To designate workflows, there's 2 things to know:  1) status and category drive workflows most all parts of the system and 2) Deal Stage designates the workflow through the sales pipeline.

Status and Category

Here's an example of a pretty standard workflow in the system

Status: New      Category: Prospect         first step in the workflow, a new prospect
Status: Active   Category: Prospect         active when contact is made
Status: New      Category: Lead               convert to a lead, create a Deal
Status: Hot        Category: Lead               make the lead HOT to raise importance
Status: New      Category: Customer       convert the lead to a new customer
Status: Active   Category: Customer       existing customers should be this

You can customize all Status & Category fields in the system in:

Setup -> Setup Field Sets

From here, you can customize all workflow parts of the system.

Deal Stage

To customize the deal stages go to:

Setup -> Setup Field Sets

The deal stages affect the Pipeline reports.  When you open a Deal, you should assign the deal stage and also progress the contact or company to the proper workflow step. For example, you may convert an Active Prospect to a New Lead and create a Deal with the stage "Quoting".  

Next, you may go from "Quoting" to "Proposal" or "Negotiating Contract" -- these are all examples of Deal Stages that you may use, while also moving a contact to the "Hot" status.  You can also add a priority to the Deal as well.

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