Intro to Product Qualified Leads (PQLs)

Intro to Product Qualified Leads (PQLs)

The number one problem we hear from salespeople at product-led companies is: “I have so many users I could talk to. Where do I focus?”

Enter the product-qualified lead (PQL). The PQL combines signals from both what the lead is doing in your product AND who they are.

  • Intent → how is the user or account using your product? (product usage)
  • Fit → are they the right buyer for our product? (customer profile / ICP)

By leveraging product usage signals, you’re talking to prospects who are ready to talk to Sales.  As a result, PQLs convert 5X better than MQLs.

PQLs can be used to find both:

  • Freemium or trial accounts ready to convert
  • Paid accounts who are expanding / ready for enterprise plan

Product Usage = Real Intent

A core component to your PQL definition is product usage. Product-led companies are sitting on a treasure-trove of usage data that is a valuable signal. How an account is using your product provides insight into how real their intent is. It answers questions like:

  • How intensely are they using the product?
  • Have they uncovered the core value of our product?
  • Are they using the product in the way that indicates they need a higher tier plan?

Answers to these gives Sales a foundation on which to have a conversation with the customer. This is a massive advantage for PLG companies. Sales can use PQLs to identify who to talk to and use the usage itself as the conversation starter for their sales engagement. It makes the outreach relevant.

Because companies are different, so too is the product usage criteria that defines a PQLs. Here are some examples that products might have:

Clickup logo

Created more than 50 tasks and invited 10 users in last 30 days

Created 10 boards and have 20 daily active users

Made > 100 API calls in last 30 days and bought a phone number

Guidelines for choosing product usage criteria

When figuring what your own product usage criteria should be, it’s important to look at:

  • What do existing successful customers look like?
  • What are the key milestones in the customer journey? (eg what’s the aha moment)
  • What volume of leads can our Sales team handle today?
  • What size customer is worth it to involve sales?

You don't need to have one and only one definition. You can further segment into levels of product intent via multiple definitions. We generally recommend it's best to start with one and add once you've mastered that.

PQLs = Fit + Intent

While product usage is a powerful indicator of intent,  usage alone doesn’t make someone a PQL.  Your PQL definition needs to combine both intent and fit to ensure you're talking to the right leads.

  • Intent → are they going to use our product?
  • Fit → are they the right buyer/persona for our product?

To figure out Fit, companies often leverage firmographic data (eg role, industry, company size, etc) from providers like Clearbit, Zoominfo, PeopleDataLabs. Using data providers to enrich your signups will give you insight into things like:

  • Industry →  Is this company in the right industry?
  • Funding →  Do they have enough funding such that they’d be willing to pay?
  • Company Size →  Is the company big enough to have this problem / willing to pay?
  • Title →  Which of the users has the buying authority for the company?

If you don’t want to rely on data providers alone, it’s increasingly common for companies to have quick questionnaires (5 questions or less) when customers signs up. It will ask things like industry, use case, etc, as part of the sign up flow. This data is a great way to augment or get around the need of data providers.

Tiering your PQLs

These tiers are ranked by the expected value of the account converting (eg high probability of close and high value deal). Tiers change how sales teams should approach the leads.

Tier 1: This group has a very high propensity to buy. They are using product intensely and fit your customer profile. These accounts should be sellers #1 focus. They are likely to close faster than any other deals.

Tier 2: This group is fits your customer profile well but is using your product in a limited way. A salesperson should definitely reach out and figure out how to get the account more engaged. This is where new motions of product-led selling and product evangelism are very successful.

Tier 3: This group may or may not be worth your time depending on deal size. They are very active accounts but may be smaller or not ideal use cases. You need to figure out if the deal size warrants a salesperson getting involved or just let the accounts self-serve with marketing nurture.

For Tier 3, you may be able to find new use cases that simply require slight tweaks to packaging and pricing to make it worth Sales' time. Customers often find new ways to use your product that you don't expect. So, you may need to respond with a tweaks to packaging and pricing.