It’s finally here, the last part of our 3 part series where we explore product-qualified leads (PQLs). The purpose of this guide is to help product-led growth (PLG) companies develop, establish, and operationalize their product-qualified leads (PQL). If you haven't already, go read part 1 and part 2 before diving into the final blog in this series. In Part 3, we’ll explore advanced PQL topics like managing multiple PQL types, setting up processes for teams beyond sales to leverage PQLs, and how to create composite PQL scoring.
Read the entire series:
- Part 1: How to define and Identify Product-Qualified Leads
- Part 2: How to develop your Product-Qualified Lead Engine
- Part 3: Advanced PQL lead scoring concepts
A quick recap of what we have learned
Before we jump into part 3, let’s quickly recap what we have learned so far in part 1 Defining Product-Qualified Leads (PQLS) and part 2 Operationalizing PQLs:
- PQLs are different from Marketing Qualified Leads (MQLs) because these are actual users of your product who have met minimum criteria for product usage, customer fit, and buying intent.
- There are three signals that help you calculate PQLs: (1) customer fit (2) product usage and (3) buying intent.
- When defining PQLs for the first time, don’t get stuck in analysis paralysis. Start with a hypothesis and then experiment and iterate on several definitions.
- Don’t start thinking about PQLs until you have a few “hand raisers” and can find at least 10 other accounts in the data with similar patterns.
- Operationalizing PQLs for sales is a team sport you need to get buy-in from a cross-functional team that includes data analysts/operations folks, customer success, product, and growth.
- Use this handy product-qualified lead launch template to get started.
Going beyond the basics
Once you operationalize your first PQL you may be wondering…what now?
Is my work here done?
Well, no. Your work is not done for a few reasons. The obvious is of course a need for continuous experimentation. You’ll want to continue tinkering with your PQL definition every so often to make sure it is still helping the sales team target the right opportunities.
Other more advanced PQL projects include:
- Leveraging multiple PQL definitions - As your sales organization grows and matures, you will need to add new PQL definitions for various motions. For example, your initial PQL may have focused on opportunities that are ready for expansion but now you may also want to define a PQL for consolidation or upsell opportunities.
- Going beyond the sales team - PQLs are a great tool for sales teams, but they can also be used to help inform efforts in customer success, marketing and growth. Once PQLs are operationalized for sales, you will want to focus on operationalizing PQLs for additional teams.
- Creating composite PQL scores - Composite PQL and MQL scoring is still a hotly debated topic. Does composite scoring actually help? Find out below.
Let’s dive into each of these.
#1 Defining multiple Product-Qualified Lead (PQL) types
We learned from Aaron Geller, Director of Sales at Cypress.io and the PQL pioneer at DigitalOcean about the number of PQLs at different companies. When he left DigitalOcean, they had “about 18 to 20 PQLs”. Now at Cypress, he’s doing the same thing, “we've got three PQLs that constantly run, evolving to five in Q4 and we'll continue to reevaluate and grow from there.”
The number of PQLs that you should have depends on:
- Size of your funnel
- Amount of resources & teams
- Complexity of your go-to-market motion
- Company maturity
Having multiple PQLs is not right for every organization. Multiple PQLs is necessary if:
- Your product has two or more very distinct customer segments (i.e. SMB and very large enterprises or marketing teams and engineering )
- You have multiple buyers journeys and subsequently more than one funnel (i.e. you may have a freemium self-serve path and a sales-assisted paid tier free trial path)
Let’s use two examples. First, let’s say you’re selling to SMBs with one goal to convert free trials into paying customers. In this scenario, you will likely only need one PQL. Now, let’s say you are selling to SMBs, mid-market, and enterprise customers that all interact with the product in slightly different ways. In this scenario, you will likely need multiple PQLs routed to different teams responsible for the different go-to-market motions.
So how do you start defining more PQLs? Start with your goals for your go-to-market motion, then work backgrounds. We put together a list of different PQL types that align to goals from our product-led sales community:
- Enterprise account consolidation (i.e. moving users with same domain to one plan)
- Upsell/upgrade to the next tier
- Seat expansion within an account
- Expansion to a new team/department
- Enterprise-wide expansion
- Free trial to paid tier conversion
- Freemium to paid tier conversion
Within each of these types, you can start to define distinct PQLs that align to different roles within your sales organization and actions taken by the team. For example, the playbook for a freemium to paid tier conversion PQL will be quite different compared to an enterprise-wide expansion PQL.
If we break down multiple PQLs further, the goal is personalization to your users’ needs and their buying intent. Defining multiple PQLs helps your customer-facing teams get sharper about what message to deliver to which prospects at what time.
A word of caution: don’t venture down this path until you have fully operationalized 1 or 2 PQLs and your team has successfully converted those PQLs into paying customers (or whatever you have defined as the end goal - it could be expansion revenue). Managing multiple PQLs can be a big project for your data and sales operations teams if they don’t have a tool in place to make this easy, like *inserts shameless plug* Pocus or having a robust resourcing plan in place.
