Product-Qualified Leads (PQLs): Turn users into customers

Sid Khaitan
Published
May 10, 2023
Updated
April 23, 2024
TABLE OF CONTENTs
TABLE OF CONTENT

How do you determine what makes for a good product-qualified lead or account?

I’ve learned that it takes a village to figure it out. 

During my time at GoHealth and Chili Piper, we were in the early stages of transitioning from a sales-led model to a product-led mindset. As I hopped on meeting invites, I was surprised to see representation from the C-suite, analytics, RevOps, Product, Marketing, and Sales.

With this many people in the room, it was clear we weren’t going to find the answer overnight. 

You might have already had these types of meetings, or plan to soon. This guide will show you how to identify PQLs and PQAs for your product so you can convert them into paying customers.

What is a product-qualified lead (PQL)?

Product-qualified leads (PQLs) are prospects that experience value from your product, match your ideal customer profile, and show signs of purchase intent. 

Using the product to qualify leads plays a central role in product-led growth (PLG) because it prioritizes actual product analytics and user behavior over form fills and intent scores.

This Venn Diagram sums it up perfectly:

A PQL Venn Diagram by HeadsUp

It’s safe to say PQLs have a leg up on marketing- or sales-qualified leads. Let’s explore why.

PQLs vs. MQLs

PQLs are prospects that have actually seen value in using your product, whereas marketing-qualified leads (MQLs) are just people who’ve engaged with your marketing activities.

MQLs are often generated through marketing campaigns, website visits, events, and gated content. They cater to a curious audience of free users, but not necessarily future customers.

The typical MQL customer journey by OpenView

Anyone can click on a LinkedIn ad, go to your website, and enter their email to get access to a whitepaper. But not everyone is willing to invest the time and energy to try your product and get value out of it.

That’s the difference between MQLs and PQLs. 

PQLs vs. SQLs

PQLs can be generated automatically and objectively through product usage and CRM data, but sales-qualified leads (SQLs) can’t. 

An SQL is a prospect that has been vetted by your marketing and sales team and is deemed ready to talk to a rep. These people show some level of interest in purchasing the product or fit the bill of an ideal customer.

Some indicators could include requesting a demo, having the right job title, or demonstrating decision-making power.

SQLs are also subjective in that sense and often take manual work to identify.

A smart baby learning about PQLs for the first time by Konigle

PQLs vs. PQAs

PQLs are individual leads, which means they are people. Product-qualified accounts (PQAs) are companies or groups of people that work at the same organization and have met some product-usage criteria.

Most B2B companies generate new leads through a free trial or freemium product. The problem is, they aren’t truly PQLs since they don’t always match the ideal customer profile or intend to buy. ‍In fact, 40-60% of people who sign up for a free software trial use it once and never come back. 

This causes an overflow of leads that just want to try your product for free. These users aren’t always potential customers. Having your reps follow up with these people causes friction for everyone. Users are bombarded by countless emails, reps feel like they’re wasting time, and your CRM gets crowded with bad leads.

Robert Kaminski, Co-Founder of Fletch PMM, makes a fun analogy.

Robert’s comment comparing PQLs and PQAs on Ben William’s post

Product interest and usage alone don’t mean a person wants to buy, or even has the decision-making power to do so. That’s where PQAs and product-led sales become important.

Example PQLs from real PLG companies

It’s hard to miss news of how incumbent SaaS companies are leveraging the PQL model to become widely recognized household names. 

But how did they get there? Let’s take a closer look.

Figma

Figma’s graphics editor and prototyping tool is now considered an essential tool in any designer’s tech stack.

But it wasn’t always this way. Their initial PLG strategy was a free plan that gave users options for two editors and unlimited files. That didn’t work out so well. Why?

After analyzing product usage data, they realized that users wanted to collaborate with teammates on one file. So they tweaked their free plan to offer unlimited editors and two files. A simple fix!

Since discovering this core insight, they’ve evolved their approach. Now the PLG company looks at four key indicators to identify PQLs:

  1. Activation events: creating components, inviting colleagues, and exporting designs
  2. Propensity-to-pay events: hitting a paywall, visiting the pricing page, or managing subscriptions
  3. Demographic signals: like country, size of industry, or number of designers
  4. Technographic signals: like existing tech stack

Hopin

Hopin is a hybrid events platform that became one of the fastest-growing startups ever by reaching $100M ARR in just over a year.

They factored other product usage metrics to identify PQLs, including:

  • # of meetings created
  • # of meeting attendees
  • # of integrations used
  • # of features used
  • # of referrals sent

Leveraging a variety of lead qualification criteria helps them narrow in on prospects that are worth reaching out to. By not assuming that self-serve signups are the same as PQLs, they help sales development and demand generation teams focus their efforts on the right leads.

