What is a Product Qualified Lead and Why Should I Care?
You may have heard of marketing qualified leads (MQLs) or sales qualified leads (SQLs) as methods to track and quantify prospective buyer intent. As a lead actively engages with your content or submits voluntary information, they will convert into a MQL and will warrant additional follow-up and tailored attention. As the lead continues to engage with your company and offerings, they will eventually engage with a sales team for an additional level of vetting and qualification. Once the lead has passed the checkpoint after an introductory or discovery call with a business development or sales representative, the lead graduates to a SQL. At this point, the lead is ready for time dedication to become a real opportunity for an intentional and direct sales push.
At this stage in the early customer experience, the lead has still not seen your working product. While they may have seen marketing content (white papers, videos, slides, ect.), they have not gotten their eyes on working product functionality. This presents a real gap as early prospects want to see your product, but they have not yet graduated to the appropriate status. Once they do, a product demonstration requires dedication and time from your sales team driving up customer acquisition costs. This gap highlights the need for a product-led sales approach and qualification methodology that is becoming commonplace in the modern B2B SaaS sales motion: product qualified leads (PQLs).
A Product-Centric Alternative
So who is a product qualified lead? A PQL is a user who has experimented with your product to visualize the value for their unique business challenge or need. This hands-on experience can come in the form of a trial, freemium lite-version of an app, or lightweight product overview. SaaS-first products have made this testing period a reality for many businesses. Thanks to cloud hosting services, creating a lightweight product experience is simply a matter of creating a temporary account or sample environment that a prospect can explore on their own time. For most modern applications, there is no longer a need to wait for software to download or request license keys when first experimenting with a product solution.
Unlike MQLs or SQLs, PQLs rely on automated product feedback to track the lead's engagement and perceived interest in a given solution. Using a product-first approach to sales qualification enables your prospect to "tell you" how interested they are without ever saying anything at all. Rather than connecting with prospects via discovery calls or surveys, PQLs take a self-service approach to engaging with a solution. By enabling leads to explore the product on their own time, vendors can save time to focus on later stage deals. This rise of lower sales touch, high prospect self-service has led to the growth of new metrics to track this early stage product engagement.
Why Should I Care?
Widespread SaaS has led to highly available solutions that can quickly be created and showcased with little to no overhead. This ease of access has made sharing your product easier than ever. A PQL funnel provides an automated, low cost solution to lead scoring and qualification, improved data-backed intelligence about the leads and their interests, and meets a changing buyer mindset looking for a self-service first approach to purchasing software.
Low Cost Qualification Solution
PQLs provide a hands-off (read: inexpensive) tactic to bring in new leads and resulting business. Without ever needing to engage your busy sales and marketing resources, you are leveraging your product to act as your lead generation and qualification engine. From a resourcing perspective, this shift enables your growth teams to focus on higher value selling initiatives such as later stage deals or enterprise opportunities.
Data Driven Insights
In qualifying a lead using a product-first approach, you are actively collecting data about engagement and product interaction. While this data can be used to draw intelligence around qualification scoring, it can also be used to inform sales teams of features and product areas that are most interesting and relevant to a prospect based in usage trends. Tracking engagement patterns and metrics creates a bank of information that can be readily accessed and utilized later in the sales process. For example, in deeming a lead "product qualified" you have tracked their engagement with different components of the product or service. In tracking these discrete interactions, you can then tell which features, pages, or services the prospect spent the most time with for future reference. Once the PQL converts to a SQL, this data can be shared with the sales team for additional intelligence on a prospects past usage patterns and product interest to help better tailor sales messaging.
Shifting Buyer Mentality
Modern software buyers don't like "getting sold" by pushy sales reps and marketers. Buyers are used to instant gratification through app trials, 30-day opt outs, and freemium products in their personal B2C software lives, their professional B2B software lives should be no different. A Forrester report shows that 68% of B2B buyers prefer doing business online versus with a salesperson (Forrester). Enterprise software is no longer high touch. Buyers expect a hands-on product overview they can take for a test drive prior to making a purchasing decision.
How Do I Get Started?
Figure out what your ideal PQL looks like.
To determine a score that indicates a qualified lead, you must first assess your product to find patterns and usage trends that indicate interest and buying intent. These patterns will vary with every product based on expected usage.
Here are a few examples of PQL definitions and associated metrics (ProductLed.com). Each company focuses on different areas based on the product's core competencey and associated expected usage of a presumably interested buyer.
- For Slack, a PQL is when an account reaches its 2,000 message limit
- For Facebook, a PQL is once someone adds 7 friends
- For Drift, a PQL is once someone has 100 conversations on their website
At the end of the day, it is up to you to determine what an ideal candidate looks like based on product interaction. Ask yourself the question, how would a typical customer engage with our product and does that differ from an ideal customer - if so, how?
Build the right early customer product experience.
There is no correct or incorrect way to get your product in the hands of prospective buyers. The end goal is to get a lead in front of a product in a hands-on environment.
Time limited trial: a timed (7, 14, or 30+ days depending on the service and industry) introduction to the full product offering to help early prospects engage with a solution before making a financial commitment.
Freemium: an initial introduction to a free version of the product offering without (or a limit to) certain features and functionality to enable prospects to get started with a working solution before making a purchasing decision.
Lightweight overview: a scoped overview into a product offering that enables early stage leads to engage with working functionality in a constrained demo environment.
Oftentimes, companies will leverage multiple strategies for different prospect types or solution offerings. The right type of product experience will depend on your existing and planned sales motions and level of prospect commitment needed prior to qualification.
Product Qualified Leads leverages your core asset, the product, as a sales engine to qualify leads and drive interest in your solution. PQLs help to fill your sales funnel with leads that have proven interest in your offering to free up your growth teams to focus on the right opportunities with the highest likelihood of closing. Lastly, PQLs provide your sales teams with a proven opportunity with typical conversation rates of 25 to 30% (Tom Tungaz). Leading with your product provides an engaging and relevant introduction that excites prospects and drives revenue.