What is a Lead? What is a Prospect? What’s the Difference?

What is a lead? What is a prospect? What's the difference? cover imageLead and prospect – for two terms that you likely hear on a regular basis, they’re surprisingly difficult to define. Both terms are deeply ingrained in business processes, leading to a variety of company-specific (or even business-unit-specific) definitions. To make things more complicated, marketing automation and CRM systems contribute their own – sometimes differing – definitions for leads and prospects. In fact, many sources can’t even agree on which of the two is more qualified; some say leads are qualified prospects, others say prospects are developed from leads, and still others say prospects are equivalent to sales leads.

For continuity sake, there needs to be a common understanding of the terms “lead” and “prospect” at the company level (at minimum). Continuing to use these terms without some sort of shared understanding is detrimental to all parties involved. What constitutes a lead? What constitutes a prospect? Where do leads and prospects fit in the sales process? Companies need clear answers to these questions.

We’ll walk you through our definition of leads and prospects, as well as our rationale. We’ll also highlight some key differences between leads and prospects.



One of the most difficult things about defining the term “lead” is that it covers a broad variety of qualification standards and positions in the purchase cycle.

The most basic, top-of-funnel lead is an inbound web form completion. Web forms are commonly completed to ask a question or download a gated asset. Just about anyone can complete such a form. Those who submit the forms are considered leads even though they may not have the authority, resources, or intent to purchase. These leads are just beginning to receive branded communications.

On the other end of the spectrum, sales-ready leads have been thoroughly vetted. These leads have been checked to ensure they’re a good fit for the company and offering. They may have come in as a web form completion, but since then they have demonstrated sales-readiness through subsequent engagement. As the name indicates, sales-ready leads are prepared to be contacted (and hopefully closed) by a sales rep.

To find a meaningful definition that covers the various subtypes and standards for leads, we have to take a step back. At the simplest level, what is a lead? This answer begins with the most basic, non-business definitions of the word.


Lead [noun]

  1. A piece of advice or useful information especially from an expert

    My sister got a lead on the job opening from her neighbor, who is the human resources director for the company.

  2. A slight or indirect pointing to something (as a solution or explanation)

    The police are now working on several leads generated by the evidence gathered at the crime scene.

Source: Merriam-Webster Dictionary


Looking at these definitions, two key pieces of information stand out; leads are information-based and they’re indefinite. Applying this information to a sales context, we can conclude that a lead is information that indirectly points toward a sale.

When we compare this definition to typically accepted examples of leads from either end of the spectrum, the definition more or less holds up. Both top-of-funnel and sales-ready leads have provided information and point toward a sale. Top-of-funnel leads have provided contact information and demonstrated some, albeit indefinite, sales potential. Sales-ready leads have provided the same information and demonstrated a greater degree of sales potential. In both cases, the information is typically user-generated and provides a contact method (thus enabling further communication and sales potential). With these two clarifications taken into account, the final definition is the following.

Lead – An individual who has provided contact information and, in doing so, pointed toward a potential sales opportunity.



Prospects tend to be classified in one of two ways. Some consider prospects to be contacts who fit one of a company’s buyer personas but have not expressed interest. Others consider prospects to be sales-ready leads that have moved on to the sales team. Again, we look to the simple, non-business definition of the word “prospect” to help evaluate these approaches.

Prospect [noun]

  1. Something that can develop or become actual

    One highly desirable prospect for the city is a major-league franchise.

Source: Merriam-Webster Dictionary


Comparing the definition of “prospect” to the definition of “lead”, we see that the word “prospect” is more closely linked to an outcome. The verbiage around “lead” discusses slight or indirect indications toward a subject, while that around “prospect” discusses the potential for immediate development and actualization. In other words, a leads puts you on the path toward an outcome, while a prospect is the final step before actualization of the outcome.

