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Sales Lead Definition & How It Works

Updated: November 18, 2022

It’s no secret that sales contribute to both short-term and long-term growth for any business. Offering a product or service that customers love is only part of the challenge, they still need to make a purchase. And within this, a sales team is often what helps an organization tick. 

It doesn’t matter if your business is big, small, or medium-sized. And while it might seem obvious that closing a sale is important, it can often be difficult. That’s why finding and capitalizing on a sales qualified lead is a critical aspect of business success. 

So what exactly is a sales lead and how does it work? What do you need to know and is it different from a prospect? To help, we put together this guide to cover what you need to know for your sales cycle. Keep reading to learn all about sales leads!

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    • A sales lead is a person or business that has shown interest in making a purchase of your product or service.
    • Several tactics can get used to generate sales leads. These include advertising, networking, and an email marketing campaign. They can also include social media campaigns, direct response marketing, and internet marketing. 
    • One of the most basic types of sales leads is from a customer filling out and submitting personal information on your website contact form.

    What Is a Sales Lead? 

    On a basic level, a sales lead is basically a prospective customer that might have an interest in purchasing the product or service you offer. However, when the sales lead first occurs you might not have any idea as to why or what specific product or service. As a decision maker, one of the easiest ways to try and understand this is that a sales lead is the start of the consumer’s journey to buying. 

    Optimizing lead generation is a critical aspect to the sustained success of your business and its continued growth. Generating leads is typically the first step that will happen within the entire sales process. But, they can come from any number of different channels. 

    For example, a common type of sales lead can come from a customer filling out a contact us form on your website. They might include their name, age, occupation, and gender. It’s a basic lead, but it’s sales lead management nonetheless. 

    It can be common for leads to get communicated in a large-scale way. Many businesses implement specific campaigns that are directed toward their target audience. These campaigns can be through email marketing, social media, or even an integrated campaign. The key is that there is a management process that helps drive access to sales leads. 

    So, what does all of this mean in simple terms? Basically, a sales lead is a potential buyer of your product or service that has provided some basic information to you. This ultimately suggests that there’s an interest in purchasing your product or service. 

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    How Does a Sales Lead Work?

    It all starts with some basic information. To keep things simple, we’ll say that a potential customer submitted a bit of contact information on your website. This is when the sales process begins and your marketing efforts are further utilized. 

    From here, sales representatives or your marketing team might generate and compile the sales lead data into your business’s sales pipeline. You would then contact the sales lead through an outbound sales call, for example. Or, you could use their contact information to send direct marketing materials or sales-pitch emails. 

    There can be a few things to keep in mind with a sales lead, however. Several different factors are going to determine the level of quality a sales lead offers. Things like an incentive for a customer to provide their contact information often come into play. There’s also a need to verify the accuracy of the information that’s provided. 

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    Essentially, the validity of a sales lead is going to depend on whether or not the potential customer was aware of a sales opportunity. This is all important information to try and break down and decipher to have the customer continue through the sales funnel.

    What’s the Difference Between a Sales Lead and a Prospect? 

    The biggest difference to account for between a sales lead and a prospect is that the lead is what starts the process. Once they provide contact information or show interest in a sales opportunity, they have now engaged with your business. 

    This shows promise that the sales lead has the potential to purchase your product or service. Once this happens, this is when the sales lead will turn into a sales prospect. Exceptional sales leaders know how to establish deeper sales relationships, and this is felt across the entire sales team.


    Sales are often the driving force behind the success of any business, no matter the type of product or service offered. This is why generating sales leads and moving them through the sales funnel is incredibly important. Each sales lead is a potential purchase, so you want to keep and maintain as many leads as possible. 

    Things like social media marketing can help create brand awareness and develop sales leads. You can encourage customers to sign up or provide an email address in exchange for something in return. This is a common form of lead agent. Other forms could also include things like trial subscriptions, free consultations, tip sheets, sample products, and even special reports. 

    It’s important not to underestimate the importance of converting the quality of sales leads into prospects.

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    FAQs About Sales Lead

    What Are Good Sales Leads?

    A good type of sales lead to strive for is one that’s similar to a customer that has previously purchased your product or service. That said, every lead can turn into something more, so you should never overlook the power of lead generation.

    What Are 3 Ways of Getting Sales Leads?

    Sales leads can come in several different forms. Customer referrals are one of the most effective and proven ways to generate sales leads. Leveraging the power and reach of social media platforms is also an effective strategy. You can also provide a simple contact information form on your website.

    How to Turn a Lead Into a Prospect

    To turn that lead into a prospect it’s important to keep and maintain good records. It will also be helpful to plan your approach and make offers to the leads that have meaning. From here, you can continue to listen and investigate ways to engage the lead further.

    What Is an Example of a Sales Lead?

    A good example of a sales lead is when a customer visits a business and provides their contact information when they’re interested in a product or service. Calling or following up with them at a later date provides an opportunity to generate a sale. 

    How Do You Evaluate Sales Leads?

    One of the first steps to take is to gather additional information from a potential customer that contacts your business. You can find out about how they found your company and their interests to help determine if they are a potentially serious customer interested in your products or services.

    How Do You Generate a Sales Lead?

    There can be several avenues to generate sales leads. You can have networking events to engage with potential leads, ask current customers for referrals, or promote your business across social media to name a few. Generating leads is essentially making contact with and collecting information from potential customers. 


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