qualified Lead
  4. Qualified for Purchase Intent and Ability
  5. Two-Way Communication
  6. Contacted on an Individual or Small Group Basis
  7. Personalized Communication from Individual Rep
Overall, the goal should be to nurture those sales leads through the pipeline and convert them into a sales prospect—it’s about sales and marketing aligning and working together.

Do you currently have a ineffective lead nurturing strategy?

Read on to see some of the most common mistakes that we see in an ineffective lead nurturing strategies–and how to fix them.

Start Closing More Deals!

Hopefully, this article has helped bring some clarity to your sales process. Now, take what you’ve read and use it to more accurately adjust your marketing campaigns and to CLOSE MORE DEALS!

Not sure where to start? Let us help you turn your leads into valuable prospects. Visit or contact us at or simply click the button below to learn more!

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