08.09.2022

The Different Types of Sales Leads And How to Attract Leads to Your Funnel [Complete Guide]

Every department has its own vocabulary. Accountants are talking about credits and debits while the dev team chatters about bugs and cookies. The unique language we speak around our co-workers not only unifies objectives and discussions but also gives us a sense of camaraderie and confidence in our work.

Like every other department, sales and marketing have their own way of communicating. Still, for those on the outside looking in, the different terminologies can be confusing. Even though one can write a book on sales and marketing vocabulary, some of the most important terms you need to know are based on how these professionals describe leads in the funnel.

Whether you are an entrepreneur wearing many hats or new to the revenue-generating side of business, this guide will teach you all you need to know about the different types of sales leads and how to acquire each lead type. By learning this lingo, you’ll better understand how to develop a health sales funnel full of opportunities for your company.

What are Sales Leads?

A sales lead is an individual or business that expresses interest in your product or service. Just like a detective follows a lead in an investigation, a sales rep follows a lead through the purchasing decision.

Leads are usually discovered through marketing campaigns designed to pinpoint prospects who may benefit from your solution. The lead may have filled out a form on your website, subscribed to your email list, or attended one of your events. In essence, leads are people who are likely to buy your product but aren’t ready to commit just yet. They still have to go through the buyer’s journey, which can include assessing available resources, comparing your offering to similar products, and obtaining approval from procurement. When sales reps get leads, they follow a process of nurturing those leads and turning them into customers.

There are different types of sales leads based on where they are in the buying process — we’ll get to those in a moment — and those lead types will align with your sales funnel.

What is a Sales Funnel?

A sales funnel is an image or diagram that represents how leads move through the various stages of your sales process. As the name suggests, you can visualize a sales funnel as an upsidedown triangle narrowing as leads move closer to the purchasing decision. The top of the funnel represents your marketing techniques, such as social media ads, email outreach, or SEO strategies designed to bring in new leads. The middle section of the funnel represents the nurturing process aimed at providing the support leads need to make an informed decision. The bottom of the funnel represents the engagement sales reps have with leads in order to close new deals.

By defining the sales funnel, your team will be more aware of where leads are in their buyer’s journey and better equipment to diagnose problems in the process.

The sales funnel has six stages, which are:

Awareness: In this stage, the lead becomes aware of your brand and solution through inbound or outbound marketing efforts.

Interest: Once the lead connects the problem to the solution, interest may be expressed through a form, booked meeting, message, or call.

Evaluation: Next, the lead evaluates if the product or service is a good fit. At this point, a nurturing program is initiated by marketing, usually through a drip campaign, to establish trust in the brand and authority in the market.

Engagement: After a lead has evaluated the solution and is qualified by marketing, a sales rep becomes more involved in the purchasing process. When a prospect makes it to the engagement stage, they are fully aware of the problem, solution, and alternatives. It’s up to sales to ensure the relationship transitions into a partnership.

Action: As the buyer’s journey comes to a close, a purchasing decision has to be made. The sale is either won or lost at this stage, but it’s no time to get lackadaisical, no matter how sure a deal seems. Encourage your sales team to stay vigilant in every aspect of the purchasing process so a “sure thing” never falls through the cracks.

Loyalty/Repurchase: Just because a customer is acquired doesn’t mean that the funnel is finished. What happens post-purchase is just as important as what happens prior. To create a cyclical sort of sales cycle, keep your customers delighted by promoting harmony between expectations and outcomes. In doing so, your prospects will not only become purchasers but your biggest promoters. And with most business calming 65% of new customer sales coming leads referred by current clients, you can’t afford to put a loyalty program on the back burner.

What are the Different Types of Sales Leads in a Funnel

Ever played “hot or cold” when you were a kid? You know the game where you hide something in your house or yard and then tell the seeker if they are getting “hotter” or “colder” based on their proximity to the hidden item.

Well, lead types are a lot like that beloved childhood pastime. The closer a lead gets to becoming a customer, the warmer they are in relation to making a purchasing decision. With that little analogy in mind, let’s go over the different lead types in a typical funnel so you can understand how most teams describes a lead’s position in the sales process.

