What is the difference between a Prospect, a Lead, a Customer, a Client and your Target Audience?


I’ve got a thing for calling stuff by the right name.  Unless I’m being silly.  And aside from the bouts of silliness where I might call the lawnmower a yard vacuum, I like accurate names.  Names are labels.  Labels help us to organize.  Organization causes us to be more efficient.  Efficiency speeds up progress.  Progress brings us closer to our goals.  In the case of our discussion, our goal is actually singular:  To use the process of marketing to sell your products, services and ideas.

Using incorrect names leads to confusion.  It leads to the need for additional questions and clarification.  I know a family where the closest adult friends of the parents are referred to as Aunt or Uncle.  “Aunty Vicky is coming over after school today!” Mom would exclaim to the young child.  “Give Uncle Steve a hug before he leaves” encouraged Dad.  This was done, of course, by the parents to demonstrate the close relationship that existed between them and Vicky, Steve and other close family friends. Vicky and Steve were given love, affection and were regarded as part of the family.  Steve and Vicky were considered part of the family in all of the ways.

Trouble didn’t come to this extended family paradise until several years later when one of the children was doing a genealogical project for school.  The assignment was for the child to define their heritage.  The reasonably young child was asked to identify what their primary nationality was.

The child knew she her ancestors were, in large part, Scandinavian as artifacts and customs from this culture were part of their lives, especially around many of the holidays observed by their culture.  The child also knew that she was in large part Native American as she often attended special events and enjoyed the customs of her Uncle Steve and Aunt Vicky.  “If my Uncle and Aunt are Native American, I must be also,” she concluded. 

She wasn’t.

It can be argued that really no harm was done in this confusion.  She continued treating Uncle Steve and Aunt Vicky with love and affection and simply learned that her family was extended beyond the dictionaries definition of the words Uncle and Aunt.

In matters of family emotion, this may not be a tragedy.  But, in matters of business, it can be very detrimental if you use the wrong name to refer to those with whom you do business, subsequently causing you to mentally categorize them incorrectly and eventually respond differently to their needs.

Your Attitude Changes When The Relationship Changes

An example of understanding this would be when you purchase a car.  In my opinion, there are four stages of buying a car, and the shopper’s attitude toward the actual car changes as he passes from one stage to the next.

Recognizing the Desire
Test Drive
The Moment She’s Yours

Recognizing The Desire

When the car shopper is in the first stage, he has recognized that he wants the car.  He’s thought a little about the kind of car he wants.  He’s put a little thought into why he needs a new car.  He’s even warmed himself up to a few makes or models.  But, nothing is concrete yet.  At this stage, the car is still a relatively abstract idea.  The car itself is not his yet.  He doesn’t have a sense of ownership or responsibility for it yet.  It’s just a thought, it’s not a truly tangible item yet.


The second stage, shopping, gets a little more personal.  It probably starts online, looking at pictures, learning about options and eventually moves onto the dealer’s showroom or parking lot.  By now our car shopper pretty much knows what he wants and is very discerning of most of the models on the lot.  He wants heated seats.  If the car in front of him doesn’t have heated seats, he dismisses it.  He wants the premium sound system.  This model doesn’t have that?  Get it out of my sight!

Finally, the salesman is able to bring out a vehicle with all of the options he’s asked for and our shopper begins to walk around the specimen.  He begins to picture himself owning the vehicle.  He’s begun to wonder if this car is the match for him that he hoped it would be.  He’s beginning to create space in his brain for the answers to the questions he has.  He wonders what the cooled seats really feel like.  Will his music sound as good through the Bose sound system as he imagined it would?

The Test Drive

During the test drive, his suspicions are confirmed.  The seats feel magnificent!  He turns on the radio and tunes it to his station, so he can truly evaluate it.  Ahhh, it sounds better than he had hoped.  The engine is responsive, the ride is luxurious, he’s made up his mind.  He now desires to own this car.  Not just a new car, but this new car.  But it’s not his yet.  There’s a problem, it still belongs to the dealer.  There’s the protective paper on the floorboards and those bothersome stickers in the window.  But, all that is left are the price negotiation, the paperwork and then this car is his.  But not yet.  The keys need to be handed back and the salesman locks its doors.  Our shopper takes one last longing look back at Black Beauty (he’s named her) and goes into the dealership to do paperwork.

