After spending most of their careers trawling through ambiguously useful marketing-qualified leads (MQLs), sales reps are hugely excited about a new kind of individual: the product-qualified lead (PQL).
You’ve probably seen the buzz and might be wondering why the novel-sounding PQL is being suggested as the replacement for MQLs, and perhaps even SQLs.
The problem with SQLs (despite their apparent heat) is that sales reps generally only convert around 6% of them.
Put simply, PQLs are far warmer and deeper in the sales funnel than traditional leads.
A PQL has displayed a high level of usage and appreciation for your actual product. Many companies rely on an individual’s time with your freemium or free trials for establishing PQLs, but that’s jumping the gun.
You need to outline the level of product usage that indicates a lead is seemingly ready for conversion.
As with any hyped concept, it’s important you gain a practical understanding. While there’s a loose definition for PQLs, identifying them within your funnel largely depends on your company and product-related definitions and benchmarks.
We’ll help you double down on your first set of PQLs, and how best to convert them into loyal customers with a developed business model.
The “wasted potential” of MQLs and SQLs
MQLs (Marketing Qualified Leads) and SQLs (Sales Qualified Leads) play essential roles in traditional sales funnels, yet they sometimes fall short of capturing the full spectrum of sales opportunities, especially in a product-led growth model.
The criteria used to define MQLs, like email engagement or website traffic, don't always indicate a lead's genuine interest or interaction with the product. This can make it challenging for sales teams to prioritize these leads effectively.
Moreover, transitioning MQLs to SQLs can be a protracted process, with a relatively low conversion rate.
This traditional approach may lead to higher CAC and longer sales cycles.
On the other hand, Product Qualified Leads (PQLs) offer a more streamlined and efficient path to recognizing and engaging potential customers, as they are based on actual product usage and engagement, which is often a stronger indicator of a lead's readiness to buy.
The new measure for customer success
These leads aren't just warmer; they're practically sizzling, demonstrating genuine engagement and understanding of your product's value. But here's the twist: identifying these golden geese within traditional CRMs like HubSpot can be akin to finding a needle in a haystack.
We encountered this very challenge. Our quest for a more efficient, actionable data integration into various CRM systems led to the birth of Breyta. Traditional setups involving Customer Data Platforms (CDPs) were cumbersome and often failed to deliver the expected results, especially when harnessing new data swiftly and effectively.
Diving deep into the world of lead generation, it's clear that the era of relying solely on marketing-qualified leads (MQLs) and sales-qualified leads (SQLs) is evolving. Enter the game-changer: Product-Qualified Leads (PQLs).
The qualified quality of PQLs
The problem with traditional scoring models and definitions is that they often don’t factor in real buying intent. With the modern sales focus now on product-led growth (PLG), the PQL definition is a natural development of lead scoring definitions.
Let’s start your product-qualified journey with a quick terminology refresher:
- Product-Led Growth (PLG): A growth model where your product is the main driver of user acquisition, activation, and retention.
- Product Qualified Leads (PQLs): Individuals who have registered for your product and shown significant engagement, indicating they understand and value its offers.
- Product Qualified Accounts (PQAs): Groups of users within a company that meet the PQL criteria on a company-wide scale.
- PQL Scores: Metrics that combine customer fit, product engagement, and buying intent to prioritize potential customers.
The PQL definition varies between company and thought leader, but here’s how we define one at Breyta.
Product Qualified Leads (PQLs) are people who have signed up for your product and demonstrated strong interest by taking actions that show they've experienced meaningful value. They get what your product can do for them.
Chris Moen, CEO & Co-founder
PQL Scores are vital for determining who your salespeople should focus their often limited time on. It’s all about determining the best fit, and we have a nifty process for doing just that.
How to stand out in the CRM universe
Breyta simplifies the complex, often overwhelming world of data integration, offering a no-code, CRM-native Customer Data Platform designed to supercharge sales and customer success.
By syncing your CRM's master data and enriching it with insights from various sources, Breyta transforms data into actionable intelligence, making identifying PQLs a breeze.
