As you landed here, I assume that you heard about Product Qualified Leads (PQLs) already somewhere on the internet. You are probably intrigued by the sound of it and wonder if and how you could us PQL metrics for your SaaS business.
But first you want to get a quick overview of what PQL actually stands for?
Keep on reading, this article is for you!
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 the concept is, many SaaS sales teams still struggle to get started. So let’s dive and explore the topic.
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.
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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?
This is exactly where Product Qualified Leads metrics can help you.
A couple of weeks ago we asked 9 SaaS expert how they identify their 10x leads. Guess what was one answer we heard over and over again? Looking at the activity of a lead is one of the best indications to successfully qualify them.
If by now you are convinced that you want to dive deeper into the topic, we have good news. We got so excited about the PQL model that we wrote The Ultimate Guide to PQLs. Head over there to learn everything there is to know about PQL metrics.