3 Ways PQLs Help Power Growth

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By Tyler Bench, Lucidchart

Marketing qualified leads (MQLs) have long been a staple for B2B companies as they try to identify customers with real buying intent. But lately, there’s a new kid on the block offering a relevant metric that drives success: product qualified leads (PQLs).

PQLs are generated by customers who have been using your product and have taken some sort of action that indicates they may be willing to pay for increased access to your products/services or even for additional products. Marketing teams who focus on these triggers can use them to create highly qualified leads for sales. However, it’s important to note that while PQLs can be an effective metric for SaaS companies, they may not play a role at companies with more traditional product delivery models where it’s hard to get deep insight into product usage.

Although most companies transition from focusing solely on MQLs to incorporating PQLs, we actually started our lead generation efforts with PQLs here at Lucidchart. As a result, we’ve seen firsthand how PQLs can combat many of the challenges facing B2B organizations today, including aligning marketing and sales, changing the customer buying process, and scaling customer acquisition.

By no means are we saying you should ditch the MQL model. It is tried and tested and can deliver excellent results. In fact, now that we have built a solid PQL machine at Lucid, we’re starting to build out an MQL strategy as well, because it is a strong fit for our sales solution. However, if you can layer PQLs into your business model, you can start seeing big wins. Let’s look at how PQLs can help solve some of those challenges organizations are currently facing.

Making customer acquisition scalable and less expensive

Most marketing organizations rely on paid channels to feed marketing automation flows and create MQLs. You find several competitors advertising in the same place with the same content, using channels such as LinkedIn, Facebook, and content syndication. The unit economics of these paid channels decay with scale, making it increasingly expensive to acquire customers over time.

PQLs, on the other hand, use the product itself to generate demand. It’s a great way to maximize the investment in customers you’ve already worked so hard to acquire and to engage with your captive audience for free.

PQLs are especially powerful for products that people can access for little to no cost. The low barrier to entry allows you to quickly acquire new product users through organic and scalable customer acquisition channels such as SEO and word of mouth. The PQL model makes it possible to efficiently monetize a wide pool of users if the business model allows for opening the funnel to a high volume of end users.

At Lucidchart, we acquire over 10,000 users per day at a very low cost, which allows us to grow our product qualified lead funnel at fantastic unit economics. At the same time, we gain so much data from the way people use our product that we are able to automate a huge chunk of sales’ workflow, which improves the sales commission component of our unit economics, as well. We automate sourcing and prospecting of tens of thousands of PQLs each month, which allows our SDRs to only work leads once they have responded to this automated prospecting.

Instead of just relying on gated content that hopefully goes viral to hook your target customers, you can achieve virality through a phenomenal product experience. And you own that distribution channel—virality cannot easily be replicated or competed away.

Aligning marketing and sales

At nearly every company, you’ll find a palpable tension between marketing and sales—if not properly addressed, it can turn hostile and create rifts in your organization.

But sales and marketing are working towards the same objective, right?

Yes, they share a common goal, but the teams are not measured on the same performance metrics, and therein lies the hazardous disconnect. Marketing teams are usually measured on number of marketing qualified leads (MQLs) delivered, while sales teams are measured on revenue. As a result, marketing focuses on quantity rather than quality of leads—which means they may hit their numbers, but sales may not, due to the lower quality. This issue is further complicated by the fact that marketing sets the rules for what qualifies as a lead that will drive revenue—and often marketing teams set those rules without the input of sales. While marketing celebrates, sales may suffer.

PQLs, on the other hand, rely on intent-based qualification criteria and thus tend to naturally create more objective alignment between marketing and sales. Both teams can work towards the same revenue goals, which means the sales org has input in the metrics that marketing is measured by, driving trust between the two. Marketing teams pass on more qualified leads because the point at which sales engages with these leads is further down the funnel—the customer is already aware of the product and its benefits, and they tend to have a much easier time getting the deal to the finish line. PQLs create the ideal scenario: As marketing is successful, so is sales. Both teams can hit their numbers.

So what does a typical PQL flow look like? It will depend on your product/service. Here at Lucidchart, one of our high-conversion PQL flows is triggered for users who start a trial of our team features. As soon as the trial starts, the sales team receives a notification to contact the user about a potential upgrade. These leads convert at a higher rate and result in a faster sales cycle than traditional MQLs do because the customer is already partially bought in.

If it’s starting to feel like you could cut the tension between marketing and sales with a butter knife, consider focusing on PQLs to foster internal alignment.

Mapping to the true customer journey

Gone are the days when customers could only get the information they needed from the sales rep. Today, empowered customers have access to far more information, and they can gather most of what they need to make a purchasing decision completely on their own. Customers expect enough transparency from companies to allow them to evaluate products by themselves and then talk to a rep on their own timeline.

While this is the reality of the modern buyer, traditional automated email flows often don’t map to the true customer journey. Marketing automation might only begin to speak to the customer when they are already 90% of the way through the buying process.

PQLs allow customers to discover additional products and new features at their own pace, without forcing them into a rigid nurturing funnel. This model aligns marketing, support, and product to allow the customer to experience the benefits of the product and raise their hand to get in contact with a rep on their own terms.

By the time the rep initiates contact, the customer is a more informed buyer and closer to the bottom of the funnel. As a result, you’re providing the experience the modern buyer expects and spending your time focused on customers who are more prepared to purchase.

Capitalizing on PQLs

PQLs expose you to scalable, cheaper, proprietary customer acquisition channels, which can be a source of sustainable competitive advantage. You’ll pave the path for a better way to grow your business without blowing up your costs, especially when there are so many competing in the same space.

PQLs have allowed us to capitalize on the tremendous opportunity inside of our freemium customer base while aligning our internal teams and providing a better customer experience in the process. How could PQLs revolutionize your business?

 

About the Author

Tyler Bench is Director of Demand Generation at Lucidchart, where he manages inbound lead generation, events, and customer marketing. Tyler joined Lucidchart in 2014 as an early employee. Since, he’s been along for the ride as the company has added hundreds of employees, millions of users, and many enterprise customers. He loves spending each day working alongside Lucidchart’s world-class sales and customer success teams to drive revenue. Tyler earned his degree in business administration from the University of North Carolina. While in school, he got his first operating experience running the revenue side of an urban farm. Tyler began his professional career at Google managing digital advertising accounts, where he gained valuable experience in sales, customer success, and support.

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