What is the primary difference between contact management and opportunity management?

Many times we are asked: “What is the difference between a CRM lead and an opportunity?” If you are asking yourself exactly this questions, then I will try to explain it in a very simple and easy way. Imagine yourself being a fisherman who is about to conquer the high seas looking for fish to catch!

“Fish to Sales” terminology

You, the fisherman, have a fishing rod and are about to set to sea in order to find fish. Your goal is to find Nemo, who is your happy customer. In order to find Nemo, you will have to follow a specific procedure, which can be compared to your sales steps. Below you can find same basic “fish to sales” terminology that will help you to understand the difference between a CRM lead and an opportunity:

• Fisherman = You
• Fishing Rod = Your Product or Service
• Sea = Your Sales Territory
• Nemo = Your Happy Customer

What can you find in the sea?

Each fish in the sea represents one potential contact. Moreover, if a fish swims with other fish, then this group or pod of fish represents an account. Since there are always “Plenty of Fish in the Sea”, you can say that your sea is full of fish (contacts) swimming in many pods of fish (accounts). However, only few of them can eventually be your Nemo or sales opportunity!

• Contact = Fish
• Account = Pod of Fish

Now it’s time to find Nemo!

Any individual fish or pod of fish in your sea represents one lead. Your Nemo will not be the first or the second fish that you catch. At the beginning, you will have very little information about the Nemo you would like to catch. You will start to examine your fish and create some criteria as to how Nemo should look like. In other words, you are qualifying your fish.

• Lead = Any Fish in The Sea.
• Opportunity = Nemo

The process of examination and adding the criteria represents your sales pipeline strategy. It’s always true that:

“Without a commitment to pursue working together (something that results in this company potentially buying from you) there is no opportunity.” – Anthony Iannarino

At the end of your examination ie. of your sales process, you will either let the fish swim back into your sea (lost opportunity) or you will put Nemo into your aquarium (won opportunity).

• Won Opportunity = You have found Nemo
• Lost Opportunity = You have not found Nemo

So, what is the difference between a CRM lead and an opportunity?

A Lead – is a contact or an account with very little information. It could be just a person who you might have met at a conference. You will need to retrieve more information regarding this lead in order to create (qualify) an opportunity in your sales pipeline. A old sales rule says: “If you have never contacted your contact, it’s a lead.”

An Opportunity – is a contact or an account which has been qualified. This person has entered into your buying cycle and is committed to working with you. You have already contacted, called or met him and know their needs or requirements. The old sales rule says: “The opportunity is a deal that you have the possibility to close!”

“Think about the difference between a lead and an opportunity as an evolving process i.e. each lead needs to be qualified to an opportunity. There will always be plenty of leads in your sales territory, but only few of them will qualify to become real sales opportunity.”

We have successfully build Pipeliner around this sales pipeline technique. Do not hesitate to try Pipeliner and use it as your lead and opportunity management system.

Please let us know what in your opinion are the biggest differences between a CRM lead and a sales opportunity.

As a small business owner, do you ever feel like you’re drowning in a sea of business buzzwords? Well, you’re not alone. And luckily, there won’t be any mention of “synergy” here. 

Instead, let’s talk about things that can better your business like lead management and opportunity management. 

Although they may sound like trendy buzzwords, they’re actually critical functions for every small business. 

Not sure what the difference is? Keep reading to find out.

First things first, what are leads and opportunities?

To start, let’s note that there are different schools of thought about what defines a lead versus an opportunity.

Some describe a lead as a contact you don’t know much about and say that leads only turn into sales opportunities when they express interest in buying from you. However, this metamorphosis mindset can be confusing.

For the sake of clarity, we view a lead as a potential customer whose contact information you’ve acquired. Please note that a lead may refer to an individual or a company, depending on your sales process and business.

When it comes to sales opportunities, you can think of an opportunity as a source of potential revenue for your business. Or, in other words, as an opportunity for you to sell your product or service to someone. 

Since sales opportunities aren’t the same as sales transactions, opportunities exist solely in your CRM or sales tracking system. 

Not surprisingly, leads and opportunities are closely related. For example, say a marketing consultant is approached by a retail store that needs help with its social media strategy. 

The consultant now has a new lead (the store) and a new opportunity (to consult on social media strategy).

Method:CRM users: Stay organized while speaking to multiple people at the same company by adding new contacts to an existing lead.

Leads vs. opportunities: A closer look at the differences

As explained above, a lead can be a company, an individual, or an individual within a company that your sales team has identified as a potential customer. 

You may or may not have had any contact with a potential lead but they have agreed to share their contact information with you. 