Hopin case study from Toplyne

Dock

Dock also uses PQLs to figure out which prospects are likely to purchase their products. What I like most about their motion is that they don’t rush users into buying right away.

Users can try up to 10 assets and 5 workplaces with no time limit, which gives them the chance to see how Dock can integrate into their existing workflows—and gives them a chance to close a sale or onboard a new client before they buy.

Pricing is transparent, setting expectations for anyone who decides to give it a shot.

Dock’s pricing page (as of May 2023)

Now comes the fun part. 

Which indicators show that a free user should qualify as a PQL? We asked Andy Sietsema, Dock’s Founding Account Executive.

He shared a weighting of factors which included:

  • # of workspaces is greater than one
  • # of users on a team is greater than one
  • user clicked “Talk to Sales”
  • user connected their CRM
  • company size is between 25 and 200
  • industry is software/internet companies, but also complex products or services with longer sales cycles

In the early days, you’ll likely broaden or narrow these levers to reach out to more leads or focus on specific ones based on bandwidth. 

However, this is a good example of how startups can test PQLs sooner than later and iterate over time.

Slack, Hubspot, Userflow, and more

Here are a few more examples to get your mind-wheels spinning:

  • For Slack, a user becomes a PQL once they create 2+ channels, invite at least one teammate, complete their first conversation, and send 2,000+ messages.
  • Hubspot focuses on two “hand raising” signals. The first is when free users request to speak with sales through the app or start trying in-app trials of premium features. However, they also look at the number of contacts added, number of messages sent, in-app views of the product comparison page, and in-app views of the pricing page.
  • Userflow defines a PQL as a user who has spent more than 30 minutes building a flow, and fits their ideal customer profile. They also look at how many times the user logged in, how many team members they’ve added, the number of flows they’ve built, and if they deployed any of the flows into production. 

One interesting thing these companies have in common: they all began investing in top-down sales teams to complement their bottoms-up motion once hitting the $20-30M ARR mark. 

Although they were still generating PQLs, they started to evolve their approach to finding PQAs and adopted a sales-assist motion to convert PQAs into mid-market and enterprise customers.

📖 Learn more about the sales-assist motion in my article about product-led sales.

The benefits of using PQLs

As Peter Caputa, CEO of Databox puts it:

"The sales-led way of buying software: Read about the software, create a list of features needed, let sales qualify you, do a demo, and twist their arm so they give you a trial. 

The product-led way of buying software: Just start using the product. Ask for help if you get stuck. Based on your usage and profile, receive personalized recommendations.

Which sounds better to you as a buyer?" 

- Peter Caputa, CEO of Databox

Moving towards a PLG strategy and adopting PQLs makes life easier for buyers, which makes life easier for revenue teams. This leads to cascading benefits for your business.

1. Offer a better prospect and customer experience

PQLs align your success with your customer’s success, instead of forcing a sale.

They shift the customer lifecycle from:

Lead > Buyer > User

to

User > Lead > Buyer

It caters to the way people want to make purchase decisions. They don’t want to book a sales demo right away, they want to do their own research and “try before they buy.”

When revenue teams use PQLs, they come to the table with contextual information before engaging in sales conversations. By reaching out to the right customers at the right time, you present your company as one that adds value and subtracts friction.

Even if PQLs aren’t ready to convert, they have a better perception of your brand. In a world with more competitors and lower attention spans, adopting PQLs can help differentiate your business.

2. Lower acquisition costs and raise conversion rates

Tomasz Tunguz, a VC at Theory, noticed that his portfolio companies were converting PQLs at 25-30% when the sales team reached out to them. Compare this to MQLs, where 98% will never result in closed won deals.

The best marketing and sales efforts fall flat when they’re focused on filling the pipeline instead of giving value to prospects. Without qualifying leads through your product, you’re setting the stage for higher acquisition costs and lower conversion rates.

3. Guide product development with new insights

What if you could get a glimpse into a prospect’s mind? That’s basically what PQLs do—they allow you to see how users are experiencing value and where they are getting stuck. 

Instead of relying on feedback from reps, product teams can look at specific user behavior and quantifiable metrics to guide future product development.

4. Improve marketing and sales alignment

MQLs and SQLs cause rifts between marketing and sales teams.

If the criteria for what makes a good lead is entirely subjective—no one agrees on the lead qualification criteria. This causes missed opportunities with potential customers, misaligned compensation structures, and deceiving metrics in your Salesforce instance.

5. Decrease churn

When your prospects and customers get a chance to check out the product upfront, they are less likely to churn. There are fewer surprises and less change management needed down the road because the product has already been battle-tested by the buyer.

This also helps Sales and Customer Success (CS) teams, because they don’t have to do as much hand-holding or prove the value of your product at every stage in order to earn customer renewals.

