Or maybe using Accounts/Contacts it the way to go?
First, there is no “right” answer. What we can do is give you information about the benefits of doing it each way in order to help you decide which method you want to use.
The Argument in Favor of Using Leads
One of the benefits of using the Lead entity is that it is a way to park information that you are not sure has value yet. This can include people that might come up to your trade-show booth and hand you their business card. Are they interested in your handouts and gifts, or are they truly interested in your product? Entering that business card as a Lead allows the capture of their information, which may or may not have value later. This can also include anyone that signs up for your website or newsletter, and people who download your whitepapers.
By recording information as a Lead, you keep reports clean, and also assure you don’t have to scroll through multiple pages of information looking for your actual customers (Accounts and Contacts.)
Introduced in CRM 2013, Cross Entity Business Process Flows allow the unification of the Lead qualification with the Opportunity in the same process flow. This allows the easy navigation straight from Lead to Opportunity and back.
Data Management Concerns
Another benefit to use the Lead entity to track your prospects is the ability to easily cull bad data. For example, if you are buying Leads from a re-seller, you may be importing 5,000 leads at one time and 4,500 of those 5,000 may turn out to not have an interest in your product, with only 500 becoming customers. It is far easier to separate the 500 who are doing business with you from the 4,500 who has no interest in your company if they are stored in separate entities within Dynamics CRM. If all 5,000 of those original leads are turned into Contacts and tracked there, eventually all these non-value contacts could affect performance, if they are not purged on a regular basis, slowing the user interface for everyone.
If you decide to put prospect information into Accounts and Contacts and create opportunities from there, you end up with a lot of accounts and contacts that are not currently customers, and who may never be customers. Their passing interest in your product has waned, they have unsubscribed from everything and are just sitting out there and you have no easy method to keep them out of your reports or views.
As time goes on and more and more of similar and same named individuals are added to the system, you can end up searching for John Doe and pull up 1,200 John Doe’s that you will need to search through, looking for the John Doe you really want. 1,100 of these John Doe’s may have never purchased from your company, have never shown any interest in your product, have no interest in your marketing or newsletters, and are not signed up for your Blog.
Why would you want them on your interface, making it harder for you to find the 100 John Does that actually have an interest in your product?
While Leads used properly can be extremely helpful, they should never be allowed to get old. The longer a lead sits in the lead entity, the more likely it will be that data issues will arise. Also, when a lead is qualified, it is deactivated and most, but not all, of the data is moved to an Account and Contact record. For example, without customization, notes associated with the Lead do not copy over to the newly created Account and Contact.
It is also possible, when a new Contact is created, to create a duplicate record as there is no fool proof manner of duplicate detection between Leads and Contacts.
When a Lead is disqualified, the lead is deactivated and if the person calls months later, the salesperson may be unaware of the previous record and its notes.
Some CRM Users do not want a Contact and Opportunity created when a Lead is qualified, but there is no method to stop this from happening.
There is one other detail to consider when deciding whether to use Leads to track Prospects, or to use Accounts/Contacts. Dynamics CRM has a built-in process for qualifying Leads who are interested in your product. This process can automatically create an Account, a Contact and an Opportunity for a qualified Lead. There is no such automated process to create opportunities for Accounts/Contacts that express an interest in purchasing your products.
The Argument in favor of using Accounts and Contacts
It is quite possible to use the relationship type field and add a type called “prospect” to differentiate between prospects and actual customers. You can use this field to help create targeted marketing lists that contain new product information that can be shared with your new prospect and current customers alike. So it is convenient to be able to group everyone who has an interest in this particular product together, whether or not they are a customer or a lead, and whether or not they are just a newsletter subscriber. So, there is an argument for some companies to have all that information in one place.
For example, when creating a Marketing Campaign, two separate marketing lists would need to be compiled, one for Leads and one for Contacts, before being sent out to tell them about your new Product X. However, if Leads are not used and prospects are recorded in Contacts, only a single marketing list for Product X would need to be created and recorded.
The upside of using Accounts and Contacts in that the information about who is interested in what products gets grouped together and thus easier to report on. It would be easy to record on a Contact, by use of check boxes, who is interested in or a customer of Product X, Product Y, and Product Z, allowing for easy sorting, reporting, and viewing prospect and existing customers all at once. In the same situation with both Leads and Contacts in use, that information would be spread out and not as easily and quickly reported together.
But…which is better?
Based on your business processes, is it more efficient to have all the data in one place for easy reporting, or better to not have to sift through hundreds (if not thousands) of records that offer no value to the company? Are records searched daily, versus a monthly marketing campaign? Is 1,100 extra John Doe records slowing even the simplest of tasks when required to be searched through on a daily basis?
Okay, so while we said there is no “right” answer, in most cases we find it is better to keep prospects separated from active customers, due to the multiple day-to-day usage functions within Dynamics CRM. This means using the Lead entity to track Prospects, and saving Accounts/Contacts to track people who have shown an interest in your product. The small gain in efficiency found when reporting on all Prospects and Customers (when all info is entered in Accounts/Contacts) is quickly nullified every time a new Advanced Find is performed, and records need to be sorted appropriately.
Using the out-of-the-box processes, views, reports and functionality supplied with Dynamics CRM gives you a process advantage. However, there is still nothing wrong with using Accounts/Contacts to track Prospects, so long as your company has a clear data management process established.