Now, it’s important to note that not all your leads are equal. Below are the seven major ways to categorize your leads.

What are the different types of leads in sales?

1. Cold leads – These are leads that have had little nurture and that usually have little-to-no contact with your business. 
2. Warm leads – These are people who are familiar with your company and what you do. You or your team may have already had contact with them in the past.
3. Hot leads – As you probably guessed, a hot lead is a contact with a good chance of purchasing from you. They may have reached out for more information on your products or expressed interest in buying from you.
4. Information qualified leads (IQLs) – These are leads that have come to you through gated content like an ebook or report. You have their contact information but these leads may have not shown specific interest in purchasing from you.
5. Marketing qualified leads (MQLs) – MQLs are considered to be further down the sales funnel than IQLs. MQLs are similar to IQLs in the sense that they come from your marketing efforts but are usually more familiar with your business and products.
6. Sales ready lead – A sales ready lead is one where a potential customer requests to speak with a salesperson. They may still be on the fence but are interested enough to discuss the possibility of purchasing from you.
7. Sales qualified leads (SQLs) – Once a member of your sales team has qualified a lead and opportunity, they are now an SQL. 

How to decipher lead quality

Some leads are ready to buy the product or service you offer, while others have just recently heard about your business. So, this is where lead qualification and prioritization come in.

When evaluating lead quality and the likelihood of a purchase, the BANT framework is helpful. 

The BANT method uses the following criteria to evaluate leads:

• Budget. Does this lead have enough budget to buy my goods or services? 
• Authority. Does this lead have the decision making power needed to buy from me? 
• Need. Does this lead need my products or services? 
• Timing. When is this lead looking to purchase? 

By asking yourself these questions, lead prioritization becomes a lot easier. And better yet, using BANT might even increase your win rate and sales!

What should I look for in my leads?

Ideally, your lead is the person with purchase authority or is someone who can influence the decision maker. Even better, if your lead is currently in the market for a product or service you sell. 

You’ll also want to do your best to find leads that align with your target industries and buyer personas.

For example, imagine that you sell the forklifts that warehouses use for order picking. 

The type of leads you want are companies that have warehouse operations. As a result, you should seek out and prioritize the Procurement Leads and Warehouse Managers at these companies as you can assume they’ll check at least half of the BANT requirements. 

Not to mention that they’ll know the difference between forklift models and understand the benefits of your forklifts over your competitors’.

When it comes to sourcing leads, a targeted approach like the above results in more sales opportunities and closed deals. 

Now that you’ve learned some lead generation best practices, let’s move on to when your leads become opportunities.

When does a lead become an opportunity?

Opportunities are associated with leads that have a high chance of converting into a sale. The transition from a lead to a sales opportunity often results in some qualification by your sales team to ensure only legitimate opportunities go into your sales pipeline.

How do I convert leads into sales opportunities?

Your business probably has specific steps that your sales and marketing teams follow to get a lead through your sales funnel, some of which we’ve spoken about above. 

On a high level, lead and opportunity management helps you convert leads into opportunities by trying to accomplish the following:

• Seeking out the right leads and contacts who need your products and services, can afford them, and who have the authority to make or influence the purchase decision. 
• Having effective communications with a lead or contact. This means establishing touchpoints for engagement with potential customers, showing the value that your service or product provides in addressing their needs, and developing a rapport with them. This can be done through the content on your website, social media engagement, and email nurture campaigns.
• Following up with leads to qualify them as opportunities. Usually for a lead to become a sales opportunity, there will have to have been some direct communication between the potential client and someone on your sales team or in your organization who recognizes that there is a high possibility of a sale.

Of course, the above are just the basic ways of converting a lead into a sale but usually, all three will happen when leads become sales opportunities.

Where do leads and opportunities come from?

Since we’re all on the same page about what leads and opportunities are, let’s look at how to get more of them. 

Thankfully, there are countless ways to acquire new leads and unlock sales opportunities. A few examples are:

• Networking at events.
• Online lead gen forms.
• Getting referrals from existing customers.

Depending on how you generate leads, you may acquire sales opportunities simultaneously, or the opportunities may arise later. 

Regardless, your best shot at turning these leads into customers is to get their contact information into your CRM so you can follow up with them.

Method:CRM users: Click “Setup” on your Web to Lead app to change the Method user that new web leads are assigned to by default.

What are leads and opportunities in your CRM?

Let’s begin with a quick refresher on CRM.

CRM stands for customer relationship management. It’s a system or process your company has for handling all the interactions you have with your current, former, and potential customers. 

