Are you intrigued by the concept of product qualified leads (PQLs) but don’t know how to identify those people among your users?
Do you wonder how to leverage demographic data and product usage to spot and act on your users’ buying intent?
Let’s face it; more and more SaaS brands adopt product qualified leads as a way to identify high-value accounts and improve inside sales success. But, given how new is the concept, many SaaS sales teams still struggle with identifying who their PQLs are.
If you’re one of them, you’ll love this post. I reached out to some of the leading SaaS brands, inquiring about how they do it. I asked companies like Close, CoSchedule, Mailshake, Wisepops or AgencyAnalytics about what metrics or other factors they use to single out their 10X accounts – people who match your ideal client profile, have used the product successfully and in turn, indicate the likelihood of becoming paying customers.
Before I show you their answers, though, I believe we should discuss something else briefly.
Why Focus on Product Qualified Leads in First Place?
I’m sure you’re well familiar with the concept of MQLs (marketing qualified leads.) I suspect you’ve been using it to determine which of your users show the buying intent. And, most likely, you also know how limiting the concept is when it comes to a SaaS company.
After all, as Mickey Alon wrote at OpenView Partners blog, the MQL model is “highly subjective, rule-based and relies on basic activities […] It is missing a critical element when it comes to SaaS companies, whereby potential customers expect to educate themselves by experiencing the product beforehand.”
The MQL model relies on analyzing behaviors happening before any sales-driven engagement with a brand.
Now, doing so makes sense in many industries. Whenever experiencing the product follows the purchase, measuring any pre-sales interaction can help determine the buying intent.
But not in SaaS.
For one, the process happens in reverse for you. Self-service model-based SaaS brands allow their users to experience the product completely free, after all, and make up their mind about it without having to invest much into it.
Enter Product Qualified Leads
Monitoring product qualified leads expands the above with a critical factor – product usage signals that indicate whether a person has experienced the value of the product, and might be ready to discuss their upgrade options.
Because of this laser-focus on the match of ideal client profile and engagement (more on this in just a second,) PQLs help inside sales teams to focus on the highest opportunities, rather than wasting time trying to process all leads.
But What is a Product Qualified Lead?
A product qualified lead is a prospective customer who a.) meets your ideal client profile, b.) has experienced the value of your product through free trial or freemium account, and c.) has taken actions that indicate a potential buying intent.
There are three elements to this definition. Let’s break it down, then.
- Meets ideal client profile. A PQL is someone who matches the demographic characteristics of people/companies you’d like to work with. These might be as basic as being based in a specific location (i.e. US-based SMBs) or as complex to define the person’s job title, responsibilities and their company’s tech stack.
- Has experienced the value of your product. A PQL has would not only have used your product already, they would reach the activation point, and have seen success with it too.
- Has taken actions that indicate a potential buying intent. These actions will be different for each business. However, some common ones include repeatedly logging in, inviting other users into the app, spending time reviewing the pricing page, and so on.
Why It Is Critical to Identify Product Qualified Leads?
I admit that, at first sight, PQLs might not seem like such a big deal. I mean, you could assume, that, for the most part, those people will pre-qualify themselves by using the product and upgrade when they’re ready to do so (or their trial expires,) right?
Well, maybe but I wouldn’t be so sure. Consider a simple scenario where you decide to go upmarket. You’ve been experiencing some growth through the self-service model, and now you want to take things to the next level. Or you simply want to upsell current customers to a higher plan.
So, you hire the first inside sales person (or decide to process those leads yourself) and that’s where the problems begin.
For example, you may have no clear lead qualification process to identify high-value leads where a high-touch approach makes sense.
Your rep, as a result, might end up running around in circles, not knowing which leads to go after.
Your rep might define their own lead qualification criteria or go by the gut feeling when prospecting.
Needless to say, neither of those approaches could deliver meaningful results.
In many companies, sales teams cannot access to the database of trial and freemium users.
As a result, reps have to build their own lists of leads and close deals off those while having the hottest leads (people using the product already) right in front of them.
- Not knowing whom to talk to and when
- Wasting time processing all leads
- Missing out on the amazing opportunities.
And these are just some of the possible scenarios, sadly.
So, how do you overcome this?
We asked 9 SaaS experts about how they identify their 10x customers.
