If you’re a modern SaaS business (you are, aren’t you?), you probably have some sort of revenue forecasting system. And to get any value from that system, you need to know how likely your SaaS trial leads are to convert.
That means plugging values into a spreadsheet with a formula, typically
deal size x likelihood to close
Of the two, deal size is relatively easy to determine. But how do you determine likelihood to close? If you’re like the average modern SaaS business, you might have a conversation with the Account Rep in charge of the account. Surely they’ll know.
“How are we feeling about Footprint Inc?” you ask the Account Rep.
“How likely are they to close?”
Oh, they’ll close. We’ll get them for sure. I can feel it.
“Great! I’ll just put them in the spreadsheet —”
94% — they’re going to close.
“Because they’ve been especially engaged with our key features during their trial?”
No, how would I know that? I can just feel it.
“You can…feel it?”
Yes, I can just feel it. They’re going to close.
“Ok. Is it because they’ve gone through all the Activation steps?”
I told you! I can feel it.
“Ok, Jim if you’re going to give a percent you need a reason.”
No, I don’t.
“Ok, very well. I’ll just ask Product for the account engagement and put them in the spreadsheet based on—”
“Jim, that’s not even a percent!”
This is clearly not a sustainable way to determine how likely it is that a trial will convert. Want a better way to forecast revenue? Product Engagement metrics give you singular insights for your revenue forecasting so you don’t have to rely on Jim’s “feelings” anymore. (Sorry, Jim, but who were you kidding? 638?)
The key product engagement metrics to consider for your SaaS revenue forecasting are
(n.) A static measurement of how far along a user or account is in their journey toward “first value” or the “aha” moment where they realize how great your product is.
(n.) An indicator of how far along someone is to becoming a product qualified lead
(n.) An over time measurement of how much a user or account is using your product
(n.) A measure of responsiveness and proactive outreach that a user or account displays during a free trial period
Most SaaS trials fall into one of seven types, based on their Activation, engagement and communication during their trial period. Have you met all seven?
SaaS Trial Lead #1: The Golden Leads
90% Chance of Conversion
If only SaaS revenue forecasting was all Golden Leads
Don’t we all wish every lead was a Golden Lead?
These people are almost guaranteed to convert. From the beginning, they do everything right. They get set up in the product quickly and stay highly engaged throughout the trial, often bringing in more team members. They’re also extremely open and communicative with your team, clearly describing their goals, taking advice, and asking questions whenever they get stuck. You can’t do better than a Golden SaaS trial lead.
How to handle these SaaS trial leads:
Just enjoy the ride with these leads. They’re really committed to making your product work for their use case so do everything you can to help them make it happen. And don’t be afraid to show them important but less obvious features — they’ll be on board to try them!
SaaS Trial Lead #2: The Silent Successes
75% Chance of Conversion
Don’t be discouraged by silence when SaaS revenue forecasting
Just because these SaaS Trial Leads are quiet, doesn’t mean they don’t care
These SaaS trial leads sign up and self-serve their way to value. They don’t respond to any emails or communication attempts from your team, but they maintain high Activation and engagement rates throughout the trial. As much as may seem disinterested, their engagement tells a different story.
How to handle these SaaS trial leads:
Firstly, don’t give up hope. Just because they’re not communicating, doesn’t mean they’re not interested. It’s easy to rank the likelihood to close lower for these leads because they don’t talk much, but stay focused on their Activation and engagement and be available if and when they do need help. Then wait and watch them lead themselves to glory.
SaaS Trial Lead #3: The Contrary Converters
60% Chance of Conversion
Feedback (even if negative) is good for your SaaS revenue forecasting
These SaaS Trial Leads complain a lot, but they’re still engaged
These people communicate constantly and consistently throughout their trial — but most of what they have to say is negative. They challenge your features, complain about your on-boarding experience, question how you wrote your help docs, etc. They just don’t seem happy with what you’re doing. Despite all of those complaints, though, these SaaS trial leads keep engaging and implementing.
