What Are Sales Leads? Definition and Examples

By Indeed Editorial Team

Updated February 22, 2021

Published February 25, 2020

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Generating sales leads is an important part of every company's sales process. Finding promising leads and converting them into paying customers is a necessary part of a company, ensuring their continued success and profit. If you are interested in sales leads and how they factor into the sales process, you will need to know what they are and how companies find them. In this article, we will define the term "sales lead," look at different types of sales leads and discuss effective methods for lead generation.

Read more: Learn About Being a Sales Manager

What is a sales lead?

A sales lead is a company or individual who has the potential to become a paying consumer. Leads are prospects at the earliest stage of becoming a customer. Leads are people who have expressed interest in goods or services by performing some sort of action, like clicking on a link or filling out a form. To turn a lead into a customer, a company must contact the lead, provide information about the product and close the sale. Generating leads and efficiently capitalizing on their interest is a crucial part of a company's sales process.

Generating leads via the internet is the most effective method in today's society. Finding leads online involves offering internet users the opportunity to interact with marketing or advertising content. The goal of facilitating these interactions is for the lead to provide the company with their contact information. Once the lead has given the company their email address or phone number, the sales team can begin using direct marketing techniques to convert the lead into a customer.

Related: A Guide to Funnel Charts

Types of sales leads

Sales leads can be separated into certain categories depending on their level of interaction with a product. The more information a lead has about a product, the more likely they are to become a customer. Here are three common types of sales leads:

Cold leads

Cold leads are individuals or companies who know nothing or almost nothing about your product. They may not have expressed any specific interest in your product yet, but they still could be an excellent fit as a consumer. Cold leads typically come from professional directories or existing customer recommendations. In order to appeal to cold leads, sales teams must be careful not to overwhelm the lead with information. The best method for converting cold leads will involve presenting a concise introduction to the company and a low-risk opportunity to interact with the product.

Cold leads are often purchased using lead generation services. Some companies pay a fee to access a list of leads that meet geographic and demographic criteria. Once the company has the lead's information, they may need to exert considerable effort to persuade the lead to become a customer.

Warm leads

Warm leads are entities that have shown some interest in a company or product but have not expressed any desire to make a purchase. Warm leads might respond to a brand's social media post or fill out a form to receive more information about a certain product. Warm leads might also be those who have not made any commitment to supporting the company monetarily, but who are interested in the company's mission or brand.

Companies find warm leads by reaching out to businesses who have contacted the company in the past or to people who have responded to the company's general marketing efforts. Warm leads have the potential to become customers with a relatively small amount of effort.

Hot leads

Finally, hot leads are brands or individuals who have already expressed a desire to purchase a certain product. Hot leads are well-informed on the product, agreeable to the price and willing to support the company. Some hot leads connect with a company without having to be generated. These leads might be consumers who found a company through an internet search or who received a recommendation from a friend. They have conducted independent research and decided to purchase on their own. Other hot leads may have originally been cold leads which were effectively converted by the sales and marketing teams.

Hot leads are typically someone who has initiated contact with a company or who has responded well to direct marketing efforts. In some cases, the only effort required by the company is closing the sale and completing the transaction.

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How can you find leads?

There are many effective methods a company can use to find and generate sales leads. As technology has developed and society has evolved, the best tactics for lead generation have also changed. Here are our suggestions for some of the best ways to find leads:


The most fundamental tool you need for lead generation is a website that effectively features your goods or services. This website will be the landing page to which all other lead generation methods will redirect. The website should present the company's product in a way that will appeal to a wide range of customers. The website should also request for visitors to input their contact information as soon as they arrive at the home page. To attract visitors to the website, you will need to ensure your webpage appears in search engine result pages by using search engine optimization methods.

Website lead generation often takes the form of a pop-up graphic that welcome the visitor and asks them to type their email address into a field. Once you have the visitor's email address, you can send them a follow-up email that contains more detailed information about your products and invites them to contact a customer service department if they have any questions.

Social media

Another effective tool for lead generation is social media platforms. Creating a company profile for services like Twitter, Instagram and Facebook will give you the opportunity to promote your product to millions of internet users every day. To generate leads using social media, you will need to post regular content that promotes your products and invites viewers to interact with your brand. Depending on the specific platform, you can share polls, quizzes, giveaways or contests which promote audience involvement. You can use your social media presence to help build your brand and set yourself apart from competitors.

The goal of all social media activities will be to direct your audience to your website or another webpage where they can purchase your product. Promotions like free trials, online discounts or free shipping can help persuade social media leads to become customers.

Customer referral system

Another effective type method for sales lead generation is a customer referral system. To use this method, companies provide incentives for existing customers to refer the product to their friends, family and coworkers. For example, a company might promise their customers $15 in store credit if they can convince a friend to purchase the company's product. This is a highly beneficial tactic because the potential leads are more likely to trust a recommendation from their friend than from marketing materials. Additionally, the existing customer is likely to buy more than $15 worth of product when using their store credit.

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