Why PQL is the best indicator for Product Market Fit

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Why PQL is the best indicator of Product/Market fit

Product Qualified Leads (PQL) are potential customers who have used and have experienced value in a  product.

Value could mean different things depending on the prospect. A simple way of looking at it is if a prospect had reached pre-defined triggers that signify a strong likelihood to become a paying customer (time, activity, engagement in a key feature, etc), that prospect had experienced value and is a Product Qualified Lead.

Let’s use your typical email application as a hypothetical example. If a user logged in, setup an email address and account, sent 10 emails, used an advanced feature such as a scheduled email to be sent later, this user is a PQL and should be sent to the sales team. 

PQLs are gaining momentum!

Here is the kicker – with PQLs, you get better quality leads!  Much Better – PQLs typical conversion is between 25-30% (Source) compare that to MQLs of 10-15%. (source) That’s double!

This high conversion rate makes sense considering these are the users who have already on-boarded and adopted the paid product in it’s trial version; there is little to explain or demo here for the rep, so they can focus on closing business and positioning the customer for longer-term success.

If we flip the traditional SaaS sales 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!

Today’s SaaS buyer is demanding to try before buying!

The reality is that no one is buying anything anymore without: Social Proof, or First hand experience (Source) .

Let’s take a moment and dissect these two in a bit more detail:

Social Proof:

Social proof is something that’s obtained through a great reputation within your target market. To get there, you need to have two things 1.  Product/Market fit 2. Solid product engagement.

The old way of getting there involved years of trial and error between product, marketing and sales. It required solid coordination between those 3 teams to make quick pivots to deliver the right value to customers. 

Sounds easy right? NOPE. For many SaaS businesses out there, product/market fit is an elusive goal. Product, Sales and Marketing don’t actually work well together. They have disparate goals and are often not even looking at the same success metrics.

First hand experience:

When is comes to the B2B SaaS world, the customer rarely gets a chance to test drive the product before making the decision to buy.  Sales people are hesitant to provide access as the moment they do, they lose visibility and control over the deal momentum.

Typically, after numerous touch-points between sales and a customer, and after the customer has been properly qualified, then the customer MIGHT get their hands on a demo environment. By that point your sales team has spent many hours selling in the product to the customer. The demo environment is more of a cherry on top before they sign on the dotted line. 

If the reality of the product doesn’t match what was sold, the customer will eventually churn resulting in countless wasted sales and marketing hours spent towards that buyer.

Do you really have Product/Market fit?

With PQLs, you know if you’ve got product/market fit by looking at the lead’s engagement level in the product. More importantly, PQLs make it abundantly clear when you don’t have product/market fit and have been marketing to the wrong customers! 

By monitoring product usage of prospective customers, you know which types of users from which industries and roles are more engaged. This tells you who to build your product towards, who to market to and finally who to sell to. No more wasted time selling to people that don’t actually have an interest in the product!

The PQLs that sales is following up with are already engaged in the product. No need to explain how the product works. The conversation shifts to value-add up-sells and maximizing user adoption.

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