Design your Free Offer to Generate Product Qualified Leads (PQLs)
Steven Forth is a Managing Partner at Ibbaka. See his Skill Profile on Ibbaka Talent.
One of the hot topics in Product-Led Growth (PLG) is the idea of Product Qualified Leads (PQLs). We have long had Marketing Qualified Leads (MQLs) and Sales Qualified Leads (SQLs). We now have Product Qualifies Leads (PQLs). How do you design your free offer to generate PQLs?
Please take this short survey What do you want from a pricing dashboard?
Let’s begin with some definitions.
What is a product qualified lead (PQL)?
A product qualified lead (PQL) is an individual and business who has experienced value from using a product as a result of a free trial, use of a limited feature model, or other types of first-hand experience with the product. The use of the product takes it a step further than a marketing qualified lead (MQL).
The flow from attractors to product qualified lead
The goal is to have the free version of your product act as a lead generation mechanism. The flow is from the attractors that bring people to your free product (this could be a website, and email campaign, interactions on social media and all the other growth hacks available) to usage. Usage but not any usage. The usage we are concerned with is not just any usage. We want to encourage the specific forms of use that lead to something of value to the user. In other words, your free offer has to include value paths.
A value path is a sequence of actions taken by a user on your product (in this case the free version of your product) that leads to something of value. This could be something of emotional value, but for B2B one wants to deliver economic value as well. Think about that.
Your free product has to deliver economic value to your user, value you do not charge for.
Completion of value paths in the free version of you product serves two purposes: it provides proof of value and it shows what segment the customer belongs in. Both are part of the Product Qualified Lead.
A Sales Qualified Lead (SQL) has information about whether the contact is a buyer and why they are interested in buying. A PQL, in order to qualify as a lead, needs to have its own ways of answering these questions. How you do this will depend on your product and the information you need to collect. So far as possible they should emerge from the use rather than being the result of a survey process.
What happens with Product Qualified Leads
Many of the companies using PQLs are executing Product-Led Growth (PLG) strategies. This means they will want to move PQLs into an automated sales process where they are presented with the relevant next step, one of the paid offers, and a way to purchase and begin to interact with customer success processes. The key is to carry the value delivered and documented in the free product into the paid offer.
In some cases, the PQL will become a Sales Qualified Lead (SQL) and be handed over to internal sales. Value continuity is key here as well. The rep should NOT begin the relationship with a qualification process. They should first take steps to confirm the value and provide even more value. Value selling (see Mark Stiving’s excellent new book Selling Value).
A PQL checklist
Is the free version designed to deliver and document value?
Can that value be organized as one or more value paths?
Does information gathered in use suggest what value segment the user is in?
Is there an automated lead scoring mechanism that determines if the user is a PQL?
Does the PQL include
Value Documentation (Proof of Value)
Value Segment
Contact
Is there a routing from PQL to Automated Purchase or SQL?
Value Segment: A group of users who get value in the same way and who buy in the same way
Lead Scoring: A point based approach to determining when a free user becomes a PQL
From free to usage-based pricing
Your pricing model may include a usage based pricing metric. This is a pricing metric that scales with use. If this is the case, the free product should track the metric and help the user understand how this usage correlates with value and will be used to set price. Ideally, the data needed by your use prediction engine is being collected by the free product and fed into a prediction of future use that can then be used to understand how use and price will play out over time.
Read other posts on usage based pricing
How to get ready for usage based pricing
Five characteristics of superior pricing design
Pricing under uncertainty and the need for usage-based pricing
Enabling Usage-Based Pricing - Interview with Adam Howatson of LogiSense
