What is the Difference Between a Lead, Account, Contact and Opportunities?
If you are new to CRMs (customer relationship management) systems, these terms may also be new. Most CRM (customer relationship management) systems use these 'buckets' to categorize records. Almost all clients have questioned the definitions and how to use them - with some, often, revisiting the conversation.
What's Natural to You?
The definitions seem to vary by almost everybody. Most sales people look at an account as an existing customer - that could potentially provide a lead for new business within the same company. Or they feel a lead could be from a list of trade show attendees they met. Some would like to turn an account back into a lead if they do not move forward with a sale. Let's shed some light on these concepts...
Most CRMs follow a similar flow: a Lead >> converts to >> an Account / Contact + Opportunity
What is a Lead?
Remember restaurants used to have fishbowls that you would put your business card in for free lunch (maybe some still do)? All you have is a name and contact info. A lead, by loose definition in Zoho CRM Plus and Salesforce, is the same thing - a person (not a company) that you have contact information for. They do not know you and you do not know them. You market to a lead to develop interest in your product or service. Your objective is to convert the lead into an opportunity (or transaction) to close the sale.
Sometimes it can take some time to nurture a lead, so you leave them as a lead and may use a sub category (or subcategories) within the leads to identify their level of potential interest by labeling with levels of cold, warm or hot - or 1, 2, 3. You can then use these sub categories along with other criteria to send email / social campaign messages to further develop interest.
What about Leads for Companies with Multiple Contacts? Hint: Prospect.
What if you have started pursuing a lead, but still do not have a grasp on if they would be a good qualified candidate to focus on selling - but now have been connected to many contacts within that company? We advise you should not keep them as a lead in that case, because you would have three separate leads without any cross association. We recommend converting them into an account labeled as a prospect. This works especially well if you sell a more complex product or service to larger organizations where many people may be involved.
Example: You call on someone you met at a trade show (a new lead) but they are not a decision maker; however, they connect you with someone you should talk to. Do you create a lead with only the name of the second person - whom you haven't talked to - and forget the original connector? Not ideal. We recommend creating a lead for the first person, then convert them into an account labeled as a prospect, then add the second and future additional people as contacts under that account. Secondly, we would recommend adding an opportunity with an initial stage of "qualifying" to keep the effort on the radar. In essence, the opportunity becomes the lead. I know, confusing but hear me out...
When Should I Convert a Lead?
Good question - and one asked by almost every client we've worked with. The answer is - it depends. Other than the example above, it depends on how soon in the sales process you need exposure and visibility for a potential for a transaction to start. You do not want to clutter up your opportunity funnel with deals that will not close, but you also do not want to leave everything in leads until it closes. What makes sense for you?
Example: One of our clients mails tens of thousands of marketing letters every month. Each 'lead' they mailed to was already in their system. Each had a special code used by the lead when they called in to inquire about the letter. This company would leave the lead as a lead until they finalized a purchase. The challenge is, they completely lost visibility to how far the lead had actually progressed in the sales process if they didn't finalize the purchase. We recommended they start converting and marking their stage for where they left it so their reps could more efficiently follow-up with each that didn't close instead of just working to close new leads - thereby increasing their sales.
Different Types of Accounts
Accounts can be split into different buckets: they do not have to just represent customers. We have clients that have created separate status (there is a field labeled type in Zoho and Salesforce): prospect, customer, past customer. Pretty self explanatory - the first is someone you have yet to sell to, the second is one you have sold to and the last is someone that has purchased but hasn't for a certain period of time (or perhaps a contract ran out). You set the default status as 'Prospect' so that when you convert a lead, it will automatically set it as a prospect without having to change it.
Having them in different buckets allows you to build filtered lists and reports.
What Is a Contact?
In most cases, a contact is a person that belongs to either an account or vendor (Zoho has a separate tab for vendors, Salesforce does not). You can have multiple contacts associated with either. However, if you have the enterprise level of Salesforce with person accounts enabled or Zoho without the company field required, you do not need to have a contact 'belong' to an account. A contact can also be associated with an opportunity through something called a contact role.
Can a Contact be a Lead?
Yes and no.
A contact cannot be both a contact and a lead in the CRM - it has to be one or the other. However, once you have a contact within an existing account, and they let you know they may be interested in buying again, you may consider them a 'lead', but only as a new opportunity with that contact / account.
What is an Opportunity?
An opportunity should be number one focus of your sales efforts - this is where the money is. An opportunity is typically created when you convert a lead. Both Zoho CRM and Salesforce provide the option to create one upon conversion. As mentioned before, if you have an existing account/contact, you would create a new opportunity versus a new lead to represent the potential transaction. These can be renamed in Zoho CRM Plus and Salesforce to anything that better fits your terminology: Deal, Potentials, Orders, etc.
Most opportunities go through a series of stages or milestones as it works through the sales process - until it is 'won' or 'lost'. The stages allow you to categorize where they are now and identify what the next step / stage / milestone is to nudge them towards.
Once the opportunity is won, you can have a workflow automatically update the account status to 'customer'.
As you go through your sales day as a sales rockstar, you will add new leads, convert leads into new accounts / contacts / opportunities as well as create new opportunities for existing accounts/contacts.
Hope that helps! If not, feel free to reach out via a comment below, start a chat in the lower right or reach out via our contact form here.
David Edkins started his career at Hewlett-Packard; in finance. He thought he wanted to become a CPA and that HP would look good on a resume. After a year or two he realized he wanted to engage with customers directly by selling their consulting services.