The majority of them told us that they use a mix of demographic and product usage. Or, in other words, they use PQL metrics. Specifically, most companies identify their one, key PQL metric that allows them to identify their ideal customers to reach out to quickly.
Here’s what they’ve told us, specifically.
9 Amazing SaaS Brands Share Their Top PQL Metrics
We’ve recently added qualified trials (instead of all trials) as our main KPI for measuring marketing success.
We ask a qualifying question when people sign up for an account: “How many clients do you currently have?“
That tells us how large an account has the potential to be for us. If they’re > 0 that means they may be a good fit immediately. If they’re > 50 they’re a potential enterprise customer who is treated as a 10x customer.
In short, “number of clients” is the property we track and follow up with accordingly.
Christian SculthorpAgency Analytics
After working with many different companies on this subject, there isn’t a one size fits all answer to this question. For some companies, the number of employees is very important, while for others, small companies are a much better fit.
Every company is different and the Ideal Customer Profile (ICP) needs to be highly customized to fit their strategy. The best way to go about this is to look at past sales data inside your CRM and to look at the factors that have the most significative impact on your conversion rate.
You can then start thinking about scoring leads but the first step is to really analyze what’s inside your CRM so that you can truly nail your ICP.
To identify our 10X customers, we focus on two simple metrics: traffic estimates (via SimilarWeb) & headcount (via Linkedin).
We also add a subjective dimension to the equation: our contact in the target company. Not all big companies that receive a lot of traffic are good leads for us. A lot of them will be slow to move, will take a lot of our time, will have a hard using the solution, etc. If we feel that our contact is energetic and moves fast, then we know it’s probably going to work out.
This might be the unsexiest answer you get when asking startups this question—but our main strategy for identifying 10x customers is to stay in touch with our customers and keep the lines of communication open.
We have an amazing Success and Support team, and these people make sure to understand what our customers need to succeed. It’s probably a much bigger investment for us than it would be to set up a product usage based scoring system, or simply tracking revenue expansion, especially at the scale at which we’re operating—but we’ve been able to identify and seize opportunities that we would have missed with a purely metric-driven approach. And ultimately, we’re an obsessively customer-focused company. We believe that even from the standpoint of our own selfish business interests, the benefits of continuously talking with and listening to our customers are well worth the investment.
For us in the SaaS industry it’s crucial to identify customers to focus on. That means knowing and aligning your internal processes across the teams and working together, especially when it comes to Marketing, Sales and Support.
A CRM is the data basis for that, but we also enrich that data with Marketing and Sales information like a lot of campaign parameters or content the lead interacted with. When a user identifies as marketing qualified by several indicators, then our sales team is doing a qualification call to get the personal contact and detailed information about the company.
I wouldn’t say there is a metric that we focus on when identifying a 10X growth opportunity inside of an account. What I will say is identifying one comes down to one word: “questions.” The more you can learn about an account, their current challenges and their goals, the easier it becomes to identify and then execute on a large growth opportunity.
Our pricing model is directly connected with website volume. So, for us the key metric is sessions per month. The bigger the website, the more likely it is to convert into an ‘enterprise’ subscription.
The metric we look most closely at is the size of the sales team. If leads have at least one full time salesperson, we can be pretty sure that they are committing to making sales work for their business. A lot of founders and entrepreneurs may give sales a shot to see if it can work, but these tend to be small customers who churn at a high rate. If a company has a full-time salesperson, it is likely that email will be a part of their process, and if the product works for their process, they are less likely to churn because they’re giving up on sales as a channel.
We use a lead scoring method based on user responses in our opt-in forms. The scoring system ranks prospects based on the plan they’ve selected and the size of their budget. We try to gather information about the age of the business as well. Companies that are already established, interested in a custom plan, with a large budget, will receive a higher score.
Sometimes new leads don’t always provide us with that information initially. But it’s still worth reaching out to those prospects. In these instances, we use their average response time as a metric for identifying the customer’s potential. Leads that take a week to reply aren’t scored as high as the ones who are eager to respond within hours.
Want to See How PQL Metrics Can Help Your SaaS?
Book a personalized demo with our team and learn how Refiner can optimize your inbound sales process with Product Qualified Lead Metrics.