The Moment She’s Yours

While signing the paperwork, the dealership prepares the car for our buyer.  The stickers and floor protectors are removed, it’s washed and the cardboard and plastic label on the keys is removed and replaced with an ergonomic keyring with both the manufacturer’s and dealer’s logo.

While all this is going on, our shopper is transitioning his mindset into being the owner of Black Beauty.  The numbers and figures on the paperwork are a blur.  Eventually, he is led outside to his new car.

As he sits down on the genuine-leather-heated-and-cooled-seats, the transformation is complete.  He rubs the steering wheel in a way that he didn’t feel was appropriate before the car was actually his.  Now, he can move his phone charger in.  Now he can adjust the seat perfectly.  Now he has both sets of keys in his hand.  Nobody else owns this car.  Nobody else can open its doors.  Nobody else can drive it.  Black Beauty is his.

During each stage of purchasing this car, the attitude of our shopper changed.  Sometimes it was subtle, sometimes it was a genuine paradigm shift.  Being able to recognize when each shift occurs and what causes it is vital to the success of the car buying process.

I didn’t share the stages of the car buying process with you to help you run a car dealership or gain more control over your emotions when car shopping, although if it helps in either of those situations, you’re welcome.  I shared it with you so you could see that there are very clear and defined traits at each stage of the process.

Our shopper transitioned through

Mental Ownership
Physical Ownership

His attitude toward this same car changed at each stage of the process.  The car dealer cannot treat our shopper the same from one stage to the next.

In regard to marketing and business, it is important to mentally consider the probable purchasers we encounter in the correct context of where they are in the purchasing process.  I encourage you do do this, by always thinking of them by the correct name so you can understand your relationship with them, and put the effort required to bring the probable purchaser to the next stage of the sales process. 

It would be nice to think that relationships exist and thrive purely automatically and on emotion alone, but that’s not the case.  All relationships require deliberate and intentional action to maintain them.  Let me repeat that in bold (and a larger font)

All relationships require deliberate and intentional action to maintain them.

As business owners, entrepreneurs and marketers, we must be sure we understand what stage of this business relationship we and the probable purchaser are in.  I encourage you to do that by using the right words to describe the right people.  This is something you do internally, of course.  It would be ridiculous to greet someone who walks into your store by saying, “Good morning, prospect!  May I have your name, so I can consider you a sales lead?”

The Names We Give Them – Finding Our Future Customers

To find our customers, first we need to find our Target Audience

Your target audience is someone who is

Likely to be interested in your product, service or idea

I cover a lot more about defining your target audience through Avatar Building in another issue so we won’t waste a lot of time on that here.  But be assured that no matter what industry you are in, defining the target audience for any kind of marketing or advertising campaign is crucial.  Not doing it not only costs you money in the form of wasted advertising, but it is also a wasted opportunity to talk directly to the people who are most likely to be interested in your business.  The important thing to recognize is that no matter what products you sell, no matter what services you provide, no matter what idea you are trying to pitch, defining your target audience as “everyone” is not specific enough to be effective.  You need focus.  Think of it like an internet search.  There are too many options out there to try to read them all, you need to narrow down your search to the sites and pages that most relevant to you.  Exactly the same is true in your search for buyers.  There are a lot of people in the world that are not in your target audience.  They will never buy your product because it’s just not made for them.  Don’t waste money advertising to them, send the message specifically to people who are most likely to do business with you.

Everyone is not all interested in the same thing at the same time for the same reasons.  Being able to reach the right people, means understanding who those people are.  In addition to not being everyone, there are several other things that our Target Audience is not:

Aware we exist (or aware of our current offering)
Already in our Sales Funnel
A Customer
A Prospect
A Lead

The goal of most mass marketing is to guide our target audience from a state of not knowing we exist to knowing we exist and eventually into our Sales Funnel.  The goal of most targeted marketing is to help move prospects into the sales funnel and leads deeper down the funnel toward customer status.


When a member of your target audience raises their hand in some way and indicates interest in your product, service or idea, they become prospects.

If you operate a retail store, the transition from target audience to prospect probably took place before the individual walked into your store.  They responded to your targeted marketing and made the effort to push open your door.