How to handle these SaaS trial leads:
Support these SaaS trial leads happily through their grumpiness. When they frown, you smile. Listen to them and make them feel heard. If they find value in the product, they will convert. And they might even become one of your biggest advocates!
SaaS Trial Lead #4: The Positive Procrastinators
30% Chance of Conversion
Actions speak louder than words when it comes to SaaS revenue forecasting
Don’t get caught up trying to give these SaaS Trial Leads everything they want
These SaaS trial leads may seem like some of the most promising. They say all the right things and seem excited in a too-good-to-be-true sort of way. These trials always have some excuse for why they can’t make progress on their trial. They never get set up with your product, and their sweet nothings may feel nice but are meaningless in the end.
How to handle these SaaS trial leads:
The biggest thing to remember with these SaaS trial leads is that talk is cheap. Be firm with them. Make them commit to an action plan. Make them commit to becoming Activated with your product. If they can’t or they won’t follow through, don’t waste your time.
SaaS Trial Lead #5: The Fizzlers
10% Chance of Conversion
When SaaS revenue forecasting, keep in mind: early excitement doesn’t always lead to lasting results
These SaaS Trial Leads start hot and then burn out
These leads are the most disappointing of all in many ways. They start out so excited (much like the Golden Lead), becoming Activated quickly and constantly remarking how all of your features feel made for them. But then something changes — their engagement tails off, and they’re gone.
How to handle these SaaS trial leads:
Keep these SaaS trial leads on your marketing lists. (As far as SaaS revenue forecasting, they’re not going to close during their trial). They were clearly excited about something you had to offer, but it may have been a matter of bad timing. No one knows what the future holds!
SaaS Trial Lead #6: The Incompatible Ignoramus
5% Chance of Conversion
Bad leads are bad leads — no need to categorize them otherwise when SaaS revenue forecasting
Is it even fair to call these SaaS trial leads?
These SaaS trial leads are just bad. There’s nothing else to it. They don’t have the resources or motivation to get your product implemented, but they interact with your team, taking up valuable time. They insist they want to make things work, but who are we kidding?
How to handle these SaaS trial leads:
Smile and move on. Be grateful for the initial interest and efforts of these leads, but don’t waste time. They may, at some point in the future, have the resources or feature needs. They may come back. But in the meantime, you don’t need them signing up and spreading bad vibes about your product in the marketplace.
SaaS Trial Lead #7: The Heartbreakers
5% Chance of Conversion
Sometimes SaaS revenue forecasting requires that you let go of a hollow dream
Don’t let these SaaS Trial Leads turn into a morale black hole
Like their namesake, these leads are everything you want but can’t have. They’re well-known logos that would make your brand shine. Just saying their name gives you goosebumps. But the problem is they never actually use the product after signing up and are generally unresponsive to Sales outreach.
How to handle these SaaS trial leads:
Just. Let. Go. Be happy that such a great SaaS trial lead showed enough interest to sign up but don’t dwell on them. Likely, the wrong person started the trial and they just aren’t engaging with your features. It might be worth it for your Sales team to spend some time mapping this account and trying to find the right buyer, but not too much time.
SaaS revenue forecasting is all about product engagement
Chances are, by this point, you’ve realized that SaaS revenue forecasting is all about looking at engagement. Is the SaaS trial lead engaged during the trial period? If so, they’re more likely to convert. If not? There are more fish in the sea.
Need a tool to separate the Heartbreakers from the Golden Leads? Try Sherlock free for 17 days.
What do you think? Did we miss any SaaS trial lead personas? Send us an email at email@example.com and let us know.
According to many in product and marketing, the future is product-led. But what does it actually mean to be “product-led”?
VC firm Openview defines product-led growth (PLG) as “a go-to-market strategy that relies on product usage as the primary driver of acquisition, conversion, and expansion.”
Translation: Make a great product, let people try all (or part) of it before paying, watch it go viral—no whitepapers required.
Speaking of whitepapers — the hallmarks of Sales-led and Marketing-led growth models — let’s take a second to look at the differences between product-led growth and Sales/Marketing-led growth.
