Just like countless marketers out there, you probably use the terms prospecting and lead generation interchangeably, and that could be costing you money and efficiency.
If you’re not clear about the two concepts and how they’re different, you won’t understand how to market to each effectively, costing your company accessible sales.
So in this article, we’ll explain exactly how prospecting differs from lead generation, how the two are related to each other, how each strategy works, and what tools make prospecting and lead generation easier.
Why Lead Generation and Prospecting Are Often Confused
The reason why lead generation and prospecting are often confused is that they’re closely related to each other and have the same ultimate goal — to bring in new customers and make more sales.
At the end of the day, both lead generation and prospecting help you move one step closer to closing the sale. But how they achieve this goal is where differences lie.
Since both processes employ different strategies, they require different skill sets and people to ace.
When you blur the boundary between lead generation and prospecting, you also blur the boundary between the type of people who’re the right fit for each process. And that’s how inefficiencies arise.
What is Lead Generation
In simple terms, lead generation is the process of putting your brand out there. It’s a marketing function where the goal is to build awareness and start new relationships.
Compared to prospecting, lead generation is a slow and long process. It’s the first few inches of your sales funnel. But luckily, it can be automated (unlike prospecting), so you don’t have to spend a ridiculous amount of time on it.
Here’s an example of a lead generation exercise.
Let’s suppose you have a sports e-commerce store. Your marketing team decides to create a blog page on your e-commerce site, where you regularly upload content that sports enthusiasts would read.
But you’re not really targeting one particular sports enthusiast. You’re not writing content for “Mr. James” (who happens to be a crazy table tennis fan). You’re writing content to put your brand out there for anyone who loves sports.
You then supplement your blog with gated content — content that readers can only access in exchange for their email address. If ten of your readers absolutely love your blog posts, they’ll give you their email address in exchange for the new eBook you just launched (which is a type of gated content).
And those ten email addresses are your leads. You can start a new relationship with each of those people via automated email sequences, driving them down the sales funnel until the time arrives that they’re actually interested in buying one of your products.
Since you’re engaging with multiple leads at the same time, lead generation is considered as a one-to-many marketing activity. This is different from prospecting, which is one-to-one marketing (more on that later).
This brings us to the question — what is a lead?
What is a lead?
A lead is a top-of-the-funnel contact. It’s usually an email address but can also be a phone number or an address.
In simple terms, a lead is someone who’s shown interest in your company by giving you their contact information in exchange for gated content (or in response to other lead generation strategies that we’ll discuss later).
It’s important to grasp that a lead may never buy from you. You can’t be sure whether or not a lead has the money, authority, and interest in actually buying your products or services.
For example, someone who reads your sports blog regularly may never purchase a racket from you.
This is why lead generation is considered to be a very slow process — you’re just putting your brand out there, getting the contact information of people who seem interested, and seeing if they can be driven down the sales funnel.
Common lead generation strategies
Here are some common lead generation strategies businesses use:
- Chatbots, which can drive customers to things like newsletter signups and consultation bookings after helping them out with their queries.
- Paid advertisement, which promotes your business not only on social media platforms and search platforms, but also on large publishers like Bloomberg, MSN, and The Independent.
- Offline events, which include workshops, seminars, meetups, and conferences. People are required to give their email addresses in order to sign up for these events. All of these can be hosted online, too!
- SEO blogs, which are optimized for top-of-the-funnel keywords to attract potential customers to your blog. This doesn’t generate leads directly but increases the chance that readers are going to interact with your lead magnet.
- Gated content, which in addition to eBooks, can include newsletters, guides, infographics, reports, worksheets, and courses. It can be basically anything that provides enough value to the reader for them to give you their email address.
- Free trials, which allow customers to test your product for free in exchange for their email address. Leads that come from this are a bit more qualified (than for example, leads from newsletter signup) because they’ve actually tested your product.
Tools that make lead generation easy
Running advertisements on top websites like Bloomberg is one of the easiest ways to maximize your brand’s reach. This is why Taboola is a tool that can make lead generation a lot easier.
It promotes your content when readers are in “discover more” mode on platforms like The Independent, The Weather Channel, MSN, Bloomberg, NBC News, and more. Since users are in “discover more” mode, they’re extremely receptive to the content being served to them.
But make sure you have effective lead magnets on your blog to make the most out of the traffic that Taboola drives to it.
Other tools that make lead generation easy include:
- HelloBar, which lets you place a bar containing a message and a CTA at the top of your website.
- SEMrush, which is one of the most powerful SEO tools out there. It can help you optimize your website for top-of-the-funnel keywords.
- HotJar, which is a heatmap tool that lets you see the most popular areas of your website. You can place your lead magnets on these areas to maximize their effectiveness.
