What Is a Sales Lead? How It Works and Factors Affecting Quality

What Is a Sales Lead?

A sales lead is a person or business who may eventually become a client. Sales lead also refers to the data that identifies an entity as a potential buyer of a product or service. Businesses gain access to sales leads through advertising, trade shows, direct mailings, third parties, and other marketing efforts. A sales lead is not really a sales "prospect" per se because a business would need to examine and qualify the potential new client further to determine their intent and interest.

Key Takeaways

  • A sales lead refers to a person or business entity that is currently not a client but may eventually become one.
  • Sales leads can also be the data that identifies someone as a potential buyer of a service or product.
  • Several factors determine the quality of the sales lead, such as the accuracy of the contact information, the incentive used to motivate the prospect, and whether the prospect was aware of the sales opportunity at the time they responded.
  • Companies use a variety of marketing methods to generate sales leads, such as direct response marketing, advertising, sales calls, email marketing, and social media.

How a Sales Lead Works

The sales process begins when a sales professional generates, qualifies, and places the sales lead data into a company's sales pipeline. Salesmen use the lead's contact information to send sales-pitch emails, direct marketing materials, and to make outbound sales calls.

Several factors determine the quality of sales leads, such as:

  • Whether the individual or business had the incentive to offer contact information
  • The accuracy of the data provided
  • The validity of the sales lead

A sales lead's validity depends on whether the targeted person was aware of the sales opportunity when they responded.

The Age of Internet Sales Leads

A report issued by Pew Research Center in April 2021 reveals that more than 90% of Americans regularly access the internet. Because of this high level of access, the Internet provides ample opportunities to obtain sales leads. However, acquiring sales leads is a strategic process that requires skill and effort.

Businesses gain quality sales leads by using the internet to inform themselves about consumers' unmet needs or problems and then offer solutions to them. For example, technology sector businesses may provide e-books, hold webinars, and broadcast podcasts to enlighten consumers about using a product or software. Sales professionals could hold interactive online sessions and publish question-and-answer (Q&A) materials for a similar purpose.

The internet allows sales professionals to extend their reach globally. However, many internet users are wary of providing their personal information online. Increasingly, consumers are demanding that the information they submit online is kept private.

Social Media Marketing

Social media marketing is a type of digital marketing that uses popular social media platforms—such as Facebook, Twitter, Pinterest, and Instagram—to reach potential customers and share a company's message. Effective social media marketing campaigns try to engage social media users by encouraging comments, likes, and sharing of the company's messages and posts.

Some social media campaigns are primarily to develop brand awareness of a company's products or services. Others develop sales leads by encouraging viewers to signup or provide their contact details in exchange for a free product, discount, or download.

The "freebie" that the company entices the viewer with is called a lead magnet. Lead magnets can take many forms. Popular ones include trial subscriptions, free consultations, special reports, tip sheets, white papers, and sample products. The marketer will then use the provided contact information to send the prospect additional messages that will entice the person to make an actual purchase.

Alternative Ways to Find Sales Leads

The type of business you have, and the customers you are trying to reach, will impact how you look for and acquire sales leads.

Traditional in-person networking tends to be quite effective. Industry trade shows and networking events provide a wealth of sales leads for businesses, as does your local chamber of commerce. Disseminating information about products or services through advertising in local media also is useful.

Social responsibility can foster sales leads as well. By being socially responsible, businesses that give also receive. When a company or its employees donate time, effort, or supplies to local public service and nonprofit organizations, they don't just get to feel good about helping others. They also put their company's name in front of many viewers, sometimes through media coverage, which can generate numerous contacts including sales leads.

What Is a Sales Qualified Lead?

A qualified lead, or sometimes a sales-qualified lead, is a potential customer who has moved through the sales pipeline. Their information has been acquired as a sales lead, and they have demonstrated enough interest that the sales team can work to turn them into an active customer.

How Do Businesses Protect Against Losing Leads's Private Information?

As companies store more data from sales leads and customers, the impact of a privacy breach becomes more serious. Businesses can spend significant money dealing with the fallout of a data breach. Some companies concerned about potential losses they could suffer from privacy breaches of their customers' confidential information will opt to buy cyber and privacy insurance.

How Long Does It Take for Sales Leads to Turn Into Customers?

How long it takes to turn leads into active customers will depend on your business model, type of products or services, ideal customer, and the cost of a purchase. It will be easier, for example, to turn a lead into a customer for a $5 product than for a $500 product because most consumers take longer to make big purchasing decisions. Leads may need to be exposed to your brand or product seven or more times before they are ready to become an active customer.

The Bottom Line

A sales lead is a person or business entity that may become a client or customer but isn't one now. It can also refer to the data that a company holds which identifies potential buyers. Companies use many methods to acquire leads, including advertising, direct response marketing, email marketing, social media, and cold calls.

The quality of a sales lead is determined by the accuracy of the contact information you have for them, the incentive used to motivate them to become a prospective buyer, and whether they are aware of the sales opportunity. A qualified sales lead is one that is ready to be passed to the sales team and converted into a customer.

Article Sources
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  1. Pew Research Center. "7% of Americans Don’t Use the Internet. Who Are They?"

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