Sales and Marketing-led models create a need for the product by focusing on the promise of what the product can deliver and generally making that promise to someone at the top of an organization. A potential business leader may have their curiosity piqued by opening and clicking on a series of emails that tell them how a product will increase their ROI. They go on to schedule a demo and talk to a sales guy (several times, even). This could really help us do X, they think. There is no one to convince because they are the decision maker. They sign a deal. The term is long. There’s a lot of onboarding. That’s a Sales/Marketing-led growth model.
Product-led growth flips the elements of Sales and Marketing-led growth models around. Start with the product. Give it to end users. When any given user sees how much it’s helped them, they will share it with their team. Have end users (not decision makers) fall in love with it. It will then receive buy-in from decision makers who want to invest in software their team is going to use.
If the product is good, then perhaps one or several users will share it with teams both in and outside their organization. And so the product spreads — all by itself.
The benefits of product-led growth
At the end of the day, product-led growth’s main benefit is faster, more efficient growth. You can see this at every phase of the customer journey.
Lower acquisition costs with product-led growth
Think of the big names in product-led growth: Slack, Dropbox, Calendly. How did you hear about them? How did you start using them? Chances are, you or your company didn’t adopt these products because of an ad or a whitepaper. In fact, you may have never even heard of them before you started using them.
Product-led growth relies on the idea that if a product is good, it’ll infiltrate the market and grow on its own. Maybe someone you knew used Dropbox or Calendly. They sent you a file or an invite. You opened it. Suddenly, you are a user. How much did it cost for product-led growth company X to acquire you specifically? That’s right — zero dollars.
This scenario is not an uncommon occurrence in a product-led growth model. When the product has built-in methods for driving customer acquisition, the cost of acquiring a customer is lower. You don’t need a Marketing team to buy ad space and you don’t need a huge Sales team to sell the product. All you need is a product that’s really, really great.
Speaking of your Sales team, a product-led growth model allows your salespeople to be far more efficient. Imagine a salesperson with 10,000 leads at the top of the funnel. Perhaps they whittle it down to 5,000 using firmographic criteria and traditional portrayals of interest. Let’s be optimistic and say they even get it down to 1,000 using stricter MQL requirements (multiple whitepaper downloads or email clicks). Even then, most of those leads aren’t going to convert to paid.
While these numbers are exaggerated, the underlying logic is there: One salesperson cannot handle such a large volume of leads, and without any further indication of who will convert, they are left to reach out in some random order.
Enter the Product Qualified Lead. These are leads that have used the product and loved it. They have tried either a freemium version or a free trial of the product, used the features, and found value from the features. What if your Sales team only called leads like this? The list would certainly be a lot shorter, but the conversions would be the same. That’s what Product Qualified Leads do. They give your Sales team a way to look at how users engage with the product during a free period and then use that information to pick out users that are actually interested. Who is more interested in your product than someone who has used it and loved it?
Increase retention and upsells with product-led growth
Or the reverse: Reduce churn with product-led growth.
We already covered how using a product-led growth model in Sales helps salespeople find better leads because they know who is engaging with the product and who is getting value out of it. Similarly, Customer Success teams need to know who is not finding value in the product and what features they might be missing out on. Because the focus in a product-led growth model is on how users are interacting with the product, CS teams will have data on user engagement readily available to them. This gives them singular insight into who is engaging and who is not so they can better tailor their upsell and churn reduction activities.
Give users a better experience with product-led growth
It’s simple: Product-led growth improves the user experience. Users find value before paying; user onboarding is more straightforward; users can pay when they feel it’s warranted. There’s no promise of value. There’s just value for the user.
Additionally, when your product is everything, your focus is 100% on making it the best it can be. User feedback is at the center of everything you do and you are truly doing everything you can to create the best experience first and foremost for the user.
A few product-led growth metrics
What are you really measuring in a product-led growth model?
Trial-to-paid conversion rate
(n.) The percent of users that go from a free trial to a paying customer. This also applies to freemium.
Conversion rate is an important KPI for any business.
