Lead: unqualified, unverified
A lead is a name and some contact details, with no confirmation that there is a need, a budget or any interest. Form submissions, event lists and referrals all arrive as leads.
The important property of a lead is that it may be worth nothing, and treating it as pipeline is how forecasts inflate. Leads should be searchable, assignable and workable, but kept out of revenue reporting until qualified.
Prospect: qualified, not yet transacting
A prospect is a lead that has survived contact. Someone has established there is a plausible need and that you are talking to a person who can act on it.
In practice this is where conversion happens: the record becomes an organization with people attached, and a specific opportunity is created against it with a value and a stage.
Opportunity: a specific potential transaction
Opportunity is the term teams most often skip, and its absence causes the most confusion. A prospect is a relationship; an opportunity is one identifiable deal within it.
The distinction matters because one organization can hold several opportunities at once, in different stages, with different owners. Collapsing them into a single record makes that impossible to represent.
Customer: a relationship with history
A customer is an organization that has transacted. The record does not reset at that point — it accumulates. Support history, renewals, further opportunities and delivered work all attach to the same organization.
This is the argument for keeping organizations and people as separate related records from the beginning: the relationship outlives any individual contact at the company, and the history should survive them leaving.