It is important to recognize the considerable amount of effort it took for this person to enter your store.  Not only did they have to push open your door and walk through it, first they had to decide that it would be worth their time to investigate you in person.  Then they had to devise and execute travel arrangements to make the visit possible.  Finally, they found themselves in the vicinity of your store they had to negotiate the parking lot, sidewalk and whatever other kinds of obstacles they may have had to endure before they walked your door.  Yet, they were able and willing to overcome all of these potential obstacles, and here they are, practically begging to enter your sales funnel.

If you operate an online store, the transition from target audience to prospect may have happened when this member of our target audience visited your website.  However, not always.  The effort threshold to visit a website is much lower.  A website visit alone cannot simply transition someone into the prospect category.  They have to show some additional level of interest beyond a passing glance at your site.

The web visitor makes the transition to prospect much more defined as their pageview number increases.  In fact, as the visitor scrolls beyond your initial splash, their value as a prospect increases rapidly.  The more targeted your website content is will help it generate interest and the likelihood this person transitions into a prospect.

In social media advertising, you define your target audience, advertise to them and wait for the new person to visit your feed and click like, follow, friend or otherwise fill out a request for more information on facebook, twitter or instagram.  Having content that engages the viewer on their own social media page is vital to attracting people to your page and transitioning them into the prospect and lead stage.

If you are pitching an idea, a prospect is identified when the individual has given you their ear.  That may be in the form of YouTube view, allowing you to deliver your elevator pitch or any other methods of hearing your message.

I want to be clear, oftentimes the transition to prospect status occurs when you are not around.  Your target audience becomes a prospect what any of the following occur:

Your radio message is heard and a mental note is made to learn more about you
A coupon is clipped
A testimonial from an existing customer/fan directs someone to you
A passerby sees your business sign and begins considering your store
A Google ad is effective enough to drive the person to look for something specific on your website


Taking the leap from prospect to lead is easy to identify.  If the prospect has voluntarily given you the ability to follow up with them, they are a lead.

Here are a few examples of leads:

  • You greet the prospect who has entered your store.
    • A proper greeting should include an exchange of names.
  • A trade show attendee has given you their name because they want to learn more about your product, service or idea.
    • Someone who registers for a give-a-way that is not directly related to your product, service or idea is not only not a lead, they’re not even a prospect.  Depending on how you’ve defined it, you can’t even be sure they are in your target audience.
  • A website visitor responds to your offer and requests free additional information
  • A website or blog visitor creates an account
  • A request to connect on social media
  • The recipient of your elevator pitch is willing to exchange business cards with you

Carefully consider what effort a prospect expended make the leap into that category.  So, don’t take for granted the sacrifice the prospect has taken by voluntarily becoming a lead.

We live in an era where people will voluntarily post their intimate details on social media but refuse to give a Sales Consultant their contact information.  It shouldn’t be unexpected, really.  And it’s the fault of every business who doesn’t engage in selectively marketing to the carefully chosen members of their Target Audience.  Consider this:  If the robocalls looking for donations you received in the evening were only concerning issues that you deeply cared about and were eager to support, you’d be thankful to have received the call, and wish you could have donated more.  That would be successful targeted advertising.  I encourage you to look for my other lesson on targeted marketing to learn more.

The prospect who has just become a lead should be rewarded.  You can choose how to reward them in a manner that suits your business and situation.  Here are a few ideas that I like:

  • A savings voucher that is only given to people when they first become friends of your store
  • A personalized and hand-written note showing genuine appreciation for getting to know the person
  • A telephone call (that does not include any kind of sales pitch) which demonstrates a genuine appreciation for the meeting.
  • An email with a coupon or article of something that the prospect will find valuable.

A Customer

The transition from Lead to Customer is probably the simplest of all.  It is when a lead gives you money.

If you spoke to your local Real Estate agent, they would define a customer is someone who is shopping with you, and a client as someone who has signed the paperwork.  While that description is accurate in that legal arena, in our world we refer to anyone who has paid you as a customer.

If you are pitching an idea to investors, you may substitute the word investor with customer.

Once a person has given you money, you must begin to execute your plan of customer retention.  Creating opportunities to allow the customer to come to depend on you for the products, services or ideas you provide.

You should always treat people well, of course, but customers should be treated extra nicely.  These are the people who liked you enough to give you money.  What an honor that is!  If you’ve lost sight of that honor, trust me when I tell you that someone else who recognizes it will be along soon enough to snatch away your neglected customers.