Both of the aforementioned interpretations fit the criteria for a prospect; the former describes a prospective lead, while the latter describes a prospective sale. Technically, both are prospects, though one is a sales prospect and the other is a lead prospect. Because, most people who use the term “prospect” are referring to sales prospects, we have adopted the latter interpretation.

Prospect – A qualified and interested individual who, through two-way interaction, has demonstrated they are preparing to make a purchase decision.


The Difference

Obviously, sales prospects are further along in the sales process than even the most qualified leads. Beyond this, there are two key distinctions between prospects and leads.


The single biggest difference between prospects and leads is their engagement; leads are characterized by one-way communication, while prospects are characterized by two-way communication. A lead has reached out to a company – through a form or sign-up – and provided their information. Once the company has that information, they enter the lead into their nurture process, wherein the lead receives communications from the company with hopes of driving further engagement. More qualified leads may engage with the content, but there is no sustained back and forth. Prospects, on the other hand, are created after a sales-ready lead is contacted by a rep. In order to be elevated to the status of prospect, the lead has to engage in dialog with the rep. This could take the form of a chain of email messages, a phone call, or a meeting.

The other key difference between leads and prospects is the methods of communication. Leads are typically contacted in large groups or as part of an automated program. In either case, processes are defined by the marketing department. Messages come from general addresses (marketing@company.com, newsletter@company.com, etc.) and calls to action are related to consuming additional content or connecting in on additional channels. Prospects are usually contacted on an individual or small group basis. 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.).

Leads-Breakdown-Chart      Prospects-Breakdown-Chart


Let us know what you think:

  • How do you define leads?
  • How do you define prospects?
  • Do you have issues standardizing these terms between systems?



Comments (15)

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Just a couple of questions about your proposed definition of “lead” …

In general, you appear to be assuming that someone external to your business is contacting you. But what about a situation where you have identified a possibility external to your business? For example, in reading a trade magazine or website or news feed, you discover that Company X is proposing to build a new facility in Outyonder. Your company sells office furniture in the Outyonder vicinity. You deduce from the information that there may be an opportunity to sell your office furniture to Company X for this new facility. You don’t have any contact information other than the name Company X so you’re going to have to do some digging to come up with a warm body. By your definition, I don’t yet have an “individual who has provided contact information” but I do have a “potential sales opportunity”. If I truly want to understand the ROI or effectiveness of various means and methods to acquire leads that ultimately translate into opportunities, should I not be tracking the effort associated with penetrating Company X to find a contact, discuss the potential, etc.? I guess what I’m asking is should the definition of ‘lead’ be modified to account for the scenario I’ve presented?

In my mind, a prospect has 3 components; company, contact, and business need. If I have 2 of the 3 components, do I have a lead? Your definition is satisfied with contact and business need. My example is satisfied with company and business need. Your definition is also very specific with respect to direction of information flow, i.e. the individual providing contact information. My example is the opposite. And maybe therein lies the difference; your definition may apply to Marketing style engagements, whereas my example is more Sales oriented (the more traditional hunting). But in my books, they are both still valid leads.

Your thoughts?

Hi Catherine,

You bring up an interesting point in regard to the Marking and Sales-oriented definitions of a lead and prospect. Our definition (which certainly comes from a Marketing perspective) is based on the premise that a user needs to have done something to enter your business space in order to be considered a lead or a prospect. Whether that takes the form downloading a document from an email campaign, communicating with a representative, requesting more information on a web form, or dropping off a business card, we wouldn’t consider anyone a lead until they’ve interacted with our company and we have access to some form of contact information for an individual at the company. To put it into your taxonomy, we would require that every lead and prospect have the “contact” component.

Typically, in a situation like you described, we would consider an individual at Company X a target and the company itself a target account. If we knew that this account was currently engaged in the buying process, we would upgrade them to an active target and active target account, respectively. As soon as we were able to get them interacting with us, we would then upgrade them to lead or prospect depending on the situation.



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