The challenge with CRMs
Identifying PQLs within CRMs such as HubSpot can be daunting due to several inherent limitations:
- Behavioral data void: CRMs are excellent for managing customer interactions but fall short in analyzing how customers actually use your product.
- Fragmented data landscape: With customer data scattered across multiple platforms, achieving a unified view within a CRM requires significant legwork.
- Lack of real-time insights: Traditional CRMs struggle to offer the instant, actionable data insights that Breyta provides, hindering timely PQL identification and engagement.
Our solution: a symphony of data
Our approach is straightforward: offer real-time data sync and a user-friendly interface to eliminate the technical barriers traditionally associated with data integration.
This enables sales and customer success teams to focus on what they do best: engaging and converting high-value PQLs into loyal customers.
Let’s get started.
Set up your Customer Fit score
We designed our Customer Fit score to be as inclusive as possible. Still, we’ll focus on three commonly agreed-upon conditions for this tutorial: Country, Number of Employees, and Predicted Revenue.
Check out our guide below:
You’ve added parameters for three vital customer metrics in just a few minutes. Now that you’ve defined your ideal lead, you can also set up your Engagement Score.
Breyta’s Engagement Score ranks your customers according to their commitment to your product, surfacing CS’s almost guaranteed wins. You can cook up your recipe for success with events that reflect strong engagement.
But why go through all this effort when your sales-led model has brought you this far?
The problem with traditional scoring models and definitions is that they often don’t factor in real buying intent. With the modern sales focus now on product-led growth (PLG), the PQL definition is a natural development of lead scoring definitions.
Focus on your already enriched leads
The beauty of a PQL is that they’ve already experienced enough product adoption goodness to be sincerely interested. Imagine having a sales conversation with someone already familiar with your types of product services and what they need from them?
Before you reach out to a PQL, or even begin scoring them accordingly, you need to nail the product actions that are most likely to convert.
You might know a software company that relies on its freemium model and tracks product usage patterns. Many businesses identify and act on their “PQLs” that have simply signed up for a free trial or jumped on their freemium model.
PQLs might be hotter than MQLs and SQLs, but that doesn’t mean the freemium version of your product is a self-fulfilling prophecy. It would be best if you still worked hard at defining what a PQL means to you and your teams.
How to identify and activate your specific PQLs
For starters, there are three key sales metrics you need to consider when establishing your PQL scoring model:
- Customer Fit: a lead’s relevance within your ICP according to firmographic metrics
- User Engagement: the number of active users, signups, and activity level with your product
- Purchase Intent: whether a lead indicated purchasing behaviors like visiting your pricing page or actively reaching out to sales
The best practice for spotting PQLs starts with adequately defining these three parameters. That’s when your customer success or sales efforts can begin.
It all comes down to your company goals and the kind of segmentation you need.
Assign teams the right PQL
As PQLs come in all shapes and sizes, you need to identify each primary type within your funnel and who will take care of them.
Segmentation is as much about defining internal roles as it is lead criteria and behavior:
- Your Account Executives should handle ICP-friendly users or accounts that have displayed impressive product usage - your diamonds in the rough
- We recommend that SDR/BDRs handle prospects that have enthusiastically used your product but might not entirely fit your ICP. You can bounce this kind of prospect between marketing and sales until they’ve been nurtured to ICP-approval levels.
- Finally, your sales assist or customer success team can engage prospects that fit your ICP but haven’t reached the desired product usage threshold.
Let’s take the example of one of the most commonly used types of segments: the free trial user that would make an incredible customer.
A rough qualification process would begin with a prospect signing up for your free trial. Make sure that your signup form requests all the needed firmographic details.
If you find that your leads would rather not fill out hefty forms, then a simple form with an email address and company name entry will do. You can then send said prospect’s firmographic entries over to Clearbit for complete data enrichment.
Shape your PQL game plan with Signals
With your refined Breyta-forged PQL list at hand, it’s time to start working on these accounts.
You know that these PQLs are very hot, but your salespeople need pre-defined triggers. Find the product usage patterns that have a high conversion correlation.