Cold Leads

Cold leads are at the top of your funnel, just outside the awareness stage. You have no relationship with these leads, but they fit your target audience and ideal customer profile. While cold leads are the most plentiful, they are also the furthest away from becoming customers. In turn, cold prospects will be less likely to respond to your outreach than any other lead type. This is because of the wide information gap between you and your prospects. You’ll have a long journey ahead with these potential customers and will need to put in extra effort to explain what you do and why.

Warm Leads

As leads inch closer to the bottom of the funnel, they start to warm up to the idea of purchasing from you — hence the name warm leads. A warm lead is someone who knows your brand, understands the problems it solves, and is likely to be interested in what you are selling. Anything from a social media follower to an email subscriber can be thought of as a warm lead. The main point is that a warm lead is starting to develop a relationship with your brand.

Warm leads are more likely to respond to your outreach than cold leads. To turn them into customers, you’ll have to nurture the leads with relevant information and value-based content consistently.

Hot Leads

Hot leads have recently expressed interest in your products or services. These prospects may have scheduled a demo, attended an event, filled out a contact form, responded to an email, or given you a call directly. Decision-makers categorized as hot have already done their research and know exactly what they’re looking for, which makes it easier to open a sales conversation and close the deal than with warm leads. They are, in essence, the low-hanging fruit in your sales funnel.

Alternatives for the Different Types of Sales Leads

While the cold to hot leads scenario gives us a great way to visualize a prospect’s readiness to buy, many sales teams that work closely with their marketing departments follow a different nomenclature for lead classification.

Let’s break down this acronym-based naming convention.

Information Qualified Leads (IQL)

Information qualified leads (IQLs) are prospects collected through marketing efforts such as advertising, email marketing, search engine optimized content, lead magnets, and so on.

You want to turn IQLs into MQLs (explained below) as soon as possible. If you don’t, these leads may lose interest and disappear. You can collect leads through various marketing channels and then use sales software to manage your leads.

The sooner you turn IQLs into MQLs, the more likely they are to become sales. Once you collect these leads, they may not be as responsive to your efforts as warm leads, in comparison. You may have to invest more time and effort to get these leads to into a purchasing conversation.

Marketing Qualified Leads (MQL)

Marketing qualified leads (MQLs) have been vetted by marketing and identified as more likely to make a purchase based on factors such as engagement with your brand’s content and how well they match your ideal customer profile.

MQLs are prioritized over IQLs and escalated for review by the sales team because they are more likely to respond to SDRs.

Sales Accepted Leads (SAL)

If an MQL is deemed ready to be pursued by the sales team, the lead is considered sales accepted. A sales-accepted lead (SAL) is at the beginning of the sales process and has either expressed interest directly or has taken actions generally associated with a sales-ready lead.

62% of decision-makers want to chat with brand representatives when they are actively looking for products and services, according to a study by RAIN Group. So, it’s essential to follow up with these leads regularly while they are heavy in the research phase. If you don’t stay in contact with these leads, the relationship may fizzle as fast as it started.

Sales Qualified Leads (SQL)

Sales-qualified leads (SQLs) are ready and willing to converse with your sales team. SQLs are the most valuable leads because they’re the closest to becoming customers. It’s important to keep close tabs on your SQLs to create a seamless purchasing process.

If you’ve done an excellent job nurturing and developing relationships with the decision-makers from IQLs forward, your prospects will be ready and eager to buy from you once they’ve reached the bottom of your funnel.

Sales Lead Types Based on Acquisition Source of Prospects

Alright, we have already discussed seven different lead types; how could there possibly be any more?

Well, so far, we have focused on lead types purely based on their position in the sales funnel. Now we will shift gears to examine lead qualifications based on their acquisition source.

“Why is this important?” you ask.

Because optimizing lead generation tactics hinges on successfully acquiring contact information through various channels. Marketing and sales teams are constantly looking for ways to rebuild their strategies better, stronger, faster. (We have the technology.) But these revenue leaders can’t manage what they don’t measure, so they assign lead types based on source and position.

What is an Acquisition Source or Channel?

An acquisition source, also known as an acquisition channel, describes how leads are obtained. Think about the ways in which you attract leads into your funnel. Do you run ads, send emails, build landing pages with lead magnets, or send direct mail to generate interest in your business? Whatever channel you choose, that is the acquisition source lead type.

