Salesforce Leads, Accounts, Contacts & Opportunities: How Does It All Work?

One of the most fundamental aspects of the Salesforce funnel is the correct assignment of a Lead, Account, Contact and Opportunity.  It is also one of the most misunderstood features for most firms setting up Salesforce for the first time. While every firm will have their own set of rules to determine what constitutes a Lead and an Opportunity, this post will attempt to provide some general rules around when to treat something as a Lead and when to convert it into an Opportunity.

What we’re about to describe next is so fundamental to the application of the Salesforce Sales Cloud that without knowing how this works, your sales team will be missing out on one of the key ways to manage pipeline in Salesforce. It’s a model that was instituted at the dawn of Salesforce in 1999, and still works in exactly the same manner today. Must be something to it! Let’s have a look.

Salesforce Leads

We always tell our clients to think of a Lead as akin to a business card. It’s simply someone’s name, and not much else. All we know at this point is that there may be some interest, on either side’s behalf, to work together. Either the Lead has expressed an interest in learning more about us, or we have determined that this is a person who we want to follow-up with. Take note – a Lead in Salesforce is a person, not a business, although that person may work for a company that we want to do business with.

Why should we use Leads. Well, for the main reason that, if you have a good marketing team, your firm will be generating a lot of them. And guess what – many of them won’t go anywhere. Whether you’re buying lists of prospects, visiting trade shows, drawing web traffic, or any number of other lead generating techniques, you should be aiming to put a lot of unknown names of potential buyers into Salesforce. But it’s not ideal to create Contacts and Accounts at this point, as we may never even reach some of these people. We want a place to store all these names that won’t clutter up our Account and Contact lists. Hence….Leads!

One very basic rule of thumb: any new person affiliated with a company that we don’t currently work with should be entered into Salesforce as a Lead. Quite often, we see companies entering new names as Contacts. This is not necessarily wrong, and if you have a limited universe of prospects to sell to, then this is actually the preferred route. But most businesses have an unlimited supply of prospects, and hence, they should enter all of their new prospects as a Lead.

Set a Time Limit for Leads

At Salesforce Training, we have a straightforward rule, and one worth following. No Lead should sit in the Lead Record for more than two weeks. We only have a few basic categories for each Lead – Contacted, Not Qualified (or Not Interested), or Qualified. It is the sales person’s responsibility to reach out to the Lead and quickly ascertain the correct status. At that point, they should be moved out of the Lead Record and classified as something else.

Now many sales people we’ve met struggle with the concept that a Lead that is not converted into an Opportunity be closed off. As most sales people tend to be eternal optimists, it is their nature to want to hold onto the Lead until such time as they can convert it into something with a revenue component (i.e. an Opportunity).

But they must remember, that assigning a Lead as Not Qualified, doesn’t remove the Lead forever. It simply moves it out of any View that lists Current Leads. The key to staying on top of the Lead is to assign a follow-up task, whether it’s a few days out, a few weeks or even a few months. The point is, it’s not sitting in the Lead queue looking like something current. This queue should only be reserved for the freshest leads demanding immediate follow-up.

So, Where Do Leads Go?

The key behind Salesforce’s architecture, lies in how you treat a Lead that has the potential to become a deal…one day. At some point, the Lead can no longer be considered a Lead and it should be classified as either qualified, or not qualified. In the case when a Lead is qualified, it should be converted. When you convert a Lead in Salesforce it automatically becomes both an Account and a Contact at the same time. An Account is just the actual business or company, and the Contact is the person – the same person from the Lead. Where Salesforce confuses a lot of people is in the name Account. So many sales people call their book of business their “accounts”. They assume an Account is a business they’ve sold something to in the past. But in Salesforce, an Account is just a label for a business – one we might already work with, or one that we hope to work with. In fact, Accounts can be other businesses that we work with as well – vendors, partners, even competitors.

Now, the other important thing to note, is that whenever we convert a Lead to an Account and a Contact, we also have the option of converting it to an Opportunity. In fact, it is the default option.  What is an Opportunity you might ask? Well, an Opportunity is something associated with revenue.

Salesforce assumes that when you convert a Lead it is because you have uncovered some type of revenue opportunity. An Opportunity is neither a business, nor a person, but rather a potential future sale. It is the lifeblood of every sales funnel.

Set Standards for Salesforce Opportunity Creation

The key is – how should your business define an Opportunity, and when should we convert a Lead into one? Well, this will differ for every business, and will depend largely on your sales cycle, as well s your customer’s buying cycles.

One of the recommendations we give to our clients is to have a fairly rigorous standard for Opportunity conversion. While we want to move Leads out of the Lead category fairly soon, we don’t have to create an Opportunity. They can simply become Accounts and Contacts, with the potential to create an Opportunity at a later date. At a minimum, an Opportunity needs to have the following (our rules – not Salesforce’s, and perhaps not yours): A projected Close date; a projected amount of revenue; Competitors being considered for the project; the final decision maker; the business challenge being solved.

“This was a great training session and I know that our staff will benefit greatly with this new knowledge.”

Margaret Wanca-Daniels
VP, Business Development, LeadingAge

Talk to Salesforce training

Our advice to companies that we work with, is that your sales person should only create an Opportunity once they can provide some key detail around these 5 areas. If they can’t then they really should be going back and qualifying some more.

Remember, Salesforce is Just a Tool

At the end of the day, Salesforce is simply a tool. A tool that is designed to take your existing business/sales processes, and embed them within its framework. Salesforce on its own won’t make salespeople sell more. Every company should have a framework for how it wants to treat Leads and Opportunities prior to setting up a CRM. It is the job of the CRM (Salesforce, or any other) to take these rules, and provide and simple and effective tool to automate it and make the data easily accessible to everyone. And Salesforce does that just about as well as anything out there.