How many people go from X activity to being a paying customer? No business is a stranger to that question. Trial-to-paid conversion rate puts a product-led growth spin on it. By focusing on the number of trial and/or freemium customers that are converting to paid, you have a much better sense of:
In short, if your trial-to-paid conversion rate is high, you’re doing great. Keep it going, but consider making some tweaks if you want to optimize. If it’s not so high, you might need to look at places you can make substantial changes so users find enough value during their trial period.
(n.) A measurement of how far along a user or account is in their journey toward “first value” or the “aha” moment where they realize how great your product is.
Start with a list of actions a user would need to take to get set up and get value out of your product. It’ll vary based on your product. You should try to stick to 5-10. This is your Activation checklist.
Activation rate is just the percent of those checklist steps that are completed. You can measure it by user, by account, or for your product as a whole.
Activation rate works in conjunction with other product-led growth metrics. When paired with trial-to-paid conversion rate it can tell you how well you know and understand what it means to find value in your product. When paired with engagement and leads, it can tell you who is and who is not a Product Qualified Lead for your product-led business.
(n.) The percentage of your customers who cancel or don’t renew their subscriptions during a given time period
Overall, these metrics measure how happy users are with your product in the long term. While hitting first value early is a great indicator of how likely customers are to stick around, nothing says staying power like a customer that actually stays.
The emphasis placed on churn and retention rates is just one more way in which product-led growth puts the product front and center. You have to work to win over your customers every term or they’ll go to the competitors. That means focusing on new features, bettering the features you already have, or increasing engagement with the product. Since customers aren’t signing long-term deals, their choice to stick around shows your product is still delivering value in the long term.
(n.) A measurement of how much a user or account is using your product
A unifying element among all product-led growth metrics, engagement score tells you how engaged users and accounts are with your product.
If you look at engagement score at the user-level, you can see which users on an account will be internal champions when the time comes. If you look at the account-level, you can see which accounts are at risk, ready for an upsell, or need to adopt a new feature. If you look at the product-level, you can use the engagement score trends to see how your business is doing overall.
DAU, WAU, MAU (daily, weekly, monthly active users)
(n.) the number of users that are active in the product for any given time period
If you follow the best practices of product-led growth, you’ve designed your product to benefit the end user. You’ve made it your primary growth channel. Understanding how many users are using the product actively for any given set of time is key to understanding if you’ve been successful in your mission to keep the focus in the right place and nail the user experience.
Product-led growth is the future
The product-led growth model shifts the way you think about your product, your users, and the relationship between the two.
Modern business buyers want to buy software their teams will use and product-led growth puts the emphasis on the teams, not the leaders. Modern business buyers want to see value in a product, not just trust value exists. Product-led growth allows them to do that. Modern business buyers have many software options that can perform any given job. Product-led growth allows you to show (not tell) them that your product is the best solution.
It’s not hard to see why product-led businesses are valued more than 30% higher than the public-market SaaS index fund.
Originally ghostwritten for productboard
Meet SC Moatti. She’s written an award-winning bestseller on how to build great products and founded Products That Count, one of the largest networks of product managers in the world. On top of that, she’s spent over a dozen years building products at Facebook, Nokia and Electronic Arts and a decade investing as a venture capitalist.
With a resume like that, there’s no denying that SC understands products and the mindset it takes to build excellent ones — and it’s not what most people think.
The fallacy of product/market fit
SC rejects the conventional wisdom that finding product/market fit is the end of the product journey. The story goes something like this: you build something, find a few people who like it, and then trade building for incremental growth.
“That couldn’t be more wrong,” SC explains. “There’s no single product/market fit — it’s more like 50 shades of product/market fit. One customer will request a feature, you’ll build it, and another will get upset, leading you to change your product again. It’s easy to get caught in the sway and lose sight of your big-picture product vision.”
To create a great product, SC suggests building your product vision around the idea that technology is an extension of ourselves instead of something that lives separate from us. “You have to think about who people aspire to be and use that to create a framework that informs product decisions,” she advised.
