Are you Measuring Product Qualified Leads?
As I’ve mentioned before, one of the best ways to ensure a healthy sales funnel is to reevaluate the quality of your leads. Better leads produce better results. And taking a product-first approach to qualifying leads can help optimize your funnel. But first, let’s look back at how
Instead of taking a one-size-fits-all approach, qualify your leads by placing each in three separate categories: “organization-level,” “opportunity-level,” and “stakeholder-level.” Then ask specific questions that will determine if your product actually fits their needs or if this is a customer destined for failure. This filter alone can save your customer success team a great deal of headaches in the future.
Types of lead qualifications
Beyond categorizing leads, it’s important to assess where your leads are coming from and what teams are qualifying these customers. Traditionally, lead qualifications have come from two areas:
Sales qualified leads (SQL): Some of the hardest earned customers come from SQLs, when your sales team identifies one of the customers in the previous three categories through research and deems them viable for a follow up call. With SQLs, you’re relying on a sales development rep (SDR) to cold-call to set a meeting or demo to get these clients into the funnel. These clients usually require a hefty amount of work to educate them on your offering, explain why you’ve identified them as a good fit and how your product solves their current pain points.
Marketing qualified leads (MQL): Inbound marketing efforts produce leads that engages with your company through a number of actions—like requesting a demo or downloading a buying guide-that help educate users before they ever receive a sales call. Before they are passed on to an SDR or account executive (AE), these clients will have some familiarity with the pain point your company can solve.
While effective strategies to help fill your sales pipeline, increasing the close rate on SQLs and MQLs can be difficult. One of the best ways to identify the potential customers with highest probability of purchasing is through product qualified leads.
Product qualified leads (PQL): When a potential customer is already using a version of your product—whether that be a trial participant or user in a freemium model—they can qualify as a PQL. With a PQL, the customer has hit a designated trigger that lets the sales team know they are ready for a follow up call. As Christopher O’Donnell notes, by using the product to educate the customer first, you’ve given your sales team a huge advantage. “If we flip the traditional model 180 degrees and start instead with product adoption, we find ourselves selling the product to folks who understand the offering and are potentially already happy with it, before they even pay,” O’Donnell writes.
Scale Leads, Create Focus
PQLs rely on the product selling itself. With this approach, you’re providing the best possible introduction to demonstrate how the product can be a long-term solution. That’s an easy process to replicate too. “[PQLs] are scalable because they require no human touch and they are high-quality leads,” Tomasz Tunguz writes. “When the sales team calls PQLs, customers typically convert at about 25 to 30%.”
If you have a freemium offering of your product, you can gain the benefits of the potential velocity of incoming leads while also earning the financial rewards of an inside sales price point.
Furthermore, a focus on PQLs can improve your product roadmap as well. Tunguz notes that PQLs actually serve as a management tool as well because the focus on customer action gets everyone onboard with revenue as the key performance indicator. are a “Typically, the product and engineering teams don’t have goals tied to revenue which bisects a team into revenue generating components (sales and marketing) and cost centers (eng and product).”
That can create a lack of effectiveness when it comes to creating a product that sells itself and providing the best ammo for a sales team to finish the job if needed. Of course, your product and engineering teams will have longer-term features that will not be revenue significant in the short-run. However, a mix of both can help get everyone on the same page and quickly end potential arguments. That’s a great addition to any company culture. “PQLs provide a rigorous framework for prioritizing development,” Tunguz writes. “Each feature can be benchmarked to determine the net impact to PQL which is ultimately funnel optimization.”
If you’re ready to track PQLs, determine which triggers require an AE to follow up with a call. Product feature limits, a number of days in the free trial or specific actions in the product can all be good reasons to get in touch.
Because you’re relying on customer actions, a large volume of PQLs may be tough to attract at first. However, learning how to optimize all your sales efforts to create more PQLs is essentially one of the best ways to constantly be improving your funnel. Track the number of PQLs each month and see how that compares to MQLs and SQLs. Share these results at monthly or quarterly investor updates to help make the argument that the team is determined to create an exceptionally efficient sales process as the company scales. Adding more PQLs could be one of the best KPIs for your company’s growth in 2017.