I am brand new to Zoho CRM and I am trying to figure out how to set up the tabs. 

I work at at travel agency and lets say I get an email from someone who saw an add somewhere and is interested in what we have to offer.  I add the info to Leads, after email correspondence they say that they want a proposal, I then add the person to potentials - when I do this I have to add the info to both contact and potential. The problem is that I want to be able to destinguish in "contacts" who is already a customer, who is a prospect, who is a vendor...etc.  

So I added the drop down menu with the following options: Customer, potential customer, Vendor, other. However when I convert a lead into a potential and choose potential customer in my dropdown menu, it automatically shows as customer in "contacts"...?! 

I am really confused and I am wondering how I can set this up properly for our travel agency.

Any suggestions are more than welcome!  Thanks!