Prospect vs. Lead vs. Buying Signal

The terms prospect, lead and buying signal are all well-known to B2B sales professionals, but their differences can be unclear. In part, the reason is that different CRM and marketing automation providers are using the terms in different ways. That's why we feel a clarification between prospect, lead and buying signal, and their roles in sales process, seems appropriate.

Our definition is very close to the framework used by HubSpot among others, and helps unify the conversation within a sales team, and further enhance sales and marketing alignment, or smarketing. Be sure to clarify sales terminology in your sales playbook!

What is a Prospect?

A prospect is a potential customer — either a contact person or an organization — that matches the definition of your ideal customer profile. Often salespeople use a sales intelligence platform (a database enriched with open and public company data) to find prospects.

What is a Lead?

A lead is a contact person who has engaged with your offering and, therefore, has possibly indicated some interest towards your product, service or merely the content you've produced. Leads are usually generated with the help of marketing automation systems. Unlike prospects, an active and "hot" lead might work in an organization that doesn't match your ideal customer profile, meaning they won't benefit from your offering.

What is a Buying Signal?

A buying signal is an event happening in an organization that either a) makes the company match your ideal customer profile or b) gives you a good reason and angle to approach a company which already matches the definition of your ideal customer profile. To recognize these buying signals, salespeople are using sales intelligence solutions such as Vainu, or actively following different media.

How do prospects, leads and buying signals land in the sales process?

The role of these terms depends largely on an organization's investment in inbound and/or outbound. A company relying purely on inbound usually has a lead as the starting point of its sales process, with leads being nurtured forward in the pipeline. Salespeople working at a company which relies purely on outbound, or on a combination of inbound and outbound (sassily named smartbound) usually track a large group of prospects and, at the same time, are actively prospecting more. Whenever a buying signal comes up, these salespeople can quickly react and offer a relevant solution to their prospect’s needs, which has just emerged.

From worst to best, the rank order of these terms is lead, prospect, buying signal. A lead isn't often interested in buying, let alone working in a company which would be potential to your offering. A prospect, on the other hand, might seem like a perfect client on paper, but the timing might not be fitting. However, a buying signal from a prospect that matches the definition of your ideal customer profile is worth gold, and gives salespeople an opportunity to present themselves as heroes, who can solve buyer's problems at once.

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Prospect vs. Lead vs. Buying Signal Miikka Jokela

Vainu's Growth Strategist by day. Songwriter by night. And mountaineer scaling +6000 meter peaks on holidays.