This is part 1 of a 5-part series on Product Qualified Leads (PQLs)
- PQLs (Product Qualified Leads) are hiding in your data — find them!
- Building a Product Qualified Lead process for your Simple Product
- Building a Product Qualified Lead process for your Intermediately Complex Product
- Building a Product Qualified Lead process for your Complex product
- Product Qualified Leads is a Team Sport
Want to know everything you need to know about Product Qualified Leads? Download our e-book.
Got a free trial? What about a freemium model? You need a way to assess leads based on their engagement with your product. You couldn’t have come at a better time, my friend. Enter the product qualified lead.
What’s that, you ask? It’s simplicity itself. A product qualified lead is a lead that has:
- Engaged with your product
- Met a set of “Activation” criteria that you set
- Found your key features of utmost use
Before we get into PQLs and their benefits, a little history:
Lead Qualification is not new
Qualifying inbound leads is quite an old concept. For a long, long time B2B businesses (not just SaaS businesses) have been qualifying leads.
Qualified leads are more likely to convert into paying customers. By qualifying leads, a business makes their sales process more efficient (and effective). Qualified lead? Focus your sales activities there. Lead not qualified? Not likely to convert? Don’t waste resources.
Lead qualification is essential for prioritized sales activities and for maintaining an efficient and effective sales system.
MQLs, SQLs, and PQLs — oh my!
Lead qualification highlights leads that have the highest likelihood of converting to customers. This likelihood is typically determined by two vectors: firmographics and interest.
Firmographics measure the business characteristics of a lead. What’s their job title? How big is the company they’re with? What industry is it in? Where is it located? The list goes on. Qualifying on firmographics hones your sales efforts on your target customer profile. Think: If you build software for cosmetic companies with an e-commerce presence, then an automotive parts company is not a firmographically qualified lead.
Interest, on the other hand, is simplicity itself. It measures a lead’s interest in buying your product. Actions like website visits, blog posts read, white papers downloaded, etc indicate interest. Theoretically, the more a prospect does these things, the more interested they are.
Marketing Qualified Leads follow from both these vectors. They have shown an initial interest – enough to “opt-in” to some marketing initiative and meet some kind of firmographic criteria (we’re looking at you job title). These leads deserve attention but are not quite ready for a personal touch from a salesperson.
Sales Qualified Leads have moved further up the interest curve and have taken actions that justify attention from a salesperson. Typically, a SQL has visited your site several times, perused your pricing page, downloaded multiple whitepapers, or requested a demo. They want to hear from Sales.
Excellent! That should be enough, correct? Perhaps if you’re a traditional software company. But in today’s world of free trials and freemium offerings, the way to qualify “interest” has changed. People have to see value in your product before they pay for it. “Interest” isn’t just a download or view — it’s how engaged a lead is with your product during a trial period.
So what makes PQLs so singular?
Remember from above, product qualified leads are leads that have:
- Engaged with your product
- Met a set of “Activation” criteria that you set
- Found your key features of utmost use
Product Qualified Leads are actually qualified. Here’s why:
1. Product Qualified Leads have used your product
This one sounds obvious, but for a long time, the most qualified leads for a software product never even used the product. Traditional qualification criteria include things like downloading an e-book or visiting the pricing page — activities that imply interest in your offering. But nothing says “interested” like engaging with your features and using your product. Nothing says interested like showing interest!
2. Product Qualified Leads have hit first value
Your users set up a trial so they could give your product a go. You need to give them some breathing room so they can fall in love with your singular features and insightful methodology on their own terms.
But how much breathing room? The goal of your trial (as with any trial) is to drive users and accounts toward “Activation” i.e. first value.
Think: what are the actions that a lead needs to take to hit first value in your product? Do you sell a productivity tool? Then maybe it’s things like adding a team member and creating a task. An analytics tool? Someone’s going to need to connect their data and create a few reports. Or is it something else entirely? Take some time and come up with a list of actions a lead would need to take to get to first value.