These significant product events include:
- Major results like landing sales using your app
- When power users have hit usage limit walls
- When a particular feature has been predominantly used
Set up a notification system for when users hit these behavioral triggers through your preferred channels. Breyta will notify you via Slack and email when users or accounts pop up on your signal lists.
So, how does it work?
1. Head to the Signals section under Data
2. Consider the example Signal definitions
Check out the example Signal definitions pictured. It’s best to divide your success markers into “Company signals” and “Person signals”.
Let’s unpack them.
Company signals
- Upsell to premium: Milestones like companies becoming customers in your HubSpot Company lifecycle stage and many integrations.
- Decreased or increased usage: Minimal or high user activity across a set period of time.
- Upsell to pro: For customers who have scored highly across several scores, like Customer Health, Fit, and Engagement.
Person signals
- Invited team: When a POI invites a set number of colleagues to join.
- Product champion: A leading power user showcasing committed user activity and a healthy Engagement Score.
- High intent signal: This individual mentions your company in related messaging, has high user activity, and a telling Engagement Score.
Once your sights set on a high-probability win, it’s time to reach out.
Write a well-timed personalized message or call script for a PQL meeting these end-goal usage benchmarks. Check out this example of an engagement email from Segment:
Source: Really Good Emails
Polish your PQL Diamonds
Once you have this firmographic data in hand, you can match it with your ICP. A good fit is essential, but leads need to meet your preferred usage parameters and other types of behaviors for your ideal PQL.
You can establish your most popular features by using services like Mixpanel or Amplitude. These tools collect usage data that will provide insights into your product’s most used features.
You’ll also be able to establish which success milestones users reach before converting into paid customers.
Being data-driven is essential, but your old-school tactics are valuable, too. You can call up or message your customers and establish which aspects and features of your tool they found the most beneficial.
This direct communication is a great way to learn more about valuable features that your product analytics tool might not identify as high-usage ones.
There are a lot of loose ends and opportunities to keep track of with various tools, even with a solid CRM.
This complexity is where Breyta comes in. You can integrate Clearbit, Mixpanel, and Amplitude with Breyta to consolidate all this essential CRM data.
Trim your PQLs down to a high-conversion list
Now it’s time to refine your PQLs. Remember those “three key metrics” we discussed earlier?
You can use Breyta to set your Customer Fit and User Engagement scores and filter your PQLs accordingly.
Your Customer Fit score is based on your lead’s firmographic details, screened against your ICP, like:
- The type of industry they’re in
- The amount of annual revenue their company produces
- How many employees work there
- The plan they’re currently on
Your User Engagement score is an evaluation of activities like:
- How many users are active within your product
- How many of them actually signed up
- And the most recently active users
We always recommend scoring entire accounts, as well as individual users. There might be several product-qualified users within each company you’re targeting, and so Breyta provides PQL account scoring.
“80% of your company’s future revenue will come from just 20% of your existing customers.” Gartner Group
We’ll also reveal the “Most Engaged User” in each account. Your teams can focus on and nurture this particularly active customer as a champion for your product.
PQLs comfortably fit in your scoring
Sales teams need to focus their time and efforts on leads that are most likely to convert based on informed and calculated engagement levels. This isn’t a tall order when you consider how many resources and tools you have available today.
PQLs don’t need to replace your lead scoring goals but can fill in MQLs’ and SQLs’ gaps.
This type of lead has a far lower chance of churning due to the personalized sales assistance they receive. Leads enjoying a fantastic customer experience before they even buy a product are more likely to join the customer acquisition process.
Our guide to a highly refined PQL list also helps you remove non-starters from your customer base. Segmentation isn’t just for finding your power users. It’s also essential to isolate duds.
Take Bonjoro’s team, for example, which reduced its churn rate by 60% by focusing on the PQL model. Bonjoro not only identified its power users but realized which customer segment was churning the most.
You can enjoy personalized and intimate relationships with leads with the PQL method, achieving a comprehensive and actionable understanding of their user experience and overall customer journey.