How many of the people entering your marketing funnel are actually leads?
Your inbound marketing efforts might bring plenty of traffic to your site, but how many of the website visitors downloading your content are just researching that specific subject with no intention of making a purchase?
On the other hand, just because someone ignores a webinar offer or a specific part of your marketing program, it doesn’t necessarily mean they wouldn't be interested in test-driving your product.
The shortcomings of the marketing qualified lead framework have inspired a paradigm shift in the B2B sales cycle recently, as more companies have begun to focus on product qualified leads.
What Are Product Qualified Leads?
Product qualified leads demonstrate interest by signing up for a free trial or lower-tier paid version of your product. With a focus on self-service, the PQL model has become a staple of SaaS companies; site visitors can sign up and try software straight from the company’s website. (You can learn more about lead forms that work for SaaS companies here.)
Of course, many traditional service businesses adopt a similar framework. For example, a massage therapy franchise might offer a discounted first massage, and then after a customer tries out their service, they'll upsell a program consisting of multiple sessions worth hundreds of dollars.
Marketing Qualified Leads vs. Product Qualified Leads
How is a PQL different from an MQL? Typically someone becomes a marketing qualified lead after downloading a lead magnet. Then, a steady drip of content is delivered to them while sales reps attempt to qualify these leads through a BANT framework. Once a rep has determined that the potential customer has the appropriate budget, authority, need, and timeframe to make a decision, the marketing qualified lead becomes a sales qualified lead.
With PQLs, the product—not the marketing—is at the forefront from day one. Product usage becomes the most critical part of shaping how companies obtain, upgrade, or upsell leads. Based on a lead’s usage of the software product, sales teams can quickly fine-tune their efforts and prioritize leads.
Setting the initial criteria for PQL is very similar to a sales qualified or marketing qualified lead model; as you collect data on trial user behavior, you'll be able to find what the strongest indicators of a truly qualified lead are. These criteria can include factors such as:
- How much the user logs in to their free trial
- Which specific features they're using
- The size of their team
Here at Nutshell, we found that trial users who add a team member during their trial, sync their email, or import their customer and lead data are 20 times (!!!) more likely to convert to a paid customer than trial users who don't. We also discovered that users who connect with our Support team during their trial are three times more likely to convert.
Identifying these high-value conversion activities has helped us focus our sales and marketing efforts on encouraging the specific user behavior that is most likely to result in customer acquisition.
Avoiding Alias Email Addresses
Completing a software signup process requires visitors to provide a proper, primary email address. In order to start using the service, they have to go into their inbox and follow a link to confirm their email address then sign in.
This requirement makes it inherently less likely for a SaaS company to collect invalid or non-primary email addresses from visitors, which often happens with lead magnet opt-in forms. (Though you can still verify and improve your data by comparing your collected email addresses to Mattermark or another third-party database.)When a visitor signs up for a free trial, you can use their email address to gather:
- Demographics: Job title, location, employer, years of experience, duties, skills
- Firmographics: Number of employees, industry
Getting the Best of Both Worlds
Businesses can use PQL and MQLs cooperatively. As users try out your software, you can monitor which particular aspects or steps they haven’t completed. Based on that, you can drip marketing content to them, such as a case study showing the results of taking a certain action in the product.
Reaching out to schedule a chat with them once they've hit a certain level of usage can also pay off. PQLs will likely have very specific questions after taking the time to test your software.
PQLs Are Leads With Immediate Needs
When you have leads trialing your software, they’re not just at the price comparison stage of buying. You have leads already finding value in your product and ready to take the next step. Venture capitalist and blogger Tomasz Tunguz reports that sales teams calling PQLs convert on average from 25 to 30%.
By having users’ behavioral data available, your business development team can effectively coordinate with your customer success and marketing departments, who can provide additional resources and best practices to guide leads after seeing which features they’re using the most. That way, when you're ready to ask for the sale, your leads feel like they’re having a conversation with a trusted partner who has given them personal advice and attention at every step.
Want to put more focus on product qualified leads in your own business? Figure out the lowest tier or free version of your product or service that you can offer, and come up with a low-friction way to deliver it to prospects. If you can give people a small taste of what your business can offer (at minimal cost), you'll have a much easier time convincing them that it's worth their money.