And because first value means just that — the lead has found value from using your product — you know that they’re all the more likely to keep wanting to use it.
3. Product Qualified Leads already love your product (or are at least engaged with it)
Either way, you’ll know exactly how much attention to give them.
Go back to number one for a moment. It’s an obvious fact: since a Product Qualified Lead comes from a trial, a Product Qualified Lead has tried your product. And since they’ve hit “first value,” they’ve also found value in your product. Elementary!
But this is just a starting point. A truly remarkable PQL has interacted extensively with your product post-Activation. They’ve gone about their day and come back. They’ve tried other methods and found yours is the best. How do you find these “remarkable Product Qualified Leads”? How do you make a spectrum of PQLs?
You need to score and rank your users based on how frequently they are using the most important parts of your product. Even better: giving context to these insights allows your sales team to act on the best leads instead of getting stuck in tables of data.
It’s simplicity itself — your sales team can’t make sense of rows and rows of event data so they won’t use it. Indeed, they’ll just chase every lead they can instead of going in order of who loves your product most.
So whether it’s love or just like, when you’ve got a Product Qualified Lead, you’ve got a lead that’s engaged with your product and is therefore likely to continue using it. Not just speculation on how much value someone might get out of your product.
4. Product Qualified Leads transcend firmographics
Firmographics are great for qualifying leads. That is, until you have something better. They tell you how close someone is to your target persona — that information is of the utmost use, correct? Hold on. The reason for creating a firmographic profile is to identify and target prospects that will get value from your product.
So if a company finds value in your product regardless of the firmographic criteria, isn’t that better? Does it matter how close they are to your target persona? Agreed, they need the budget to make a purchase, but what other firmographic criteria is better than actual engagement? (Clue: there isn’t one.)
The point: if they don’t/can’t get value from your product during a trial, they likely don’t meet your firmographic criteria anyway. (Or you need to revisit your target persona.) Engagement trumps firmographic criteria.
5. Product Qualified Leads are account-based
Traditionally, MQLs and SQLs have been very user-focused but SaaS is an account-based world. A curious thing, that. You’re not selling software to individuals — you’re selling to teams, to organizations. To entire accounts. That means tracking product engagement at a user-level isn’t going to tell you what you need. You need to be able to aggregate this engagement data at the account level. Without this ability, your sales team will have too many random data points to be able to understand which accounts to go after. Your Product Qualified Lead process will become more frustrating than helpful and your sales team will likely abandon it. Not good.
6. Product Qualified Leads are based on real user engagement, not vanity metrics
Say it with me: Silos suck. Your SaaS business has one goal — to drive revenue. (Well, it probably has other goals but you’re not going to save the llamas of the world if you can’t stay afloat.) Why are all your teams focusing on different goals, then? Why do they all have different KPIs? Why aren’t they aligned?
MQLs and SQLs don’t take the entire organization into account. They’re leads in the door that serve as nothing more than an excuse to ring a gong and move on to the next one. In many cases, they are churn waiting to happen.
Product Qualified Leads are not vanity-metric qualified leads. They are success qualified leads. In SaaS, a closed deal is just the beginning of the journey. A sales team can often convince naive customers to buy a product (and given commission-based compensation models, often do). That doesn’t work long-term though. You need a product your entire organization can rally behind — marketing with messaging, sales with outreach, and product with features, all in alignment. You need to qualify leads based on engagement so you’re bringing in the best possible customers for your business — not just for one team.
All this boils down to one point: Product Qualified Leads are more likely to be long-term successful customers.
Early success with a product (like during a trial period) is the best indicator of long-term success with a product. If a new account is able to get set up, invite their teammates, and show sustainable engagement early during a trial, then they’re the type of account that’s just a future upsell waiting to happen.
So you’re convinced. Most excellent! Now all you need is a process to find Product Qualified Leads.
