The Popularization of the PQL

PRODUCT-LED GROWTH IS ALL THE RAGE FOR GO-TO-MARKET AND GROWTH LEADERS IN 2023. LET'S EXPLORE THE CONCEPT AND HOW TO OPTIMIZE IT FOR YOUR ORGANIZATION.

Explaining PLG and the PQL...

It’s no secret that we’re huge proponents of Product Led Growth (PLG) at Skellator. Our customers are almost exclusively Software-as-a-Service (SaaS)-based, often having beautiful and useful dashboards that solve very real and targeted problems for their own customers – and we want that front-and-center. If you believe in your product, why hide it, right?

Many organizations simply don’t have a full understanding of the model or have no idea where to start, much less how to optimize the engagement, so let’s take it from the top…

What the Hell Is PLG?

PLG is a go-to-market strategy that places a heavy focus on usage and adoption of the solution, showcasing the product as the primary driver of customer acquisition, retention, and upselling. This approach is based on the belief that if a product solves a problem well enough, users will adopt it, can’t live or work without it, and will subsequently spawn word-of-mouth referrals to create organic demand.

The approach has caught fire in the software world, but I’d argue too few companies are leaning in enough, particularly in security.

Rather than relying on old school, tried-and-true sales pitches, PLG hinges on a core belief in the solution itself — “this shit works, and I’ll prove it!” — encouraging prospects to try the product before committing. It emphasizes feature-usage and engagement as a key metric of success rather than traditional lead and revenue metrics. Many mature PLG companies have even adopted the PQL as a key indicator of interest.

Makes Sense... Wait, WTF Is a ‘PQL’?

Buckle up, buddy. The Product Qualified Lead (PQL) is your ultimate signal to sales that you have a hot lead on the line.

However, you’ve probably encountered antiquated Sales and Marketing teams that have traditionally relied on Marketing Qualified Lead > Sales Qualified Lead models (MQL > SQL) to build out and segment pipelines.

With this old model, marketing teams would track and score prospect activity based on a variety of actions taken (ebook downloads, webinar views, demo requests, etc.). Once they’ve reached a threshold as MQL, they’re scored up to an SQL and handed over to the sales team to engage. This is a wildly imperfect science and a large driver of the classic divide between Sales and Marketing…

Marketing: “Sales isn’t doing shit with the leads we hand over!”
Sales: “The leads you’re handing over aren’t ready to buy!”

The PQL turns this model on its head. With enough user and usage data, software companies can pinpoint the actions taken within a platform that lead to that “aha!” moment for attachment.

Let’s use Acme Project Management (APM) as an example. APM offers free trials for users to experience its project management software before committing to buy. From the moment the user engages with Acme’s software, the data collection begins! After months of collecting valuable data from free users, they’ve discovered a trend: users who create a project and invite a teammate have a much higher chance of converting into a paid customer than free users who never invite a teammate.

Armed with this info, we can define a PQL as “created a project + invited teammate,” triggering an upsell conversation or (even better) an in-app offer to users who take such an action, at the exact moment that the action is top of mind. This is a much more efficient way to conduct outreach motions for revenue teams.

Now that we know there’s a critical moment in the customer’s journey to recognizing value, we can provide guides within the application to encourage new/free users to create a project and invite a teammate, leaving breadcrumbs to ensure they get the most out of their trial experience, exactly as we intended.

The Many Faces of PLG

There are several subsets to a PLG motion, none of which are “wrong,” and almost entirely dependent on how complicated a solution is to determine optimal strategy. Here are a few popular variations and mutations:

1. The Freemium Model. By offering a free or freemium version of the product, potential customers can try the product before they buy it, helping build trust and increase the likelihood of conversion.
2. Guided Demos. A favorite of mine, the interactive demo places a user directly inside the platform and provides a path to explore top use-cases that find value. Once requiring the support of dev/engineering, many tools are now on the market that can be utilized exclusively by the revenue teams to build such guides.
3. Engagement-Based Pricing: Instead of traditional pricing models based on the number of users or features, many solutions now lean on engagement-based pricing, charging customers based on how much they use the product, or which features they call on. HubSpot is a god-level practitioner of this lane.
4. In-Product Onboarding and Education: PLG products often have built-in onboarding and education features that guide new users through the product and help them to get the most value out of it, quickly. Your Customer Success team thanks you.
5. Self-Serve Sign-up and Usage: PLG products make it simple for customers to sign up, get started, and derive value from it quickly, without the need for salespeople or customer support. The less a user has to engage with another human, the better.

As we’ve opined before, the PLG go-to-market does not replace a sales team, it simply makes their job easier, delivering qualified leads who already have an understanding of the solution and an obvious need to acquire it.

It’s like shooting fish in a barrel.

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