If you’re neglecting your customers now, it’s time to start showing them the appreciation they are owed.  It will take some work, but the rewards will be in your bank account.

As a quick aside, remember to ask your leads for the sale.  I have seen it happen over and over again in small businesses and large corporations, the salesperson hasn’t read the signs and the customer is just begging to be sold.  A little nudge by your salesperson and the lead turns into a customer in a heartbeat.

The financial cost to business owners to introduce themselves to a member of the Target Audience is very high.  Once that introduction is made, additional investment is made to get the Target Audience to know enough to turn them into a prospect.  It’s at this point that Sales Consultants and their commission are the main cost of turning prospects into leads and eventually turning them into customers.  The goal of this entire process is simply to get them to know you, like you and trust you.

That’s what the vast majority of marketing dollars are spent on.  Those three facets of the sales process:

Get them to know you
Get them to like you
Get them to trust you

Here’s a secret that many business owners often forget:

An existing customer already knows you, already likes you and already trusts you.

All of your marketing efforts to your customers should now turn to maintaining this relationship and turning them into referral generators.  Maintaining the relationship with your customers is like being able to build new customers for little or no cost.

In another lesson, we discuss the varieties of existing customers and the best ways to encourage loyalty and referrals.

It defines their job, and yours

So far we have defined the different names for people who we market to.  But, does it really matter if we use the correct names when thinking about the different groups?  Do we really market differently to the different groups?

(Target Audience/Prospect Relationship) Imagine that a neighbor moves in next door.  He’s your neighbor, so he’s aware you’re there, but hasn’t met you in person yet.

(Lead Relationship) Shortly after moving in, you meet him in the front yard and get to know each other a little.  You cheerfully greet him and exchange some information about the neighborhood and become much more familiar than before.

(Customer Relationship) At the conclusion of the meeting, you agree that your families should get together and have a cookout.  The cookout was great and you both feel like you’re going to be great neighbors.  Each subsequent meeting begins where the last one ended and your friendship grows stronger and stronger.)

That is the natural progression of friendship, sales, and all relationships.  What happens if you mess with the order?  Would you expect the same results?  Can you skip the prospect relationship and jump right to the customer relationship without causing a disastrous outcome?

As I mentioned very early in this lesson, any relationship is deliberate.  Part of that deliberateness is knowing which stage of the relationship you’re in and behaving accordingly.

I mentioned earlier about the importance of maintaining the customer relationship and how it is a different kind of marketing than is used in the first two.  How disastrous the results of this neighborly relationship if, at the first meeting after the cookout, our neighbor introduced himself like the two of you had never met.  No, the friendship now needs to be maintained in different ways to help it grow stronger.  You cannot simply keep going back to earlier phases of the relationship and expect growth rather than recession.

Allowing yourself, or those in your business, to think of (and treat) prospects as leads or as customers indicates that they are not acknowledging the value of a prospect and the sacrifice the prospect has made to raise their hand, walk in your store, sign up for your emails or spend time on your website.  It devalues the position of a prospect and doesn’t recognize the effort and money you will need to spend to transition that prospect into a lead.

Many of the same arguments can be said for thinking of a lead as a customer. This mistake is the one I hear most.  Salespeople say they have “a customer on the floor” when, in fact, they most likely have a prospect or at the very most a lead on the floor.  (Unless this person actually is a returning customer.)  Again, thinking of the lead as anything else minimizes the risk this person took by giving you their personal information.  Remember, people are afraid that they will be hounded to death by overly aggressive and misguided phone calls, emails and texts, so for them to give you this information represents a giant leap of faith and trust.  Appreciate it for what it is.

Recognize that since a customer is one who has given you money in exchange for your product, service or idea, your customers are the brick and mortar that your business is built on.  The vast majority of marketing dollars are spent prior to the person becoming a customer.  The relationship does not end when the money is deposited in your account.  The relationship is just starting.

The ongoing relationship you build with your customer is one of the most complex and certainly the most financially rewarding one of your life.

Turn Them Into A Fan

The ultimate goal is to turn that customer into a fan.  One who willingly, eagerly and energetically spends their money on the products, services and ideas you provide.

But, that’s is another lesson entirely.