Before you start looking at data to find Product Qualified Leads, get your free trial into the hands of future customers
If you’re a SaaS business (you are, aren’t you?), you’ve likely already got a free trial or a freemium version of your product. If you don’t, stop reading now.
Customers love trying products before they buy them and the emergence of the Software-as-a-Service business model has made that exceedingly prevalent. Now all you need to do is get people to sign up. Get users to try your product, see what they say and if it’s good (it is good, isn’t it?), they’ll surely join the ranks of your other Product Qualified Leads.
The key to going from dizzying numbers to Product Qualified Leads: Define what makes someone product-qualified
As you may already know, the first step in finding something is defining it. Want to find product qualified leads (who doesn’t)? You need to know what makes someone “product qualified.”
By definition, a Product Qualified Lead is a lead that has been successful with your product during a free trial period. But what does success mean for your SaaS product?
Generally speaking, it’s a combination of two things:
- Activation: Is the trial account all set up? Have they reached first value?
- Engagement: How engaged is a lead during the trial? How often are they using the product, especially the core features?
Here’s how you find the answers to these questions for your SaaS business:
- Set up a system for keeping tabs on your product data
- Define Activation criteria for your product (don’t forget to track it too!)
- Rank Activated trials by engagement
- Do all of this at the account level
Bonus: Get the gong ready
Set up a system for tracking your product data
It’s elementary: You have to track product data if you want to qualify leads based on product usage. We’re not talking about an extensive audit — just focus on events that are important for setting up a new account and events that are core to your product.
Want in-depth insights on how to track product data? Read our e-book
Define Activation criteria for your product (don’t forget to track it too!)
You don’t have a Product Qualified Lead until your lead gets the product set up and reaches “first value.” That’s called being “Activated.”
Try this thought exercise to define Activation for your SaaS business
Suppose you have a user (let’s call him Watson) who sets up a trial so he could give your product a go. You gave him some breathing room — excellent. But how do you know when Watson is “Activated”?
Grab a few of your team members (the more, the better) and ask them:
What are the three, four, five (maybe even six!) specific actions that allow a new account or user to experience “first value?” Is it inviting a team member? Creating a new workspace? Something that’s completely singular to your business? (Clue: If you’re an analytics tool your Activation criteria might be something like connecting data and creating a report.)
These actions are your Activation checklist. And because you’re diligently tracking product data (you are, aren’t you?), you’ll be able to track Activation progress for each of your accounts. You’ll be able to answer questions like: How many of my five Activation steps has my latest signup completed? What is the average Activation rate for this month’s signups?
Who should my sales team focus on?
Rank Activated trials by engagement
Create an engagement scoring model for your product and measure how engaged your accounts are. Compare them. Rank them. Look for trials that are not only more Activated, but also more engaged. The ones that are high on both axes are closer to being product qualified. The ones that are lower — not so much. This is how you can make a PQL spectrum. This is how your sales team can really start directing their actions intelligently.
A little tip: Creating an engagement scoring model is not a simple task. You’ll need to rank your product events based on how important they are and then keep tabs on the number of times each account uses your important features over time. Remember, “last active” and “login” are not acceptable substitutes for real engagement.
Sound daunting? It’s an obvious fact that nothing worth having is easy, but Sherlock makes finding PQLs remarkably so
Do all of this at the account level
This is of the utmost importance. You’re a SaaS business. You sell to accounts — not just individual users. While a single user will sign-up for a trial, multiple users will work together to make the account “Activated” and engaged during the trial period. Multiple stakeholders in a company make the purchasing decision.
So why would you track product data at the user-level and not the account-level? It’s even more so when you’re tracking Product Qualified Leads. PQLs are accounts, not users. You’re selling to accounts, your leads are accounts — you need to track accounts.
This is all very well, but how do you turn this information into revenue?
You know what Product Qualified Leads are — excellent! You even know how to find PQLs using your product data — exceedingly excellent! Now you need to take action. Track Activation for every account during the trial period, get Product Qualified Leads to your sales team. Ring the gong!