A mind, body, spirit framework for building great products
SC thinks about people and products into three dimensions:
These three facets work together to make or break a product. When they’re balanced and well-executed, the product achieves excellence — just like a person.
Spirit: Make products meaningful with personalization
Think about the last time you thought you were in love. Your beloved likely felt like they were made for you, like they just got you, to the point that they could read your mind.
“Our phones and smartwatches are like that,” SC said. “They create an incredible opportunity for products that feel personalized and we find meaning through that connection.”
Before the mobile age, businesses could glean basic information about users (age, gender, etc), but nothing substantial enough for a product to give someone the feeling of being understood.
Now, our social media accounts auto-tag our friends’ pictures and our media apps tell us what songs and movies we’ll like. It’s almost like technology can read our minds. For product managers, the question has changed from “Can we personalize this experience?” to “Where should we draw the line on personalization?”
But why limit it at all?
“If you ask for too many permissions too soon, you’ll send off privacy alarm bells. If you don’t ask for enough, the user experience will suffer,” SC said.
She recommends that product managers start by ranking permissions on a scale of must-have to nice-to-have. “Prioritize the things you need to know to make your product relevant. Don’t let people download your GPS app without access to their location, but don’t ask for access to their address book until they want to share their location with a friend.”
Ranking permissions this way helps you balance the consumer’s concerns about data and privacy against their desire for a meaningful experience.
“We don’t want to admit it, but we like when businesses give us a service for free or serve us ads for things we want. The most important thing is just to be transparent and let users make their own decisions about what they share.”
Once you’ve figured out the user information you need to make your product meaningful, you can work on making it beautiful.
Body: Balance design and functionality to build beautiful products
Think about the last time you saw something truly beautiful — a person, a thing, or a place. What feature or aspect made it so awe-inspiring?
“Everyone can experience beauty,” SC said, “but describing it is tricky.
”When searching for the qualities that define beauty, SC found two schools of thought — the artistic, which speaks to product design, and the rational, which speaks to product efficiency. Both need to be taken into consideration to achieve greatness.
The rationals rely on concepts like the Golden Mean and Birkhoff’s ergodic theorem. Their key tenet? Beauty is about efficiency: creating order out of chaos.
“When you’re thinking about beauty from a rational perspective, what you’re actually thinking about is turning dizzying amounts of information into something simple and actionable,” SC said. “In that sense, a beautiful product is one that is super efficient, so much so it can become invisible.”
SC advises product managers to test for this with what she calls the “thumb test”. If a user can complete a task with one finger, whether that’s on a phone, watch or even a computer, then they are completing the task efficiently and the product is achieving its functional goal.
Functionality allows you to get things done, but as followers of the artistic camp say, true beauty is found in the emotional experience. When Airbnb switched their “Add to Wishlist” button from a star to a heart, they turned a conscious, rational decision into a visceral, emotional one.“
It’s like when I’m trying to tell my mom what I do for a living,” SC said. “She’s not from Silicon Valley, so oftentimes her response is more of an, Uh hunh, ok. But then sometimes I say something and she just gets it—her reaction goes to, Oh that’s really cool! If you’re going to build a great product, you need a user experience that elicits that ‘I-just-get-it,’ ‘that’s-so-cool’ reaction in your users.”
Sometimes getting to that reaction takes time, and that’s not always a bad thing, especially when it makes our products feel more human.
Mind: Create products that grow as we do
Think about how humans grow. It’s not a linear process. If you’re practicing a new skill, you’ll likely get a teeny bit better every day, until one day, you wake up and bam — you’re amazing.
“That’s how great products need to grow,” SC said. “Sometimes it’s incremental and sometimes it’s disruptive.”
WhatsApp grew that way. They made incremental changes to their read receipts, eventually landing on a checkmark system. Then, they had a moment of disruptive growth when they decided to encrypt all their messages. That one change moved them into an entirely new market—they were no longer just a consumer messaging platform but a B2B service with built-in security features.
“One of the challenges of being a product manager is figuring out the ideal ratio of disruptive to incremental growth,” SC said. “There’s a balancing act between driving the product toward greatness and keeping an eye on profits. It’s not that sexy-sounding, but that’s your job: making money for the company.”
