Salesforce: When to Convert a Lead to an Opportunity

No two companies use the exact same sales methods primarily because of the different factors and strategies that each company has. These factors and strategies could include the type of service provided, the product that is sold, how a company views their revenue or even the method in which a company handles their clients. An entire sales process could take a few days or it could take years and sale methods can be an unpredictable process.

Because of all of the variables, knowing and recognizing when to convert a lead to an opportunity isn’t always easy. One of the most common questions we get from our Salesforce clients is how to properly use the lead and the opportunity object, two of the four CRM objects within Salesforce.

In order for your Salesforce management module to meet the expectations of a company, we need to first define how to classify a lead verses someone who is classified as an account or contact. The underlying principle that helps define this is to define how your company measures the sales funnel. The sales funnel only reports against the opportunity object and leads are not included in the funnel.

To begin the process, we need to first define each of the objects. For example, below is a list of the four CRM objects within Salesforce and how most of our clients define them:

1. Accounts – Any company that is qualified to some day do business with our company. Each account is defined by type: prospect, partner, vendor, etc.
2. Contacts – Any person that is qualified to professionally work with our company.
3. Opportunities – An opportunity is best defined as having legitimate potential for creating a revenue generating event.
4. Lead – Contacts or accounts that have not been qualified. These are generally people and companies that do not fall under accounts or contacts.

Overview of Leads, Account and Contacts in Salesforce

When to Add a New Lead

Leads are generally people or other companies that have been obtained from sources such as your website, a trade show or a phone call.Because new leads are unqualified, it is up to the sales representative to qualify them and then convert them.

Not all Qualified Leads Convert to an Opportunity
Once the representative has determined that this is a contact and account that the company could some day do business with, it becomes qualified. However, just because a lead has been converted, it does not mean that there is an immediate opportunity. In this situation, the lead was converted to an account and contact, but an opportunity was not created. It is now up to the sales representative to nurture this account over time so that when the situation arises, the account can be moved to opportunity.

Identifying an Opportunity

The other scenario when converting a lead is whether or not the sales rep has determined if there is an opportunity that can be added to the sales pipeline.

The three fundamental rules that are involved in recognizing the appropriate time to create an opportunity from a lead include: Product Interest, Budget and Purchasing Timeframe.

The general idea is to implement a legitimacy test procedure which will allow you to determine whether the recently labelled opportunity is legitimate or not. An example is finding out that the client is looking for a product that your company offers. Being able to identify these miniscule indicators will allow you to determine if a lead can be or should be converted into an opportunity; an opportunity being a confirmed potential revenue generating event.

Common Issues with Undefined Opportunities

The most common issue that companies face with this is that they fail to fully establish the definition of an opportunity. This results in their sales staff operating on different frequencies which results in numerous lost opportunities or empty opportunities, opportunities that will lead nowhere, receiving too much attention.

Close the Deal

Now that a lead has been converted, the next obvious course of action is to track the account, contact and opportunity from the first point of engagement. Work towards actualizing the potential revenue generation event and bringing it to a close, or, an actual sale.