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7 Types of Sales Leads and How to Close Them

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In an ideal world, it would require no effort to generate sales for your company. The second people heard about you, they’d immediately want to buy.

Unfortunately, that’s not how it works in the real world. Nurturing people toward becoming customers is a process.

As people move through the sales funnel toward conversion, they become leads—that is, they express some kind of interest in your business. But not all leads are alike. Some leads have only just heard of you, while others—further down in the funnel—are nearly ready to buy.

Those different leads require different types of marketing efforts, which is why it can be helpful to understand the different types of leads in sales out there. 

What are sales leads?

Sales leads are people or companies who meet your company’s definition of an ideal customer to some degree and have expressed interest in your product or service. Of course, some sales leads may have expressed more interest than others, which will determine how your sales team interacts with them. 

There are many ways a lead can show interest in your company, including:

  • Clicking on a paid ad
  • Filling out a form on your website
  • Signing up for emails
  • Contacting your sales or customer service team

Converting leads to sales is critical for growing your business. And because sales leads have different levels of knowledge about and interest in your product, it’s important to categorize them properly so you can determine the best way to nurture the relationship.

7 key types of sales leads

There are a few different ways to categorize leads in sales. However, six sales lead types stand out from the crowd, and we’ve listed them below. Read on for an explanation of each one.

Lead TypeFunnel stageDefinition
Cold leadsTop-of-funnelLeads that fit your customer profile but haven’t yet interacted with your company
Warm leadsMiddle-of-funnelLeads that haven’t shown explicit interest in buying from you but know who you are and what you offer
Hot leadsBottom-of-funnelLeads that show overt interest in your products or services
Information qualified leads (IQLs)Top-of-funnelLeads that are looking to find an answer to a question or a solution to a problem and can be reached with informational content
Marketing qualified leads (MQLs)Middle-of-funnelLeads that are familiar with your brand and engage with your marketing content
Product qualified leads (PQLs)Middle-of-the-funnelLeads that have already received some value from your product, such as through a free trial or freemium version of your product
Sales qualified leads (SQLs)Bottom-of-funnelLeads that have actively expressed interest in your products or services

1. Cold leads

Cold leads are a type of lead that fits your customer profile but hasn’t yet had any interaction with your company. In short, this is the most difficult lead type to convert because they don’t yet have an active interest in your business.

As you might expect, this term is related to the idea of “cold-calling”—in both cases, you’re trying to convert someone who’s never engaged with your business before. That’s no easy task, and you should prepare yourself for the likelihood that many cold leads won’t convert.

Having said that, there are still ways to convert leads to sales and close a deal when you route cold leads to sales reps. The best approach is to nurture them further down the marketing funnel with top-of-funnel content like blog posts and social media content. However, you can also attempt to cold-call them or email them. 

2. Warm leads

Warm leads are a bit further down the funnel than cold leads. They still haven’t shown any distinct interest in buying from you, but they definitely know who you are and what you offer.

These leads might visit your website on occasion, follow you on social media, subscribe to your emails, or keep up with your blog. They have an interest in you, albeit one that hasn’t yet developed into a desire to purchase.

The best way to market to these leads is to take advantage of the content they engage with by including calls to action (CTAs). Whenever they read a blog post or open an email, they should see a CTA somewhere that encourages them to convert.

You can also take a more direct approach by reaching out to these leads with a phone call or a personalized email, perhaps offering to have a meeting with them about your products or services. Many warm leads will be interested enough to hear you out.

3. Hot leads

The word “hot” can be either good or bad depending on the context, but in this case, it’s definitely the good kind. Think “fajitas sizzling on the platter as the server brings them out of the kitchen” kind of hot.

Hot leads are leads who show overt interest in your products or services. They haven’t committed to a purchase yet, but they’ve definitely indicated that they’re considering it. These leads might be in active talks with your team, or they might be taking advantage of any free trials you offer.

