What is a sales opportunity, and when do you know it's not a lead anymore?
There is no single, universal definition. However, some common misconceptions deserve to be clarified because the concept of an opportunity impacts your sales process, your ability to qualify, and your alignment with marketing (if you can't agree with marketing on what an "opportunity" is, you'll have all kinds of challenges in scaling your sales).
In this article, I am writing about a first-stage opportunity, immediately after it's converted from a lead — the true starting point of your selling process.
A sales opportunity is a qualified prospect who has a high probability of becoming a customer. An opportunity should have a pain point your product or service can solve and an interest in the offering. Salespeople should ensure the opportunity is a good-fit for what they're selling.
Even a brand-new sales rep knows that a "sales opportunity" is when you are working with a qualified prospect who has a good chance of becoming a customer. But what does "qualified" mean, and how do you know the chance of a deal is not imagined? After all, typically only 10 to 15% of B2B sales opportunities become deals.
This might seem like a picky point, but the definition of "sales opportunity" at your company has significant bearing on forecasting accuracy. If each rep has a different conception of what entails an opportunity, they'll move leads through the CRM sales stages at wildly varying paces.
With such inconsistency across your sales team, good luck projecting revenue with any hope of accuracy — you need to define clear sales process stages to ensure deals are being categorized correctly. It's also possible salespeople are taking shortcuts in the sales process because they don't understand the value of accurate forecasting, and believe that appearing to have more opportunities in the pipeline is better.
Lead vs Opportunity
A lead is an individual who's at the top of the funnel and hasn't yet been qualified. For example, they might have downloaded a piece of content like a white paper or an eBook or they were contacted by a sales rep via a cold call. An opportunity is a qualified prospect with a high chance of closing.
Let's start with the definition of a lead. A typical B2B "marketing-generated lead" is an inbound top of the funnel inquiry; for example, a white paper or eBook download. A "sales-generated lead" is an outbound asset — maybe a person an SDR called and got interested in learning more or scheduling a call.
But a "sales opportunity" is more than a "lead," and herein lies the rub. Many think that a lead becomes an opportunity when you qualify based on BANT criteria — Budget, Authority, Needs, Timeline. However, as the name of this article suggests, that's not the case in my opinion.
The reason is this — it should not be necessary to know the prospect's budget, timeline, or authority right at the very beginning when you're just deciding whether you have enough there to convert the lead to an opportunity.
If the prospect tells you that she has budget and a 30-day timeline to buy your product then you have yourself a nice late-stage opportunity with maybe an 80% chance of closing, not a first stage opportunity that typically comes only at a 10 to 15% win rate.
So, if BANT does not a first stage opportunity make, what does? At the most fundamental level, I believe all sales opportunities should share three traits. Start with these, and then layer criteria particular to your company on top.
Lead vs Prospect
A lead is a top of the funnel, unqualified contact. Leads have typically expressed some level of interest in your product or offering, but have not been qualified to determine if they fit the ideal buyer persona or would benefit from using the product. A prospect is a contact who has been qualified as an ideal customer who would consider buying.
How to turn a lead into prospect
Sometimes there's confusion between a lead and a prospect. A lead is an unqualified contact, while a prospect is a qualified contact who has been moved into the sales process.
To turn a lead into a prospect, walk them through the sales qualification process to assess if your company’s products or services are the right solution to their problem. There are three stages of prospect qualification:
- Organization-Level Qualification — During this initial stage, verify the lead matches the key qualities of your company’s buyer persona. Consider factors such as demographic location, industry, and company size (if selling B2B).
- Opportunity-Level Qualification — In this stage of the qualification process, determine if the prospect can feasibly implement your company’s offering, and if they would benefit from using your product.
- Stakeholder-Level Qualification — Once you have determined the lead fits your ideal customer persona, and could benefit from using your product, confirm if they have the authority to make a final purchasing decision. If not, you may need to identify the correct stakeholder to proceed through the sales process with.
Check out this graphic to understand how contacts move from leads, to prospects, to opportunities.
So, how can you move leads and prospects to opportunities? Look for these characteristics.
Characteristics All Sales Opportunities Must Share
I think we can all agree that a lead needs to have some sort of pain (AKA need) before they can be converted into an opportunity. People generally buy to reduce pain, so if there isn't pain, there probably isn't a high likelihood of a sale.
However, it's the job of the sales rep to identify that pain. Just because a prospect doesn't explicitly express the pain to you out of his or her own volition doesn't mean there is none. To be successful in sales, a sales rep needs to develop the right qualification skills to bring that pain to the surface and pull it out of prospects by asking carefully crafted questions.
This goes for inbound leads as well. It's great that a prospect downloaded an eBook from your website, but that might just mean they want to learn the content. So the rep still needs to qualify for pain before converting the lead into an opportunity.
The next thing I look for is interest. For example, the prospect might be aware of their problem, but does that mean they're interested in solving it? Ask them how long they've had this problem. If they say it's been around for 20 years, then why would they care to solve it now? They've lived with the issue a long time without being bothered by it. There is clearly little interest in solving it. Executives must pick and choose their battles, and the most acute pain will get solved first.
Let's say you have a prospect who has a pressing need and a strong desire to solve the problem. Just one issue. They operate a three-person company, and your product is made for businesses with 100+ employees. Does this person represent a sales opportunity?
No, because they're not the right fit for your offering. They might want to buy your product, but the salesperson shouldn't sell it to them. Since the product and the prospect's situation aren't well aligned, it's a recipe for an unhappy customer. And unhappy customers often take to online review sites to express their frustration.
What You Don't Need to Qualify a Sales Opportunity
In my opinion, these three traits are the only criteria salespeople need to establish before converting a lead to an opportunity in their CRM.
Sales reps who qualify with the BANT framework might be a bit confused. Where's the budget qualification? The timeline? The authority?
If you are able to establish B, A, N, and T during a first call, then you don't merely have an opportunity on your hands — you practically have a deal! The prospect is far more advanced than a first stage opportunity.
By definition, an opportunity means that you have a chance of selling a customer — not a guarantee. A fully BANT-qualified prospect is essentially a guarantee. An opportunity is a prospect who has pain, interest in solving that pain, and fit. A salesperson can pick up on the budget, timeline, and authority throughout the sales process to further qualify (or disqualify) the opportunity.
Using these three criteria to upgrade leads to opportunities ensures that sales managers and leaders analyze apples to apples in reporting. Once you've established the milestones a lead needs to satisfy to be considered an opportunity, put similarly well-defined criteria in place for the other stages in your sales process. Clear exit criteria ensure consistency and repeatability — the foundations of a strong sales process.
To learn more, check out the sales cycle explained in less than 500 words next.