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Lead v Opportunity – What’s in a word? March 20, 2017

Posted by Ivor's Window to the IT and CRM World in Change Management, CRM, Microsoft CRM, Microsoft CRM 2016, Microsoft Dynamics CRM, Sales Management.
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Lead v Opportunity

Recently we have been having some interesting discussions about the difference between a Lead and an Opportunity. We also have customers who use the word Prospect as part of their sales cycle and others use the term Deal. Getting this right is terms of how it is applied in your CRM system is very important, as is ensuring that everyone actually knows exactly what each term actually means and how they are used.

I will be discussing these in terms of their general interpretation as well as how the Microsoft CRM system views these records.

For many companies a Lead constitutes potential business with someone who they have not done any previous business with over the years, so for example a list of auto electricians in the local area could be purchased and this would be a list of Leads if you had not sold to them before.

Therefore in a typical sales cycle, you would market to the business, and eventually qualify or disqualify the lead, and a qualified lead becomes an Opportunity, which in turn can be won or lost.

So when does a Lead actually become an Opportunity?

This is normally based on qualification. So what constitutes qualification? It is generally accepted that at that stage in the process where it becomes evident that there is a chance whatever the % of winning the business, so the Lead is qualified when you believe that you “could” get an order.

A Lead is disqualified when there is no chance of doing business, however if there is a longer term possibility for example 12 months, should the Lead be disqualified? Should a follow up be created or should a long term Opportunity be raised?

There are advantages and disadvantages for both of these scenarios, and primarily this relates to reporting, and the real possibility that long term potential is actually forgotten, with staff moving on, and day to day activities getting in the way.

The one vexing question is what about potential for new products to existing customers, good old Marketing 101, states “That it is easier and less expensive to sell to existing customers than generate new ones” therefore if you sell yellow widgets, and introduce a new range of lime widgets, should you be creating Leads or Opportunities for each of your existing customers?

The moment you split this up you are also more than likely going to be looking at two sets of reporting metrics across your new range.

So the big question, can you have a Lead for an existing customer?

Microsoft Dynamics 365 for Sales is set up to accommodate this capability, the question is more, does this actually meet your business requirements?

There is no right or wrong way to do this, however the within the capabilities of Microsoft Dynamics CRM 365 both options are available. Therefore I believe it is important to get in place a process and then stick to it. If the rule is Leads are only ever companies that you never deal with, then during the configuration the Existing Customer and Existing Contact fields could be removed from the Sales process so that users do not link these to existing customers

However the Lead functionality in CRM is very powerful, and if you elect to use this, when you create a lead for an existing customer, and then qualify this lead, the Opportunity inherits the “originating lead” field and this will allow for deep analysis on campaigns and the leads created.

A newly created Customer in CRM when a Lead is converted to an Opportunity also carries this data of the originating lead and therefore the source campaign. Over time you will be able to view the value of these customers based on the source campaigns. This can be valuable marketing material.

If you don’t set up a Lead and start the sales process at Opportunity, you potentially lose some of the reporting metrics that are related to the lead.

The term Prospect is also used by many organisations, if this is the case, it is possible to modify the naming conventions in your new system to reflect this, just as one could change Customer to Client if this is the terminology that you use.

Using a nurture marketing approach can also be quite helpful, where long term Leads or Opportunities are placed on a back-burner and the system will come up with a number of reminders in 8, 12 or whatever planned months time.

Over the years I have changed the term Opportunity to Deal for a few customers, where they felt they were chasing a deal and not an opportunity.

As mentioned above, there is no right or wrong, but take a minute, pause for a while and consider what is best for your organisation, and whether, if you change, will this change be easily accepted across the business. If you have been calling something “Prospects and Suspects” for many years and this in inculcated into the corporate culture, then it may well be a small price to pay to keep it this way.

 

 

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Comments»

1. Rean - March 21, 2017

Great article Ivor. I’m dealing with exactly this (i.e. agree on the definitions of these phrases) in the current project I’m working on.


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