6. Create a flywheel effect

PQLs beat MQLs and SQLs when it comes to creating a flywheel effect. Your leads become product evangelists, happy to share their experiences with the product to other potential customers.

Here’s how Juliana Casale, former Head of Marketing at CrazyEgg, described this paradigm shift

“Rather than stuffing leads into a leaky funnel, you are retaining happy customers who spread the word to others.”

How to identify PQLs

In 2021, only 25% of PLG companies measured PQLs according to a benchmark report from OpenView partners. Why?

It takes time to build a roadmap for how to mine, define, and operationalize PQLs. It’s not a problem that can get solved overnight. There are levels to this endless game.

1. Develop a PQL hypothesis

The first step is to isolate the “aha” moment–when a user first realizes the value of your solution. I’ve found that Product, Analytics, and CS teams typically have the best pulse on where this is, but it could easily come from Product Marketing or Sales as well.

For Chili Piper, we realized the best use case was when a user emailed someone else with suggested times and got them to book a meeting.

Chili Piper’s “Suggested Times” feature in emails

It made sense. You downloaded the Chrome extension, sent out an email, and felt the instant gratification of a meeting popping up on your calendar.

With an idea of the specific product action, now we just needed to qualify for ideal customer fit and buying intent. There are two ways of going about this:

  1. Let PQLs self-qualify by booking a demo or filling out a form on the website
  2. Use enrichment providers like Clearbit and gather buying intent signals through Apollo

The goal of this first stage is to find a hypothesis that’s worth testing.

2. Score and segment PQLs

Once you have the foundation in place, you can get much more granular on qualification criteria. 

Scoring tools like MadKudu, Toplyne, and Correlated prioritize PQLs, and then push predictive scores in Salesforce or Hubspot for reps to take action on. This is where your Revenue, Marketing, and Sales Operations teams come in.

Example of PQL scoring from MadKudu

Instead of being limited to a few data points that indicate a user is qualified, these tools look at a wide array of signals. This includes mapping a buying committee, looking at specific in-product events, or even monitoring sales engagement.

If you’re not ready to fork over the money for this investment just yet, you can even start manually through a simple scoring framework in spreadsheets until you’re processing hundreds of leads per day.

The point of this exercise is to segment your leads so you can surface the top ones to pass off to Marketing and Sales. 

It’s possible your PQL can make it all the way to being a customer without any help, but it’s unlikely with a PQA.

3. Test ways to nurture and learn from PQLs

Now we have a baseline understanding of which PQLs to focus on. What do we do next?

Start experimenting with outreach that helps PQLs onboard, adopt, and learn why they should buy your product.

From a marketing standpoint, you’re basically looking for a “PLG CRM” that allows you to send marketing emails, in-app notifications, or mobile pushes. Think of it like a Hubspot for PLG.

That’s how Dave Rigotti, Co-Founder of Inflection.io, explained it to me over a call.

This category is exploding, but some of the main tools include Inflection, Variance, Braze, and Iterable. These platforms allow you to send outreach when PQLs hit a certain milestone–whether it’s initial adoption, onboarding, referrals, or upgrades.

Adoption

Steal a page from Segment’s playbook. They start by celebrating the milestone of a user connecting Segment to an initial data source. 

The email then goes to the next best action, which sends the data to downstream tools so the user can take action on it. 

Segment’s PLG email from Dave’s whitepaper

This helps users get past the initial hump of connecting their data source. Then, it encourages them to send the data to downstream tools so they can get value from the product.

Onboarding

Whether you’re part of a B2B or B2C company, customer onboarding is the key to improving retention and willingness to pay. 

You can literally charge more for your product when you have a good onboarding experience!

In a 2019 study, Profitwell found that customers who had a good onboarding experience had a 12 to 21% higher willingness to pay than the median. They were also less likely to drop off in the first 21 days.

Great onboarding makes it easy for users to test out the product. The reality is users have a lot more jobs to do than try out your product. When you make onboarding fun and seamless, they get hooked. 

Take this example from Polly. They give users simple tips to improve their experience when sending their next poll.

Screenshot of Polly's onboarding screen from Inflection’s blog post

At this stage, you’re basically looking to scale the experience a customer receives from your best customer success manager. That’s why it’s important to bring the CS team in to help.

Referrals

Referrals are a major piece of creating a growth loop and network effect. You want happy users to invite other users because:

  • Other users likely fit a similar profile and could become good PQLs
  • Your product becomes more valuable when users can interact with each other

Take Slack as an example. When there are multiple people on a team using Slack, it becomes more valuable because they can create threads and have more conversations.

Mural does a great job of baking referrals into their outreach. Once a user creates their first whiteboard, they receive an email that explains why they should add collaborators and gives them a specific template to test.