SC suggests using a product equation to keep your product goals and business goals balanced and aligned.
Using a product equation to stay ROI-positive
A product equation consists of three main metrics that grow revenue: number of customers, number of transactions per customer, and revenue per transaction.
“You know you need to create value for the business, but you also want to build a great product,” SC says. “By building features that move the needle on a single revenue metric, you can do both.”
The goal here is focus. Create a strategy that changes a single metric. Want to increase the number of customers? Center your product roadmap on features that drive acquisition. Interested in increasing the number of transactions per customer? Only look at product feedback which drives engagement.
“When you choose just one metric to focus on, there’ll be casualties on the other ones, but that’s why you keep rotating,” says SC. “Did you grow your customer base with an acquisition strategy? Switch to an engagement strategy. Did the number of customers suffer a bit? Switch back to acquisition.”
Doing this, you’ll continue to grow your user base and product until you’ve achieved greatness. The only thing left to do then?
“Make it even greater,” laughs SC.
Originally published on productboard's blog
Got a free trial? What about a freemium model? You need a way to assess leads based on their engagement with your product. Enter the product qualified lead.
What’s that, you ask? It’s simplicity itself. A product qualified lead is a lead that has:
Before we get into PQLs and their benefits, a little history:
Lead qualification is not new
Qualifying inbound leads is quite an old concept. For a long, long time B2B businesses (not just SaaS businesses) have been qualifying leads.
Qualified leads are more likely to convert into paying customers. By qualifying leads, a business makes their sales process more efficient (and effective). Qualified lead? Focus your sales activities there. Lead not qualified? Not likely to convert? Don’t waste resources.
Lead qualification is essential for prioritized sales activities and for maintaining an efficient and effective sales system.
MQLs, SQLs, and PQLs — oh my!
Lead qualification highlights leads that have the highest likelihood of converting to customers. This likelihood is typically determined by two vectors: firmographics and interest.
Firmographics measure the business characteristics of a lead. What’s their job title? How big is the company they’re with? What industry is it in? Where is it located? The list goes on. Qualifying on firmographics hones your sales efforts on your target customer profile. Think: If you build software for cosmetic companies with an e-commerce presence, then an automotive parts company is not a firmographically qualified lead.
Interest, on the other hand, is simplicity itself. It measures a lead’s interest in buying your product. Actions like website visits, blog posts read, white papers downloaded, etc indicate interest. Theoretically, the more a prospect does these things, the more interested they are.
Marketing Qualified Leads follow from both these vectors. They have shown an initial interest – enough to “opt-in” to some marketing initiative and meet some kind of firmographic criteria (we’re looking at you job title). These leads deserve attention but are not quite ready for a personal touch from a salesperson.
Sales Qualified Leads have moved further up the interest curve and have taken actions that justify attention from a salesperson. Typically, a SQL has visited your site several times, perused your pricing page, downloaded multiple whitepapers, or requested a demo. They want to hear from Sales.
Excellent! That should be enough, correct? Perhaps if you’re a traditional software company. But in today's world of free trials and freemium offerings, the way to qualify "interest" has changed. People have to see value in your product before they pay for it. “Interest” isn’t just a download or view — it’s how engaged a lead is with your product during a trial period.
So what makes PQLs so singular?
Remember from above, product qualified leads are leads that have:
Product Qualified Leads are actually qualified. Here’s why:
PQLs have used your product
This one sounds obvious, but for a long time, the most qualified leads for a software product never even used the product. Traditional qualification criteria include things like downloading an e-book or visiting the pricing page — activities that imply interest in your offering. But nothing says “interested” like engaging with your features and using your product. Nothing says interested like showing interest!
PQLs have hit first value
Your users set up a trial so they could give your product a go. You need to give them some breathing room so they can fall in love with your singular features and insightful methodology on their own terms.
But how much breathing room? The goal of your trial (as with any trial) is to drive users and accounts toward “Activation” i.e. first value.
