The precise definition of a lead tends to vary somewhat from person to person. In fact, one of the biggest stumbling blocks between sales and marketing can be the definition of what counts as a lead and what doesn't. It's important to make sure that everyone involved in lead generation agrees with the people responsible for following up on those leads.
Defining a Lead
Most salespeople define a lead as someone who matches the criterion the salesperson has established and who has the need, reason and/or interest in pursuing the product. However, marketing professionals tend to define a lead as anyone who might have those qualities, and believe that a lead that proves to have the desired attributes is considered to be a 'prospect.'
Both of these definitions are reasonable, but make sure that everyone involved agrees as to which definition they'll be using. If you're reading advice on a sales site, for instance, you can assume that the writer intends the first, sales-related definition of a lead, while marketing writers will more often use the second definition.
Some sales experts prefer to use the term 'suspect' instead of lead, partly to eliminate the confusion that can arise from multiple definitions. Referring to someone as a suspect versus a prospect is also a very clear way to categorize how far along the sales process you are with a given lead. Someone you've just seen on a lead list and haven't called yet is a suspect; someone you've at least partially qualified is a prospect.
Assessing and Qualifying Leads
Not all leads are equally valuable from a sales perspective. First, some lead sources will provide a high percentage of 'junk' leads, meaning leads that don't have the potential to be prospects. For example, if you use the phone book as your lead source, then the majority of the people you call will be junk leads. That's one reason why salespeople and companies are willing to pay quite a lot of money to buy high-quality lead lists. The more targeted and accurate a lead list is, the less time the salesperson will have to waste on non-prospects.
But even leads that have the potential to be prospects can vary in value. A lead who only has the potential to make a single purchase of your company's cheapest product is far less valuable than one who will make many large purchases over a long period.
Part of the qualifying process is determining which leads have the most potential as customers so that you can then spend the majority of your time and energy cultivating those leads.
Don't Judge by Instinct
Some salespeople make the mistake of cherry-picking leads, believing they can tell by instinct which leads will turn out to be good ones and which ones they shouldn't bother to even cold call. Making this mistake can cost you a lot of sales. You're much better off erring in the direction of reaching out to every single lead so that you can make the most of what you're getting.