#2 Going beyond sales with PQLs
So far, we’ve only talked about how your sales team will handle PQLs. But, PQLs can provide value way beyond the sales team. This is why product-led sales is a whole company sport - just about every team can leverage PQLs. Let’s talk about some perfect use cases for PQLs in other parts of your organization.
Marketing is a no-brainer. Marketing should have access to the documentation, database or tool where you are defining and tracking product-qualified leads. Some use cases for marketing include:
- Trigger email marketing campaigns based on PQL type. Or, get even more granular and run campaigns based on specific in-product behavior like installing a specific integration or completing XX number of tasks.
- Configure in-app notifications based on PQL type. For example, if the account is an enterprise consolidation PQL, then show them/tell them how to ask their domain administrator to add their account under one enterprise plan.
- Send congratulations emails when your enterprise expansion PQLs hit a specific milestone that matters to them.
Customer success spends the most quality time with customers over their lifecycle of a product. From helping users adopt the product at scale to working with customers to expand their use cases, customer success teams become trusted resources. It makes sense that customer success plays a huge role in helping to expand within accounts and get that coveted expansion revenue.
At Cypress, Aaron is working on a PQL specifically for CS called a CSQL (customer success qualified lead). The CSQL tell the team when to deepen their engagement with a specific customer.
Bonus: this also makes compensating your non-sales customer-facing teams easier too.
#3 Composite PQL scoring
Finally, the last way to get more advanced with PQLs - composite scores.
Let’s start with the less controversial composite score. - PQAs.
Product Qualified Accounts (PQA)
What do you call a group of users from the same domain where a certain percentage of them are product qualified?
Some would call that a PQA or Product Qualified Account. A PQA is a composite score based on how many individual users within an account have become product qualified. You may set this threshold at 50% or 80%, but it will probably require a lot of experimentation.
What’s the benefit of a PQA?
- PQA’s can be helpful for your marketing team who might want to run account-based marketing (ABM) campaigns to an account with a high density of product qualified leads.
- It can also be a useful way to roll up your metrics about PQLs at the account level within your various tools (product analytics, CRM, or product-led sales platform like Pocus)
Combining PQLs and MQLs into one score
PQL + MQL = ???
This composite is a bit more of a mystery.
The data does not exist on whether combining PQLs and MQLs gives you some sort of super score that provides even more insight into the best opportunities.
In theory, more data helps create a clearer picture of the users and accounts that are ready to have a sales conversation, but what we learned from our community is that may not be the case. More data isn’t always better - sometimes more data makes it harder to decipher signal from noise.
Some folks in our community prefer to keep PQL and MQL separate and follow a “last activity” method for determining which funnel a qualified lead falls into. For example, Francesca Krihely, Snyk, said
"The designation is based on the last activity that pushed the lead over the threshold. So if a user signs up for a free account, doesn't complete the core activation steps, and then attends two webinars, they will follow an MQL path."
This is helpful because PQLs in Francesca’s case are not always buyers (Snyk is a developer tool) whereas MQLs could be buyers. So, they need to be distinct scores and processes because the outreach and marketing will be different.
In a previous post, we spoke to Karishma Rajaratnam, Growth Marketing leader at Vidyard, who explained how they're working to harmonize MQLs and PQLs into a single score.
"Right now, I’m developing a hybrid metric that combines product usage and marketing interactions into one score. Different activities would have different weights to account for their relative impact on conversion. The tricky parts involve nailing down proper weighting, communicating the algorithm to the sales team, and having a way to show whether a lead leans heavier towards the marketing side or product side in Salesforce."
Final thoughts on PQLs
Well if you’ve been with us since part 1 of this series - first of all congrats! You now know more about product-qualified leads than the average person in SaaS.
Here’s a quick summary of what we covered:
- Product-qualified leads are an important part of any product-led sales process. Defining PQLs unlocks a mechanism for sales teams to pick the perfect leads from a vast sea of self-serve users.
- Experiment with PQLs to get the best result. Always test & iterate a PQL hypothesis before operationalizing within your team. Our friends at Cypress recommend being really clear on the KPIs for your experiments and not being afraid of inconclusive results. You may learn something even if your PQL experiment fails to move the needle in a significant way.
- Document a process for PQLs for continued success. Use a template to get your cross-functional team on the same page, align on process regularly and review your PQL results often.
- Add complexity once you are comfortable by testing new types of PQLs, using PQLs with new teams, and leveraging composite PQL scores in your funnel.
- Leverage PQLs beyond the sales team to maximize their usage and foster more cross-functional collaboration and alignment. Defining PQLs can provide a lot of opportunities for marketing and customer success to engage with users differently. They can have more personalized conversations that aid the users' journey even if they are not quite sales-ready.
That's all on PQLs, thanks for reading along.
If you want to learn more about PQLs and find out how other product-led teams are executing on their strategy, join the PLS community on Slack. It's a private invite-only community for product-led sales experts and newbies to ask questions and share insights.