A lead is a person or company that might want what you sell. A prospect is a lead you've checked and found worth your time. An opportunity is a prospect with a real job on the table: a scope, a date, a price someone is considering. That's the whole difference, and most of the confusion comes from vendors using the words loosely.
There's no official standard for any of these terms. A software company's "prospect" can be your "lead," and a salesperson at a big company might use a fourth word you've never heard. What matters is that you pick three definitions, write them down, and use them the same way every time. Here they are, with one example each from the same fictional business.
One pest control company, three stages
Naomi runs Bellwether Pest Control, four trucks, in a mid-size city. She sells monthly service contracts to apartment buildings. Here's how one building moves through her list.
| Term | Where it stands at Bellwether | What Naomi knows | The question that moves it up |
|---|---|---|---|
| Lead | Orchard Court, a 12-unit building, on a list of landlords she pulled from county records | The address, the manager's name, nothing else | Do they have the problem, and is this the person who decides? Asked by email: "Who handles pest control for Orchard Court right now?" |
| Prospect | The manager, Lena, replies: the current company missed two visits | There's a real need, a person who decides, and a reason to switch | Is there a job, a date and a price range? Asked by phone: "If I send a quote for monthly service starting November 1, will you look at it this week?" |
| Opportunity | Lena says yes and gives the unit count | A scoped job: 12 units, monthly visits, $140 a month, $1,680 a year if it signs | Did they say yes, no, or "let me think"? Ask on day 3 of the quote: "Anything in the quote you'd change?" |
Notice what changes between rows. Naomi's knowledge grows. A lead is a guess. A prospect is a guess you've tested with one answer from a real person. An opportunity has a number attached. Money changes hands only after the third row.
A lead is a guess you haven't tested
The test for a lead is low: they fit the kind of customer you sell to, and you have a way to reach them. A website form fill is a lead. So is a name on a list, a business you found on a map, or someone who followed your page. Some leads raised their hand, and most didn't. Both are still leads, because you haven't confirmed anything yet.
That's why a list of 400 names isn't a pipeline. It's 400 guesses. If you want to build one carefully, how to build a lead list covers where the names come from.
A prospect has answered you once
A lead becomes a prospect when a real person gives you a real answer that shows the need and the authority. "We use someone now but they keep missing visits" is that answer. So is "send me details" from a person who can sign. "Not interested" is an answer too, but it moves the lead out of the list rather than up.
The three questions in how to qualify a lead (what happened, who else is involved, when do you need it) are the checks that make someone a prospect. If you can't answer at least the first two, you still have a lead.
An opportunity has a price in play
This is the line owners blur most. A prospect who says "we should talk sometime" is not an opportunity. An opportunity has a scope, a rough date, and a number you've either quoted or are about to. If you can't write the amount in the record, it isn't one yet.
This matters because it's the number you forecast from. Say Naomi has 40 leads, 9 prospects and 4 opportunities worth $1,680 each. Her real pipeline is $6,720 a year in contracts, and only if all four sign, not 53 things. Forty names in your CRM and six actual deals explains why counting leads as pipeline makes owners think they're doing better than they are.
Do a small team need all three?
Honestly, a team of one to five can get by with two words: "contact" for anyone you might call, and "deal" for anyone you've quoted. The prospect stage earns its place only when you have enough leads that you need to know which ones to call first. Past about 30 or 40 active names, the middle label saves time.
If you only keep one rule, keep this one: nobody gets called a deal without a dollar amount next to their name.
How to label them in one list
You don't need three spreadsheets. Add one column called Stage to the list you already have, with five values: Lead, Prospect, Opportunity, Customer, Not now. Move a name forward only when the question in the table has a real answer. Move it back to Not now if it goes quiet for 30 days after a quote, and write a date to look at it again. What a customer database should do shows how this looks in a tool built for it.
Tools that find buyers and write to them can fill the Lead stage faster than you can by hand. In Rocketship, the buyers it finds by name start as leads, and a reply or a booked meeting is what moves one up. You can see who's at which stage without keeping the labels in your head. The AI workers page shows how that fits together.
Mixing up these words costs you most when you're counting. Rocketship finds the buyers, emails them from your own Gmail, follows up, and books the meeting on its own. Plans that get you customers start at $24.99 a month (Launch), and both Launch and Frontier start with a 7-day free trial, card required.