Startups Should Differentiate Suspects/Prospects/Customers

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Image by Madame Meow via Flickr

When I talk to seed stage entrepreneurs and co-founders one of the things they love to tell me about is how many “customers” they have in their pipeline. I love startups that have customers! At that point I like to pause for a second and ask how many of these customers have signed a contract. It gets quiet. Well, these are actually prospects. I ask if they’ve identified the BANT (Budget, Authority, Need, Timeline) sales requirements for these prospects. Hmm, they don’t have that so they are actually suspects.

There’s nothing wrong with getting them confused but I think it’s important for entrepreneurs to understand the difference. Here’s a quick recap of the three categories:

  • Suspect – a contact that you’ve had an initial discussion about your product or service
  • Prospect – a contact that has budget to buy your product, authority to make a decision, need for what you’re offering, and a timeline to get a deal done (never forget BANT)
  • Customer – a contact that has signed a legal agreement in which you’ve been paid or will be paid money for your product or service

My recommendation is to use this terminology when discussing your startup’s sales pipeline.

What else? Have you seen entrepreneurs mis-use the words suspect, prospect, and customer?

6 thoughts on “Startups Should Differentiate Suspects/Prospects/Customers

      1. So people tell you they have *customers* in their “pipeline?” ROFL! That’s a new one on me. 🙂

        Yep, they are not a customer until they “Show me the money!” They need to “Sign on the line which is dotted.” 😉

  1. David
    Interesting piece. In my experience I would say a prospect is where one or two of the BANT attributes are missing. If all the BANT variables are ticked you have a “Project”. Using these 2 classifications you can track your internal sales guys and sales guys moving prospects to projects and understand how long filling in the missing BANT gaps takes.

    Bill

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