What are Product Qualified Leads (PQLs)? VS MQLs and SQLs

Qualifying leads has come a long way since then. Those days of merely gathering email sign-ups or initial interest are over, and a lead is now considered ready to convert. With markets becoming increasingly competitive and buyer behavior more sophisticated, companies need to use more advanced methods.

Enter Product Qualified Leads (PQLs). PQLs—the new kid on the block in lead generation—are revolutionizing the way by identifying prospects who have made significant actions within your product itself. With a customer-first mindset, knowing the differences between PQLs, Marketing Qualified Leads (MQLs), and Sales Qualified Leads (SQLs) can assist SaaS companies in unlocking more significant relationships and better conversion rates.

This blog will take you through these most important lead types, discuss why PQLs are becoming popular, and help you understand how to implement them in your sales strategy effectively.

What Are PQLs, MQLs, and SQLs?

Let's define all three types of leads and what characterizes them before we dive deep into PQLs and their benefits.

Marketing Qualified Leads (MQLs)

An MQL is someone who has expressed interest in your product, usually found through marketing efforts. This may mean subscribing to your newsletter, downloading an e-book, or viewing a webinar.

MQL Key Characteristics:

• Interactive with your marketing content (e.g., email opens, eBook downloads).
• Shows interest but hasn't necessarily interacted with your product in a direct manner.
• Usually nurtured through repeated marketing campaigns.

MQLs are valuable because they provide balance between sales and interest-generating activities, but they are not always high-purchase-intent indicators.

Sales Qualified Leads (SQLs)

SQLs are leads identified by the sales team as ready for direct sales engagement. They usually follow MQLs and tend to display buying intent or have shown interest in a demo sale.

Major SQL Characteristics

• Have already been qualified and approved by sales for follow-up.
• Actively evaluating a solution and most likely to be in the decision-making phase.
• Typically generated through direct contact or demo requests.

While SQLs get teams closer to closing, discovering them tends to occur late in the funnel through mostly manual follow-ups.

Product Qualified Leads (PQLs)

PQLs are users who have tried your product firsthand and derived value from it. Often typical in freemium or trial SaaS models, PQLs indicate readiness to buy through direct engagement with your product.

Characteristics of PQLs:

• Used your product, e.g., signed up for a freemium tier or free trial.
• Interacted with key features that show potential retention or expansion.
• Have found value in the product on their own, indicating strong interest.

PQLs are higher up the intent and qualification ladder since they've already gotten a taste of the product's functionality.

Why PQLs Have the Upper Hand

Product experiences are the lifeblood of SaaS. Prospects who investigate and discover value for themselves are more apt to convert, which makes PQLs that much more solid compared to MQLs or even SQLs.

Better Conversion Rates

Since PQLs already comprehend and see value in your product, they usually convert at much higher rates. OpenView Venture Partners states that companies built on PQLs experience up to 25% higher conversion rates.

Reduced Sales Cycles

Customers who have already interacted with the product are further along in the buying process than MQLs. When sales teams approach qualified PQLs, the customer is significantly closer to making a purchase, saving time on pitching or fighting objections.

Higher Customer Retention

The deep product engagement leading to becoming a PQL also results in improved retention. They are already people who know how to leverage the platform properly, lowering churn and growing long-term value.

How Marketing and Sales Teams Generate and Nurture PQLs

Acquiring PQLs takes a collaboration of marketing, product, and sales teams.

Marketing's Role

• Provide Free Trials or Access: Establish freemium models or free trial initiatives to put users into the product funnel.
• Onboarding Campaigns: Craft in-depth onboarding journeys to nudge users towards the product's highest-value features.
• Behavioral Analytics: Track trial user activity to see what behaviors are linked with purchasing (e.g., activating premium features).

Sales' Role

• Define Key Indicators: Sales teams can collaborate with product and marketing to establish actions that indicate a PQL, e.g., invoking a feature more than once.
• Personalized Outreach: As PQLs already understand your product, outreach should be personalized, highlighting advanced value propositions and advantages.
• Handing Off to Customer Success Teams: Seamless handover to customer success teams ensures the valuable relationship established with the PQL persists after purchase.

How to Implement PQLs in Your Business

It doesn't have to be hard to incorporate a PQL-centric approach into your business model.

Step 1: Map the PQL Journey

Identify the major activities in your product that align with purchasing readiness – such as activating a pro feature or finishing onboarding.

Step 2: Use the Correct Tools

Make use of product analytics tools such as Mixpanel, Amplitude, or Pendo to track user behavior. Supplement this with a customer relationship management (CRM) tool such as HubSpot or Salesforce to qualify leads.

Step 3: Synchronize Teams

Ensure close collaboration among product, marketing, and sales teams to establish workflows and responsibilities for lead nurturing and converting PQLs.

Real Examples of PQL Success

Company A – SaaS Collaboration Platform

By providing a full-fledged 7-day trial, the platform had its PQL conversion rates increase by 30%, since trial users were already convinced of the value of the product.

Company B – AI Writing Assistant Tool

A well-crafted upgrade path assisted in turning free users of the writing tool into paying customers by 35% simply by marketing premium features within the product interface.

PQLs Are the Future of Lead Qualification

The product-led growth model has led to Product Qualified Leads becoming the go-to SaaS lead qualification. They are genuine, interested users who have already experienced your product's value in action firsthand and are an incredible anchor for your sales and marketing efforts.

Are PQLs on your radar yet? If not, it's time to rethink your qualification strategy and begin unlocking new possibilities for growth.