For many years, B2B companies have executed their inbound sales funnel the same way.
Much like the word “funnel” suggests, it’s based on the idea that you fill the top with people interested in your product (leads) and then filter out those who aren’t qualified to buy. The problem? The way we’ve been filtering people just isn’t working any more.
Marketing qualified leads (MQLs) and sales qualified leads (SQLs) were created as a way for sales and marketing to determine if the leads they were dealing with were of a certain quality.
This happened if the individual met various criteria, including but not limited to demographic characteristics as well as a behavioral profile that suggested the person might be a good fit for the product.
But how qualified is someone just because they filled out a form or opened a few emails? MQLs and SQLs are remnants of the early days of SaaS when the needs of the customer took a backseat to the internal priorities and processes of the company.
Enter the Product Qualified Lead
A product qualified lead (PQL) is radically different from MQLs and SQLs. It uses in-product behavior to work out exactly when a lead is ready to purchase.
What is a PQL?
Product qualified leads (PQLs) are potential customers who have used a product and taken actions signifying a strong likelihood of becoming a paying customer.
Instead of getting prospects to fill out lead forms and take specific qualifying actions, PQLs keep salespeople 100% focused on getting prospects into the product. It’s a try-before-you-buy approach giving potential customers the chance to sell themselves on a product before getting in touch with sales.
For example, free trial products, like Intercom, offer an introductory, time-limited product experience helping users find value in the product before making a serious commitment.
Product Trial Advantages and Disadvantages
No matter the industry, few things tempt prospective customers more than giving away something for free. But the fact so many SaaS products today have a free trial is a double-edged sword.
What is a product trial?
A product trial gives prospects immediate access to a company’s product for a set period of time at little to no cost. It allows prospects to demo the product themselves and make a purchase decision in their own time.
On one hand, it’s easier for people to sign up and try your product with a free trial. On the other hand, however, a lack of commitment means switching costs between products are lower. People can leave as fast as they joined. So, to generate PQLs via a free product trial, it’s necessary to:
- Ensure they’re successful in that trial
- Communicate quickly and proactively to facilitate a high trial conversion rate.
How to Make PQLs Work for You
1. Find your PQLs
First, find the in-product action (or series of actions) correlated most often with someone showing real buying intent. For a product like Slack, it might be that a team on a free plan has sent 2,000 messages. Or it might be that a customer support team has replied to and closed 100 conversations.
These actions will differ for every company, but there’s an easy way to find yours. Ask yourself, what does a successful customer look like? What are they doing in your product?
Work backwards from that ideal customer, asking “How were they able to do that?” Follow these steps to identify the ultimate causes of success and you’ll find the actions that determine your PQLs.
2. Prioritize your PQLs
In-product behavior is only one piece of the jigsaw and must balance with other factors to make sure your sales team spends time with the right PQLs. HubSpot's VP of Product, Christopher O'Donnell has identified four distinct types of product qualified leads:
- Free users who’ve hit a given PQL criteria
- In-product hand raisers (i.e., users who have requested sales assistance)
- Users who’ve reached a limit in their free plans
- Self-service users who’ve purchased without any sales involvement
Image source: OpenView Ventures
To understand these different PQLs -- and to understand which one is most valuable for your business -- take what you know people are doing in your product and enrich it with other data, including:
- Demographic Information: Look at the demographics of your most valuable customers and find commonalities. For example, if you only sell to a certain geographic location, you might remove any PQL falling outside the proper city, state, zip code, or country.
- Company Information: Use third-party data sources, such as Clearbit, to get rich information about your PQLs business. If you're a B2B organization, are you more interested in selling to organizations of a certain size, type, or industry? Are you more interested in B2B organizations or B2C organizations?
By understanding who's really interested in using your product right away and who's just starting to kick the tires, it becomes easier to tailor the sales process to their exact needs.
3. Start converting your PQLs
The secret to converting your PQLs is to send the right message to the right person at the right time based on their activity with your product (or lack thereof) instead of a cookie-cutter series of messages blasted to everyone who’s signed up for a free trial on day one, day five, or day 14.
Here are three messages you can send right away to guide PQLs towards conversion:When They’ve Hit a Usage Limit
When someone has reached the usage limits for your product, you should automatically trigger a message that outlines the increased value they’ll get from upgrading from a free trial.
Most of us want what we can’t have, so they’ll be open to an upgrade provided they have a genuine need for more of your product in their lives.
For example, “Hi Pete, it looks like you’re getting organized with DropBag. Unfortunately, you only have 2GB of space left in your plan. You can upgrade to our Pro Plan for just $5 a month and you’ll get an extra 1TB of space to keep your files in sync -- and the first month is free!”When They’re Heavily Using a Feature
Another effective trigger for converting a PQL is when your customers have achieved a milestone with your product, such as:
- Spending over a certain number of hours in your app
- Accomplishing a certain number of tasks in your product
- Logging in a certain number of times
- Installing particular integrations or add-ons
Use these events as opportunities to remind your customers about the value they’re getting from doing business with you and consider how to convert them now to take things even further.
For example, “Laura here, from account management. I see you send lots of messages between the hours of 9:00 PM and 11:00 PM your time, which seems tough on work/life balance. I thought you might be interested in our Pro Plan, which lets you schedule messages in advance. Would you be interested in a free trial?”When They’re Getting In-App Results
Your best PQLs are the ones who've passed one or more “success milestones” -- the point at which they’ve received tangible value from your product. If you sell software for ecommerce stores, a milestone might be “Customer makes first sale.”
As your customers achieve various success milestones along their journey, their willingness to convert goes up, and it’s up to you to recognize and take advantage of that.
For example, “Hi Nancy, it looks like you’ve gotten your store live with a few products. It looks great! If you haven’t already checked out your sales dashboard, this is a great place to start: [link to how-to resource]. Also, now that you’ve gotten your products live, you might be interested in our marketing automation tool to convert visitors into customers. Here’s more information on that: [insert link to landing page]. Is there anything else I can help with at this stage?”
The Bottom Line? PQLs Work
Gartner have reported 80% of your company’s future revenue will come from just 20% of your existing customers. This means if your sales and marketing teams are focused on driving leads at the top, they should be working on opportunities at the bottom instead.
By flipping your funnel 180 degrees and starting with product adoption, your sales and marketing teams will spend time and energy with those leads that have raised their hands, are engaging with the product, and will end up becoming happier, more valuable customers.
Originally published Nov 14, 2018 7:30:00 AM, updated November 14 2018