Salesforce Leads vs. Opportunities: Know the Difference
Understanding Salesforce's taxonomy of data and different functions is essential for unlocking the promising potential of your CRM.
Whether it’s acting on Leads as they enter your funnel or calculating revenue based on existing Opportunities, understanding how to classify and segment data by its importance in your CRM is critical for success.
One area of Salesforce that often generates confusion is Salesforce’s Opportunity Stages.
While Salesforce Lead Stages inside your sales funnel may be utilized from a marketing and sales perspective, Opportunity Stages are important for revenue prediction and a company's financial health.
This guide will explore the differences between Salesforce Opportunities and Leads and provide tips to help you manage the transition between leads and opportunities inside your Salesforce CRM.
What’s the Difference Between Salesforce Leads and Opportunities?
A Salesforce Lead is an individual or company inside your CRM that is not qualified by your Lead score criteria.
Leads are typically acquired through traditional marketing channels, such as email, SEO, or advertising, and need to be converted into Contacts or Accounts inside of Salesforce via a qualification process.
Once qualified, all contacts and accounts, users have the option to attach an Opportunity to a qualified Lead if they have the potential to bring revenue to your business via a sale or deal, A Salesforce Opportunity merely tells you the potential revenue a qualified Lead may provide and their probability of reaching a final stage deal or conversion.
To simplify this, let’s define each term:
- Lead: A person or organization first acquired in Salesforce via marketing efforts.
- Contact: A Lead that has been qualified and converted inside of Salesforce and has marketable information attached to its record. Contacts represent individual people.
- Account: A Lead that has also been qualified and converted but represents an individual’s business or organization.
- Opportunity: A qualified Lead with the potential to complete a sale.
How Do Opportunity Stages Relate to Your Sales Funnel?
In reality, an Opportunity serves a completely different function from a Lead inside your sales funnel. Both go through a series of stages meant to complete a deal, but Opportunity stages are ultimately designed to forecast revenue.
However, changes in your sales funnel will typically correspond with changes in your Opportunity stage, depending on the makeup of both funnels.
The key difference is just in how we approach each funnel and what metrics we assign to it. For example, sales reps may use metrics like conversion rate to determine the performance of their sales funnel from lead to deal stage, while higher executives may use Opportunity stages to evaluate sales performance based on past and anticipated revenue from each sale.
- Leads represent any potential marketable individual or business inside your CRM that is not currently qualified.
- Opportunities represent leads that are qualified and have the potential to complete a purchase/sale.
- Lead Stages track the steps a lead must go through to complete a transaction.
- Opportunity Stages represent the same steps but denote the probability and anticipated revenue generated from a sale.
Understanding Opportunity Stages
With these differences noted, we need to understand how Opportunity Stages work to get a clearer picture of the difference between Leads and Opportunities.
Once a Lead is qualified for an Opportunity, it will be divided into several stages, similar to your sales funnel. Salesforce’s default Opportunity Stages include:
- Prospecting/ Qualification: The Lead is being qualified as an opportunity.
- Needs Analysis: The Lead is qualified but needs further analysis.
- Value Proposition/ Id. Decision Maker: The Lead is currently midway through the sales funnel and is engaging with the business.
- Proposal/Negotiation: The Lead is being actively pursued in a potential sale.
- Closed Won: The Lead completed a deal.
- Closed Lost: The Lead did not complete the deal and is no longer considered an active lead.
Each Opportunity Stage will also come with its own probability of success. For example, the Prospecting Stage usually yields a 10% probability of success, while the Proposal Stage could be upwards of 90%.
This probability directly impacts the Forecast Stage, which is also available among the picklist of your Opportunity Stages. Forecast categories include:
- Pipeline: The lead is in the early phases of the pipeline and has a low probability of converting to a sale.
- Best Case: The lead is highly likely to advance along the pipeline and complete a sale.
- Commit: The lead has an incredibly high rate of being closed upon for sale by a sales rep.
- Omitted: The lead fell through and is considered closed/lost.
- Closed: The lead completed the sale and is considered a closed/won.
To recap, Opportunities are simply leads that have been qualified into contacts or accounts and have the potential opportunity to complete a conversion.
Opportunity Stages track the likelihood of conversion and are used to forecast potential revenue from each sale to track financial performance.
In addition, if you perform a HubSpot Salesforce integration, the sync will transfer Opportunities into Deals inside HubSpot.
How to Convert Leads into Opportunities in Salesforce
First, before manually converting every Lead into an Opportunity, we need to define what constitutes an Opportunity. Generally, there are three factors that should constitute an Opportunity in Salesforce:
- Purchase timeframe
- Product interest
Defining appropriate lead score criteria for Leads that translate into Opportunities will help you cut down on unqualified Leads. Additionally, not all Leads–even if important–should not be converted into Opportunities.
For example, third-party vendors or affiliates inside your CRM should be left out of your Opportunity Stages.
Configuring your record types in Salesforce will help cut down on any confusion.
We also recommend configuring your Opportunity Stages so that leads that are converted are placed in proper stages for forecasting. This will provide you with the most accurate results.
Finally, once leads are converted, you just need to act on this data through a standardized marketing and sales process to improve your conversion ratio and earn more deals.
Need some assistance? Contact the Salesforce experts at Coastal Consulting.
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