- HubSpot, which is an all-in-one lead generation tool that allows you to manage all aspects of your campaign in one place. Lead scoring on Hubspot is also made easy, allowing you to qualify leads based on fit and engagement. The best thing about it is that it’s free to get started with!
- LeadForesnics, which is a tool that lets you integrate lead generation and prospecting. If visitors to your website are not completing your lead capture forms, you can use LeadForensics to find out where they work (using their IP address). You can then let your sales team know which businesses seem to be interested in your service and can be good prospecting targets.
What is Prospecting
The differences between prospecting and lead generation may appear slight, but are very important to understand. For starters, prospecting is carried out by your sales team (versus lead generation, which is a marketing function).
Basically, prospecting involves reaching out to someone (via a call, email, or LinkedIn message) and determining whether they’re interested in buying your product or service. This is called qualifying a prospect.
Once a prospect has been qualified, they can be nurtured down the sales funnel until they make a purchase.
It’s important to understand that a prospect is NOT equal to a sale. It’s very likely that a prospect never buys from you. You only know that they are interested in your service, and it’s your job to make sure that their interest converts into a sale.
And as you can see, it’s hard to automate this process, which is why prospecting is considered manual labor and is often very time-consuming (versus lead generation, which can be set up and left in place).
This is why according to a 2018 marketing study by HubSpot, 37% of sales reps believed prospecting was the hardest part of their job.
Here’s an example of a prospecting exercise.
Let’s say you run a digital marketing company that helps small brands improve their internet visibility. You give your sales team a list of company contacts, and they call each of them to find out whether they would be interested in your digital marketing service.
Your sales team will also make sure that the contacts have the authority and money to buy your service as part of prospect qualification.
Note that these people might be completely unaware (or “cold”) of your company before they get a call from your sales team. This is another way prospecting differs from lead generation. Recall how, unlike prospects, leads are contacts that have shown interest in your company and have interacted with your marketing content before.
This brings us to the question — what is a prospect?
Who is a prospect?
Unlike a lead, a prospect is someone who is actually interested in buying one of your products or services.
A prospect has a problem that can be solved by your business. This is not to say that a lead can’t use your services, it’s just that you’re not sure whether a lead will purchase from you. On the other hand, your sales team has explicitly asked a prospect whether they will be interested in using your service.
This is why a prospect is further down the sales funnel versus a lead.
While many of your prospects will be people who’ve never heard about your company before, they can also come from lead generation strategies. Once you’ve nurtured a lead enough, you can have your sales team contact them and qualify them as a prospect.
In other words, once a lead has been qualified — and is therefore highly likely to buy your product — it becomes a prospect.
A basic overview of how sales prospecting works
Processes involved in sales prospecting are significantly different from those in lead generation. You can think of lead generation as more of a passive marketing activity — you just put your content and lead magnets out there and relax. On the other hand, prospecting is an active marketing activity.
You begin by defining your ideal customer profile (ICP), which is a set of characteristics a customer should have to be able to purchase your service.
You then take your leads and pre-qualify them before reaching out to them. This ensures that your outreach efforts are not wasted.
Factors to consider before reaching out to a lead include how well they fit your ICP, the size of their organization, the physical location of the business, the industry they work in, and how long they’ve been in the business.
Once you’ve prequalified your leads, you prioritize them based on the likelihood that they’ll convert to customers to make your outreach even more efficient.
The prioritization criteria can come from previous outreach efforts, which let you determine the type of leads who converted into customers the last time (and so are more likely to convert this time too).
It’s now time to reach out to potential customers. You begin by identifying the decision-makers at your prospect’s company, especially if your product is going to cost them significantly. You don’t want to waste your efforts on low-level managers with little decision-making power.
The number one tool for finding a company’s decision-makers is — you guessed it — LinkedIn! Once you’ve identified a decision-maker, it’s time to reach out to them, which is a bit challenging because contact information doesn’t come by easily.
One great tool for digging out an email address is Voila Norbert. Norbert has an accuracy rate of 98%, which is the highest among all email finders in the market right now. All you need is the name and company URL of your prospect to find an email address with Norbert.
But the real reason why Norbert is extremely useful for prospecting is its bulk email-finding option. We’ve discussed how prospecting is manual work but some of it can be automated. With Norbert, you can simply upload a list of names and company URLs and get a list of quality email addresses in return.
Once you have the email address, you can start cold emailing a prospect to qualify them further. It’s best to write an individualized message to each prospect.
You can hopefully appreciate how the processes involved in prospecting are completely different from those you do in lead generation.
When to do prospecting vs. lead generation?
Ideally, you should do prospecting and lead generation side by side. The leads generated by your marketing team can be converted into prospects by your sales team.
But sometimes, you may find that your sales pipeline is running empty. To replenish it rapidly, you can focus more on prospecting.
On the other hand, if your pipeline is healthy and you have time on your hands, creating a good marketing strategy and focusing on lead generation may lead to greater benefits in the long run.