This post is by Sam Richard from Openview Labs
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More and more companies, especially at the seed stage, are building freemium and free trial offerings to acquire prospective users. Freemium can be an amazing acquisition engine, opening the top of the funnel and halving your customer acquisition costs (CAC) during a period where the industry as a whole sees CAC on the rise. That being said, freemium can be too much of a good thing. Sometimes, you’ll find that your organization has lots of users in the product who may not be a great fit for the paid version of your software, or you have more leads than your inside sales team can really handle, and they have a hard time honing in on the best prospects. This can lead to a lack of focus and probably a decrease in sales effectiveness over time. Hopefully, your team is already leveraging sign up forms to identify and hunt the
trying out your product, but those leads may still not be ready to engage with your sales team, or there may not be enough of them to feed the revenue machine.
“Lead scoring” is not the answer to your problemsGoogle “Lead Scoring Tools” and you’ll get ~60M results, and tons of ads that promise you the world in terms of predictive lead scoring and AI. Honestly, I’m a machine learning enthusiast in my spare time, and I have no inkling of what models, etc. these companies are using to produce effective prediction at scale for companies seeking to find “the perfect lead.” Warning: Many of these tools may look like automated and scalable ways to help your team define and deliver leads who are engaged with your product, and aren’t just fulfilling the BANT framework (Budget, Authority, Need, Timeline). But, they’re typically only using surface-level information like website visits, Clearbit lead segmentation and some information about how prospects are interacting with your marketing. If you’re operating with a freemium or free trial model, this just isn’t enough. You owe it to your team to do better. Enter: Product Qualified Leads (PQLs). Today, 55% of companies value PQLs, but only 23% of companies have actually begun to track PQLs through their acquisition funnel. What are PQLs? PQLs are leads that identify themselves as high-priority by their usage patterns within the product. Unfortunately, there’s no one-size-fits-all way to identify a PQL, but our beginner’s guide to PQLs should help you get started with an MVP.
Who owns PQLs?PQL ownership can get a little confusing. Maybe because sales owns sales qualified leads (SQLs) and marketing owns marketing qualified leads (MQLs), so people tend to think that the product team is responsible for identifying and creating more PQLs. This could be true, depending on your organization, but if you have a growth function, that team is most likely the best equipped not only to identify the indicators that create a PQL, but also to own and manage experiments that increase the volume of PQLs over time.
But once I find these hot leads, how do I actually get them to my sales team?This is possibly where the generic “lead scoring tools” have a leg up. Most of these tools have built numerous integrations to popular CRMs, and most CRMs have already acquired some sort of magical sounding lead scoring startup that they’ve integrated into their platform (I’m looking at you Salesforce Einstein), so it makes it simple to start feeding these leads. I haven’t found many tools that take rich product analytics data (usually the forte of the nerds in another room, kept far away from sales) and deliver it directly into the tools that revenue teams live in every day without substantial engineering work or high costs from your CRM provider. But, in order to generate revenue from PQLs you have to deliver them to the sales team! So, I’ve put together a few cheap and easy ways that I’ve delivered PQLs to sales teams in the past, and some new products that seem promising. A word of warning: Ideally, you’d meet with your Head of Sales Ops and your Head of Sales before starting this project. While I’m sure they’d love to start seeing better leads come through their funnel, a little ramp time for them to prepare their teams and think about PQL distribution will go a long way in proving out the success of your PQL program and making sure those leads convert.
Using the analytics tools you haveTypically, I use a data visualization tool to build out tables of my product qualified leads using all of the metrics I’ve identified that makes them so special. For example, if I found that a lead in my funnel is 5x more likely to convert if they’ve:
- Spent more than 30 minutes in the application
- Added 2+ users
- Visited the billing page