Think: what are the actions that a lead needs to take to hit first value in your product? Do you sell a productivity tool? Then maybe it’s things like adding a team member and creating a task. An analytics tool? Someone’s going to need to connect their data and create a few reports. Or is it something else entirely? Take some time and come up with a list of actions a lead would need to take to get to first value.
And because first value means just that — the lead has found value from using your product — you know that they’re all the more likely to keep wanting to use it.
PQLs already love your product (or are at least engaged with it)
Either way, you’ll know exactly how much attention to give them.
Go back to number one for a moment. It’s an obvious fact: since a PQL comes from a trial, a PQL has tried your product. And since they’ve hit “first value,” they’ve also found value in your product. Elementary!
But this is just a starting point. A truly remarkable PQL has interacted extensively with your product post-Activation. They’ve gone about their day and come back. They’ve tried other methods and found yours is the best. How do you find these “remarkable PQLs”? How do you make a spectrum of PQLs?
You need to score and rank your users based on how frequently they are using the most important parts of your product. Even better: giving context to these insights allows your sales team to act on the best leads instead of getting stuck in tables of data.
It’s simplicity itself — your sales team can’t make sense of rows and rows of event data so they won’t use it. Indeed, they’ll just chase every lead they can instead of going in order of who loves your product most.
So whether it’s love or just like, when you’ve got a PQL, you’ve got a lead that’s engaged with your product and is therefore likely to continue using it. Not just speculation on how much value someone might get out of your product.
PQLs transcend firmographics
Firmographics are great for qualifying leads. That is, until you have something better. They tell you how close someone is to your target persona — that information is of the utmost use, correct? Hold on. The reason for creating a firmographic profile is to identify and target prospects that will get value from your product.
So if a company finds value in your product regardless of the firmographic criteria, isn’t that better? Does it matter how close they are to your target persona? Agreed, they need the budget to make a purchase, but what other firmographic criteria is better than actual engagement? (Clue: there isn’t one.)
The point: if they don’t/can’t get value from your product during a trial, they likely don’t meet your firmographic criteria anyway. (Or you need to revisit your target persona.) Engagement trumps firmographic criteria.
PQLs are account-based
Traditionally, MQLs and SQLs have been very user-focused but SaaS is an account-based world. A curious thing, that. You’re not selling software to individuals — you’re selling to teams, to organizations. To entire accounts. That means tracking product engagement at a user-level isn’t going to tell you what you need. You need to be able to aggregate this engagement data at the account level. Without this ability, your sales team will have too many random data points to be able to understand which accounts to go after. Your PQL process will become more frustrating than helpful and your sales team will likely abandon it. Not good.
PQLs are based on real user engagement, not vanity metrics
Say it with me: Silos suck. Your SaaS business has one goal — to drive revenue. (Well, it probably has other goals but you’re not going to save the llamas of the world if you can’t stay afloat.) Why are all your teams focusing on different goals, then? Why do they all have different KPIs? Why aren’t they aligned?
MQLs and SQLs don’t take the entire organization into account. They’re leads in the door that serve as nothing more than an excuse to ring a gong and move on to the next one. In many cases, they are churn waiting to happen.
PQLs are not vanity-metric qualified leads. They are success qualified leads. In SaaS, a closed deal is just the beginning of the journey. A sales team can often convince naive customers to buy a product (and given commission-based compensation models, often do). That doesn’t work long-term though. You need a product your entire organization can rally behind — marketing with messaging, sales with outreach, and product with features, all in alignment. You need to qualify leads based on engagement so you’re bringing in the best possible customers for your business — not just for one team.
All this boils down to one point: PQLs are more likely to be long-term successful customers
Early success with a product (like during a trial period) is the best indicator of long-term success with a product. If a new account is able to get set up, invite their teammates, and show sustainable engagement early during a trial, then they’re the type of account that’s just a future upsell waiting to happen.
Don’t take our word for it. Learn how to set up your own product engagement scoring system and see for yourself — PQLs are bigger and better than MQLs for SaaS revenue.
This post originally appeared on Wes Bush's blog and was later converted into an ebook on PQLs