Screenshot of a Mural PLG email from this blog post from Inflection

Upgrades

I recently got a Calendly email telling me to upgrade. It wouldn’t make sense for me because I don’t need the premium features, and I’m barely even a PQL. I just want to use the product for free.

I got this upgrade email from Calendly last week

That’s why I think you could do better. 

First, it’s important to make sure the user actually qualifies as a PQL. 

Then, there’s a lot you can do to show off why a PQL should upgrade. Add GIFs to show off the product or encourage people to try a premium feature before asking to upgrade. 

Remember that many of these users won’t see the value of what’s behind your paywall until you show them.

Product-led sales

Still, broader communications won’t work for your top accounts. You want to get in front of them as soon as possible and deliver a customized experience. That’s where your product-led sales teams and product specialists come in.

Tools like Headsup, Endgame, Pocus, Calixa, and Groundswell alert your reps when a high-value buyer or account comes in as a PQL or PQA so they can start a conversation. This could be in the form of automated cadences, social selling techniques, or personal follow-ups.

The first touchpoint doesn’t have to be a demo call. It can be an automated email about fun use cases, or a CTA that goes to a meeting with a product specialist who shares how users can get more value out of the product.

I especially enjoyed the email below from Magical. They probably realized that the best way to scale onboarding would be a live demo, so they sent me there instead of a tutorial or use case page.

Automated cadence email from Magical

Similar platforms exist for enabling your CS and account management teams to upsell and cross-sell. They often rely on customer health scores, company profiles, and product usage to assign and prioritize accounts for revenue teams and help them improve net revenue retention (NRR)

To name a few:

If you want more inspiration for reaching out to PQLs, check out Page Flows. These are all examples you can implement to guide users through their journey and learn from them along the way. 

By A/B testing different scenarios against sample groups, you can parse out which ones move PQLs closer to conversion.

Converting PQLs and PQAs into paying customers

Identifying and engaging with your PQLs helps get quality leads closer to purchase. The tools shared above help revenue teams prioritize which leads to work, while equipping them with the insights they need to have better conversations.

But how do you turn these conversations into contracts and cash? 

The truth is, all the money, time, and effort go wasted if you never convert leads and accounts into paying customers. That’s where companies get frustrated and give up on the whole idea of PLG.

We’ve already unlocked so many levels. The next three should feel easy to overcome:

  1. Remove friction from the deal cycle
  2. Facilitate a multithreaded conversation with the full buying committee
  3. Make a good first impression with onboarding and mutual action plans

Roll out the red carpet for your top prospects

Once PQLs are ready to buy, it’s important to carry that same personalized product experience through to sales. The data you collect on user behavior enables you to run templated sales playbooks, instead of having to reinvent the wheel every time.

Dock’s SaaS proposal template helps you do that by equipping PQLs with all the information they need to make a purchase decision, without having to sift through numerous docs, slides, and spreadsheets. 

Here's a quick preview of the template:

Compare this with pushy marketing and sales emails that aren’t tailored towards a specific person and share scattered information across multiple channels.

🧩 Steal the template: Get Dock's SaaS Proposal Template

Reduce the inertia that prevents deals from closing

Once you know that multiple people or teams at a company are getting value from your product, it makes sense to have your reps reach out to the buying committee. 

This type of sales process requires multithreaded conversations, which typically end up looking like a constant barrage of emails and meetings.

Not with Dock. 

Their product-led sales template makes it easy to build a business case for senior leadership and IT on why they should purchase your product. 

It helps buyer champions advocate for your solution by personalizing how your product will help them, instead of sending their team links to your home page and one-pager attachments. 

Sneak peek of Dock’s product-led sales template

You can use it to distribute information about current product adoption, pricing, and implementation across a buying committee with a single, shareable link.

Simplify onboarding

PQLs don’t just help you acquire customers, they help expand through upsell, cross-sell, and referrals. In many ways, it’s similar to a sales motion. You’re qualifying customers who fit the profile of an account that is interested in exploring new features or adding new users.

As CS teams scale their efforts, it’s crucial to prioritize which customers should receive a high-touch onboarding experience, and reserve low touches and automated workflows for others.

Dock’s customer onboarding template helps you make a great first impression instead of managing mutual action plans in long, messy spreadsheets.

Here's a quick preview of the template in action:

🧩 Get the template: Simplify onboarding with Dock's onboarding template.

Summary

The reality is that PQLs don’t always become paying customers overnight. It takes a village—not only for your company’s revenue team, but also a prospect’s buying committee.

What kills most deals is friction and lack of personalization. That’s where Dock shines. 

By giving your PQLs, PQAs, and revenue teams a single destination for key product information, you can help push deals across the finish line and remove friction from the customer journey.

Get started with Dock for free today!

Sid Khaitan

Sid Khaitan is a product marketer and content strategist. Sid is currently the Senior Product Marketing Manager at Beekeeper and was formerly at Chili Piper.