Choosing the Channel: What’s the Target Market of Your Business?

Believe it or not, your ideal customer profiles play a considerable role in the acquisition channels used to reach your target market. Companies that know how their audience behaves online and offline have a 124% increase in leads through their marketing efforts.

So think about where your decision-makers are spending their time. Usually, age, career status, and profession are pretty good indicators of how your leads will consume information. For example, a millennial entrepreneur may flock to TikTok and YouTube for advice and inspiration. On the other hand, CEOs will be more likely to use LinkedIn to network with other professionals and Facebook to keep up with family and friends.

After a thorough examination of your ideal customer profiles, you may find your own way of assigning lead types based on the acquisition source, but here are some of the most common terms used by sales and marketing teams.

Website Leads

Leads coming directly to your site, whether through blogs, contact forms, or lead magnets, are considered website leads. Search engine optimization (SEO) plays a huge role in driving traffic to your site. If you haven’t already, you’ll want to develop an understanding of how your target market uses search engines to find solutions to their problems. This will require brainstorming between marketing and sales, along with keyword research. As the SEO of your website improves, you will naturally see an increase in organic traffic and leads.

Advertising Leads

Advertising leads can cover a broad spectrum of prospects. When it comes to tracking leads from advertisements, it becomes necessary to not just track the channel, like Facebook or Google, but also track the campaign and specific ad. Luckily, matching metrics from the advertising channel to the incoming leads can be automated through lead management and marketing tools.

By narrowing the sources down to the most finite details, you’ll be able to maximize your advertising budget and reduce your costs per lead significantly.

Social Media Marketing Leads

Like advertising leads, social media marketing leads can come from various channels. So, again, you’ll have to get specific about the acquisition source to make the most of your lead generation efforts.

Most often, social media leads come from a combination of marketing techniques. For example, you may have a blog linked to a lead magnet that you post on LinkedIn. In this case, you may find it difficult to determine the acquisition source without using lead tracking software. Alternatively, you can create land pages per platform for particularly ambitious marketing initiatives.

Special Offer Leads

Special offer leads are those prospects who funnel into your pipeline in response to a limited-time product or service promotion. This could be anything from a software trial to discounted pricing or even a free perk. Special offer leads are relatively easy to track and are higher intent than website or social media leads as they are generally tied to a purchase.

Cold Call Leads

This type of lead is often the most difficult to convert into a sale. As its name suggests, a cold call lead is at the tippy top of the funnel. Interest has not been expressed on the receiving end of the call. The SDR is responsible for igniting that interest with a well-developed pitch. However, it is also possible to find some highly qualified leads through cold calls, so this approach should not be discounted altogether.

Email Marketing Leads

Email marketing leads can come from inbound or outbound strategies. Inbound email marketing leads come as the result of a prospect exchanging their contact information for a lead magnet or newsletter subscription. The leads, in this case, have requested that the company contact them with relevant information. Most inbound email marketing leads are warm leads, IQLs, or MQLs, depending on the content that brought them into the sales funnel.

On the flip side, outbound email marketing leads are those that have responded to cold email outreach. Outbound email marketing is a popular B2B lead generation strategy as it helps brands connect directly with ideal clients that would benefit the most from their solution.

Referral Leads

Referral leads are prospects that consider purchasing from a company based on the recommendation of a client or partner. As we have mentioned, referral leads account for over half of the prospects for most businesses. Similar to special offer leads, referral leads are deeper into the funnel and may even be considered hot leads, SALs, or SQLs. Leads that are referred are also 30% more likely to convert.

Conclusion: Why You Should Focus on Each Lead Type

As you can see, there are many different types of leads, and each one should be treated according to its status. While some leads are more valuable than others based on their position in the funnel, it’s important to focus attention on each type to get the most out of your marketing efforts.

The thing to remember is that, while not all leads will become clients, you need to be able to pinpoint the leads most likely to buy so you can move them from the top to the bottom of the funnel. One way to ensure you are making the most of your resources is by employing automated campaigns heavily for cold lead outreach and replacing automation with more personalized strategies as leads warm up.

Once you have mastered making the most of every lead type, you’ll be able to scale your lead generation strategies predictably.

Vito Vishnepolsky
Vito Vishnepolsky
CEO and Founder at Martal Group