In your company, what is a Product Qualified Lead?
Marketing, Sales, Product & Customer Success all work together through Product Qualified Lead.
Here is why we think Product Qualified Lead is the best KPI to bring all areas of your company together.
A PQL is defined by identifying your main product’s activation event and the actions that users perform within your product that indicate they experienced your product’s value.
For you to define Product Qualified Lead, you must first determine the four or more steps, the events in your product, that a new account must take in order to reach an initial value, the activation point. As an example, you may decide that initial value is achieved when an account completes the following tasks if you offer a project management platform:
The following is an example of activation in a project management software:
-Criteria 1 : Account created.
-Criteria 2 : Invited at least 1 member.
-Criteria 3 : Created Document at least 2 times.
-Criteria 4 : Shared Document at least 1 time.
-Criteria 5 : Uploaded asset at least 3 times.
-Criteria 6 : Added a task at least 3 times.
-Criteria 7 : Created a calendar at least 1 time.
Accounts or users who complete all of these actions during their trial or onboarding are considered activated for this hypothetical product. They have now tried the product’s primary features and are able to accurately evaluate its value.
You may define Product Qualified Lead as an account that has completed 40% of these actions (we call this 40% Activated), or you may define Product Qualified Lead as an account that has completed all the main actions. Once you have decided on a definition, you can begin tracking PQLs.
There are four metrics you should be tracking when it comes to Product Qualified Leads:
The raw number of PQLs generated in a time-frame (weekly, monthly). This should be measured over time.
Who should care : Marketing and Sales
Number of PQLs divided by total new sign ups in a time-frame.
Who should care : Marketing, Sales, Product and Customer Success.
3.Time to PQL
How long does It take for a new sign up to reach PQL status.
Who should care : Product
4.PQL to Paid Conversion Rate
Total number of PQL to Paid Conversion Rate divided by Total PQLs
Who should care : Sales, Product and Customer Success.
Why PQL is important to a company and why all its areas are linked by it:
PQL is the most important metric for the Product team. Essentially, it is a measure of how effective the onboarding process is in the product. Is it easy for new accounts to understand the product and to get to first value? If not, the roadmap needs to focus on this.
In addition to the PQL rate, this is useful as a secondary metric. What is the rate at which new accounts convert into PQLs? Does this happen quickly? Would that be possible to improve?
PQL helps us identify the most frequently used features and the level of activation of each account, so we can improve product usage accordingly.
Driving high PQL rates requires a connection between customer expectations and what the product delivers. When there is a disconnect here, there will be confusion, frustration, and drop-offs between sign-up and activation. A high PQL rate indicates a positive connection between marketing messaging and the initial product experience. It is for this reason that Marketing will need to keep a close eye on this metric.
The number of PQLs in a given period (i.e. monthly) represents the sales team’s key opportunities. This represents their current pipeline and is therefore the basis for short-term forecasts. PQL helps you prioritize what potential customers are most active in your product based on their behavior.
As a sales team works with PQLs to drive new revenue, this metric measures the effectiveness of the sales process. This is a classic conversion rate that should be monitored every month.
Customer Success teams play a direct role in bringing accounts from sign-up to activation to retention. The documentation and personalized onboarding flows they create help new accounts find their way to value. These new accounts are often supported by Customer Success teams and trained by them, all crucial pieces of the PQL process. By utilizing PQL, Customer Success teams will be able to identify which accounts need a higher activation level to enhance retention.
Activation, retention, and monetization can all be improved with PQL.
What is your company’s definition of PQL and how does it influence your Marketing, Sales, Product, and Customer Success strategies?