This is where your marketing can really push for a conversion. You don’t have to be subtle here—you can openly encourage hot leads to buy from you, highlighting all the advantages of your product or service while noting the qualities that help your business stand out from the competition.

4. Information qualified leads (IQLs)

The previous three sales lead types focused on how “warmed up” leads are, or how close they are to making a purchase. These last three, however, focus more on the type of content that leads are looking for, and therefore the type of marketing you should target toward them.

Information qualified leads (IQLs) are top-of-funnel leads who are simply trying to find an answer to a question or a solution to a problem. For example, an IQL might look up something like “what do manufacturers do” or “how to form a quarterly budget.”

To target these leads, your best bet is to pump out informational content like blog posts and videos. Don’t try to deliver a direct sales pitch to these users—simply give them the answers they need while showing off your expertise as you do so.

They’ll be able to see through the answers you provide that you’re knowledgeable about your craft, making them likely to remember you when they need your services later on.

5. Marketing qualified leads (MQLs)

Marketing qualified leads (MQLs) appear further down the sales funnel from IQLs. This type of sales lead is comparable to warm leads. MQLs are familiar with your brand, and many of them engage with you in some way, like keeping up with your blog. It’s possible that you already have their email address from a previous newsletter signup, event registration, or content download.

The best way to market to MQLs is to implement marketing messages into your informational content. Start putting out materials that blend informational and salesy content—maybe you publish a page that begins by explaining a particular industry term, and then talks about how that term applies to your company.

You can also push for MQLs to sign up for your email lists or even try out product demos to get more familiar with your company and what you offer.

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6. Product qualified leads (PQLs)

Product qualified leads (PQLs) are leads that have already received some value from your product, whether through a free trial or freemium version of your product. PQLs may be further down the sales funnel than MQLs, but they might not have received certain marketing materials yet if they signed up for a free trial from your website and have had little interaction with your business.

If your business offers free trials or freemium product tiers, knowing how to convert PQLs is especially important because they’ve already interacted with your product in some way. Your sales team should have a process for:

  • Analyzing these leads’ usage of your product
  • Reaching out to PQLs to determine any questions they have about the product
  • Trying to upsell them on a higher product tier

7. Sales qualified leads (SQLs)

Sales-qualified leads (SQLs) appear near the bottom of the sales funnel. These leads have actively expressed some kind of interest in your products or services, and they’re people your company has decided are worth directly marketing to.

At this stage, you can start using direct sales pitches. You want these leads to know that you’re interested in working with them, but you want to do it in a way that makes them interested in working with you, too. To that end, try calling them directly or setting up meetings with them.

Frequently asked questions about leads in sales 

Take a look at these FAQs about sales leads for the answers you’re looking for:

How do you categorize sales leads?

Leads can be categorized in several different ways, including:

  • Their interest level in a product or sales strategy (ex. cold vs. warm vs. hot leads)
  • Their history of interactions with your business 
  • The type of content they’re interested in (ex. MQLs vs. SQLs)

How do you organize a lead list?

The best way of organizing your leads depends on how you and your team prefer to work — and the tools at your disposal. If you’re using a CRM with pipeline management features, you can look at all your leads and their pipeline stage in a board, list, chart, or map view. If you’re working from a spreadsheet, you might have more limited viewing options.

Which lead type should I focus on?

There isn’t just one type of lead your company should spend time and effort to convert — all of the leads listed above have their place in the sales funnel. While it’s more valuable to spend the bulk of your energy on hot leads rather than cold leads, for example, you also have to figure out how to make leads hot — and that takes a multi-faceted sales strategy. 

Earn more sales leads with Nutshell

As you can see, there are different ways to market to different types of leads. The thing is, it can be tricky to figure out which leads are which, and where your prospects are in the sales funnel. Thankfully, you don’t have to figure it out all by yourself.

Nutshell makes it much easier to add leads to your funnel and drive them toward conversion. You can easily categorize leads by their funnel placement and even view custom reports on the effectiveness of your marketing to them.

Want to try out Nutshell for yourself? Get started with our free 14-day trial today!


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