You couldn’t have come at a better time, my friend. You already know what product qualified leads (PQLs) are and why they’re singularly remarkable when it comes to generating SaaS revenue.
You’ve decided you need PQLs for your SaaS business (because you’re a modern SaaS pro).
Now all you need is a process to find product qualified leads.
Before you start looking at data to find PQLs, 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 PQLs.
The key to going from dizzying numbers to PQLs: Define what makes someone a PQL
As you may already know, the first step in finding something is defining it. Want to find a product qualified lead (who doesn’t)? You need to know what makes a user “product qualified.”
By definition, a PQL 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 PQL 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 PQLs. 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 a PQL is — 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 PQLs to your sales team. Ring the gong!
Curious to read more on PQLs?
- Beginner’s Guide to Product Qualified Leads (PQL) by Wes Bush: A broad overview of PQLs from Wes Bush – if you’re looking for a comprehensive intro, look no more.
- Why product qualified leads are rapidly being adopted in SaaS: A good post from the Openview partners who specialize in product-led SaaS businesses – for which a PQL process is very important.
- The product qualified lead (PQL) by Tom Tunguz: And oldie, but goodie. Tom has been talking about PQLs since 2013! Talk about being on the right side of history.
- Marketing Qualified Leads Are Cool, But I’ll Take Product Qualified Leads Any Day by Emmanuelle Skala: One of the top SaaS sales and CS leaders weighs in on the PQL in this post.
- MQLs are DEAD! Enter the PQL“Product Qualified Lead” = 10X+ revenue impact by Mitch Morando: A dramatic, but not inaccurate take on the subject from a seasoned SaaS sales leader.