multiple roads

Your Guide to Product Qualified Leads (PQLs)

Product Qualified Leads (PQLs) are users who signal their buying intent based on product usage rather than just traditional marketing or sales qualification.

Data consistently shows that PQLs convert at extremely high ratesoften 15-30%and are far more valuable than MQLs. The benefits of a PQL strategy include:

  • Higher free to paid conversion
  • Faster and more efficient sales process
  • Tighter alignment between product <> sales
  • Clear north star for product growth efforts

Sounds like a no brainer, right?

Unfortunately only one-in-four SaaS companies have rolled out a PQL strategy, a figure that’s unchanged from 2020, according to OpenView’s 2021 Product Benchmarks report. Too many companies haven’t prioritized it either because they don’t know how to do it or they think it’ll be too big of a lift relative to the return.

In this newsletter I’ll attempt to demystify PQLs and share practical tips for getting started on your PQL journey.

The TL;DR–if your customer journey still looks like this, you need a PQL strategy.

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Special thanks to expert operators who shared their PQL advice including Alexa Grabell (Co-Founder & CEO, Pocus), Hila Qu (Growth Leader, GitLab), Aaron Geller (Sales Leader, Cypress), Melissa Ross (Sales & Strategy, Clockwise), Ben Davis (Growth Leader, Air Labs), Rob Falcone (Sales Leader, Guru), and Breezy Beaumont (Growth Leader, Correlated).

>>Ready to start your PQL journey? Learn what drives a SaaS company’s growth by joining Kyle Pyar’s Growth Unhinged

The PQL maturity curve

When I reached out to operators, I kept getting responses that folks were “just starting to test” or “still in the early days” of their PQL journey. Only a handful of experts had fully built out their PQL model, let alone replicated that PQL model at multiple SaaS companies.

That’s just fine; everyone needs to start somewhere. I put together a PQL maturity curve to help you pinpoint where you are on your journey and decide what to do next to get better.

Product qualified lead maturity model

Whether you’re a PQL novice or already an expert, in this guide you’ll find practical advice that’ll help you improve.

>>Ready to start your PQL journey? Learn what drives a SaaS company’s growth by joining Kyle Pyar’s Growth Unhinged

When does a user become a PQL?

Let me be clear: PQLs aren’t one-size-fits-all and nor should they be.

Your ultimate goal should be to engage with the right accounts at the right time with the right message based on what you know about them. Treating PQLs as one-size-fits-all would miss the point.

Savvy operators carve out at least three buckets of PQLs based on what a given account needs in order to move to the next step in their customer journey.

  1. Hand-raiser PQLsHigh-intent users who actively want to talk to sales. Depending on the volume of hand-raisers, you may want to screen these based on fit with your ideal customer profile (ICP) so they’re worth your sales team’s time.
  2. Usage-based PQLsHigh-engagement users who take specific product actions that correlate with conversion. For example, maybe a user hit a usage limit but didn’t immediately convert. Usage-based PQLs are usually calculated as a score (similar to MQLs) and you may want to prioritize starting with those who have the highest PQL score.
  3. Needs-help PQLsHigh-value accounts where there’s product-led groundswell, but where there’s likely a more complex buying cycle and users would get stuck without assistance. These could also be expansion opportunities after there’s already been some small self-service purchase. These are calculated using a combination of the PQL score and ideal customer profile (ICP) score.

In order to identify PQLs across these three buckets, operators look at several different signals:

  • Product attainment (usage frequency, adoption of high-value features, usage growth WoW / MoM, completed Y activation steps, multi-product usage, etc.)
  • Firmographic information (company size, user title, location, etc.; often enriched with 3rd party tools like Clearbit or ZoomInfo)
  • CTA response (clicks to request a demo, asks to talk to support, replies to an onboarding email, views the pricing page but doesn’t buy, etc.)

>>Ready to start your PQL journey? Learn what drives a SaaS company’s growth by joining Kyle Pyar’s Growth Unhinged

What plays help convert PQLs into $$$?

Your goal should be to develop a playbook with targeted plays depending on the type of PQL and what they need from you.

Outreach should occur across multiple channels including targeted sales conversations, lifecycle marketing, and in-product chat.

In-product chat is underutilized by many companies in Melissa Ross’s experience, but is extremely effective because communication takes place in the moment the user is stuck.

To be able to do this, Breezy Beaumont emphasized that you’ll need to have data at reps’ fingertips so they know who’s using the product and how they’re using it. A personalized message sent at the right time can go a long wayand can get an extremely high response rate.

It can be a difficult balancing act between trying to help the customer use the product vs. trying to get them to pay for it according to Rob Falcone.