Using a CRM to manage your leads and opportunities is helpful because it:

• Simplifies your lead qualification and nurture process. 
• Automates many time-consuming and manual sales workflows. 
• Tracks your sales opportunities and leads’ progression.

All of which helps you speed up your sales process, better connect with leads, and close more sales.

What’s the difference between lead, opportunity, and contact management in your CRM?

Next, let’s look at what the difference between leads, opportunities, and contacts is in your CRM.

To start, lead management is the process of qualifying, tracking, and engaging with your potential customers. 

Using a consistent qualification methodology (such as BANT) helps you identify which leads are most likely to buy, so you can prioritize those follow-ups and reduce the length of your sales cycle. 

Method:CRM lets you rate leads as hot, warm, or cold, making it easy to filter for the most promising prospects.

The rationale for opportunity management in a CRM is similar. Ideally, you want to focus your energy on the highest-value deals that are most likely to go through. This is accomplished by assigning opportunity stages in Method:CRM. 

Each stage, from prospecting to negotiation, has an assigned probability percentage that indicates how close you are to closing the deal and shows you the potential revenue in your pipeline.

Now onto contact management. Contact management is the storing, organizing, and tracking of your leads, customers, and vendors. 

Using a CRM is particularly valuable for contact management as it acts as a hub for all the information you have on your: 

• Leads
• Customers
• Vendors

When it comes to contact management, your CRM is a central record of your contacts’ phone numbers, addresses, transaction history, and more! By housing all this data in one system, the information you need is easy to find and can be shared with your whole team. 

With plenty of moving parts associated with lead, opportunity, and contact management, using a CRM solution is a great way to keep track of all this information.

How do I create a customer relationship management system for my business?

There is no one specific answer to this question as each business will implement the CRM process that is customized to meet its needs. 

Having said that, there are a few things that a CRM system tries to accomplish regardless of what business you’re in. Here are the key purposes of a CRM solution like Method:

• Act as a contact goldmine – Your CRM holds all the information about customers, leads, and vendors including all previous communication and interactions your business has had with them.
• Instant access to up-to-date information –  A CRM keeps everyone connected and empowers your team to make decisions with data that’s accurate and updates in real-time.
• Provide a 360-degree customer view – A CRM gives you insights into the behavior of your leads and customers that you can use to improve your marketing and sales strategies.  
• Streamline your sales and customer service – The online portals many CRMs offer, take work off your team’s plate by enabling immediate, self-service for your customers.

Who should care about lead management and opportunity management?

Lead management is of great interest to marketing and sales teams. Here’s why.

Your marketing team wants to know who your leads are and where they came from, so they can design effective email campaigns and invest in marketing efforts with high ROI. 

Meanwhile, your sales team needs to link those leads to opportunity management so they can:

• Identify potential sales.
• Build relationships.
• Generate revenue. 

The prospect of revenue also makes opportunities in the pipeline very important to sales managers, as they use pipeline management data to forecast future performance.

Of course, some small business owners wear all of these hats in which case, all of the above is relevant!

Method:CRM users:  Check out the “Opportunity by Stage by Close Date” chart for a visual overview of how opportunities are distributed across different stages in your pipeline. 

What happens to leads and opportunities after you close the sale?

Every lead starts as a potential customer but what do you do when they become a full-fledged paying customer? 

When you close a deal, the best practice is to update the stage of the opportunity to “Closed Won”. Next, you’ll have to convert the lead into a customer. 

Luckily, doing this in Method:CRM is as easy as unchecking a box. The newly converted customer will automatically sync over to your QuickBooks file, along with their contact and billing information.

In Method:CRM, closed won sales opportunities will remain in the CRM and will not sync to your QuickBooks account. They will no longer appear in your sales pipeline but they will appear in the won charts section of your Opportunities app and you can refer back to them anytime.

Method:CRM users: If you created an estimate for your lead, save time by converting the estimate into an invoice. Creating an invoice for a lead will also automatically convert the lead to a customer!

Recap: How to qualify leads and move sales opportunities through your pipeline

Effective lead and opportunity management are crucial for every business. No matter what industry you’re in, sales are the lifeblood of your business. 

This means that nurturing your leads into opportunities and those opportunities into paying customers is one of your business’s most important activities.

Using a CRM solution for lead and opportunity management provides you with:

• A goldmine of data your business can use to better understand your customers and grow your business.
• A shared sense of truth everyone your organization can access, update and use to serve your customers better.
• Reduce your operational costs by allowing your customers to make changes and view transactions with self-serve customer portals.  

In other words, using a CRM solution to automate your sales pipeline and manage your customer relationships can help you save money and win more business.

Maximize your sales: Start your free trial of Method:CRM today.

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