“Skew too far toward the former, and you may miss opportunities to guide adoption, conversion, and expansion. Skew too far toward the latter, and your team will be viewed as commercially motivated and salesy, cheapening their product guidance.” – Rob Falcone, Guru

Some best practices recommended by operators:

“We don’t ever mention a deal cycle or pricing tier in our early notes. We earn the right to have that conversation later by delivering a positive customer experience from the start.” – Ben Davis, Air Labs

“I’ve generally had a lot of success coaching teams to lead with curiosity. i.e. ‘Hi X, I saw you did Y, I’d love to have a conversation about what you’re trying to accomplish.’” – Aaron Geller, Cypress

“Playbook example: when 3+ users at the same company reach a high usage threshold, send an email to the manager/potential buyer at that account and let them know the value their team is getting, offer a discounted team price and a team training session.” – Breezy Beaumont, Correlated

“We’ve mapped the relationship between product signals <> potential customer needs <> how an AE can help. This helps us draw inferences between what we’re seeing in product usage, and position exactly why speaking with an AE would be valuable.” – Rob Falcone, Guru

“I think the timeliness of outreach matters more with PQLs than other lead sources. It’s rare that someone who went to a conference and ended up on a lead list is actively waiting for you to reach out to them, but it’s not uncommon for a PQL to reply to sales outreach and say ‘we were just talking about your product!’ Kind of a dream for sales.” – Melissa Ross, Clockwise

>>Ready to start your PQL journey? Learn what drives a SaaS company’s growth by joining Kyle Pyar’s Growth Unhinged

Who engages with PQLs?

Is “it depends” a helpful answer? 🤣

In all seriousness, you should carve out different paths based on what that specific PQL needs in order to get to the next step in their journey as well as the potential deal size at stake.

Teams engaging with PQLs can include:

  • Product specialists (also called ‘Sales Assist’ teams) who remove product friction
  • BDRs/SDRs for initial qualification and outreach
  • Sales reps (AEs or AMs) to close deals with PQL accounts
  • Customer success (CSMs) to expand existing accounts
  • Marketing for trigger-based nurture or lifecycle emails

More mature companies usually split out the responsibilities between initial outreach and closing between two different teams.

  • Initial outreach comes from a more junior resource, either a product specialist / sales assist team (ex: for usage-based PQLs) or from BDRs/SDRs (for hand-raisers and needs-help PQLs).
  • Closing is done by sales reps who receive qualified PQLs and help the customer navigate from a self-serve user to an enterprise customer. AEs are generally assigned based on either their respective territories/patches or a round-robin process.

Alexa Grabell described the AE’s role as doing “everything that the product itself cannot do.”

“AEs do everything that the product itself cannot docommunicate with various stakeholders to navigate additional layers of security, complex procurement processes, education on an enterprise rollout, a centralized billing plan, and more. In some organizations, the AE might also be responsible for identifying new use cases and seat expansion up to a certain threshold (before customer success takes over).” – Alexa Grabell, Pocus

These efforts are usually owned by either Growth or RevOps who oversee the entire project including setting up the strategy, building the infrastructure, and integrating PQLs into the current MQL and sales process.

>>Ready to start your PQL journey? Learn what drives a SaaS company’s growth by joining Kyle Pyar’s Growth Unhinged

What technology helps you manage the PQL process?

Up until now the technology to manage PQLs could be summed up as everyone’s favorite Facebook relationship status: “it’s complicated.”

Thankfully that’s changing with the rise of product-led sales technologies such as Pocus, Correlated, HeadsUp, Bliinx, Endgame, and others.

Tooling usually includes the following components:

  • Store product events in a central data warehouse (ex: Snowflake, Redshift)
  • Set up reverse ETL to move data across systems (ex: Hightouch)
  • Analyze data & identify usage patterns with a BI tool (ex: Looker)
  • Enrich data with firmographic information (ex: Clearbit, ZoomInfo)
  • Manage and orchestrate PQL notifications and outreach (ex: Pocus, Correlated)
  • Orchestrate email campaigns (ex: Outreach, Salesloft)
  • Manage customer relationships in CRM (ex: Salesforce, HubSpot)

If you’re just getting started with PQLs, the bare minimum would include a central data warehouse, a CRM system, and tooling to send data from the warehouse to the CRM.

As product-led sales tools mature, they’ll help you offload and automate more of these additional jobs so that you can move as quickly as possible.

Closing thoughts

Achieving PQL excellence will take time and significant investment. Don’t let that stop you from making incremental progress and taking action today.

>>Ready to start your PQL journey? Learn what drives a SaaS company’s growth by joining Kyle Pyar’s Growth Unhinged. 

Kyle Poyar
Kyle Poyar
Partner at OpenView

Kyle helps OpenView’s portfolio companies accelerate top-line growth through segmentation, value proposition, packaging & pricing, customer insights, channel partner programs, new market entry and go-to-market strategy.
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