Flipping the Marketing Funnel with Product Qualified Leads

Over the last decade, SaaS companies have leveraged the freemium model for converting customers.

Freemium model is a combination of free and premium product features with the ability to upgrade to a paid subscription.

This try before you buy strategy has given birth to some of the most successful SaaS companies – Slack, Mailchimp, Wistia and Box.I

n the last couple of years, the freemium model has evolved due to the availability of large datasets. The companies that proved the value of freemium are now harnessing their vast datasets.They pioneered a new piece of the marketing funnel that boosts efficiency and converts at around 50 percent – Product Qualified Leads (PQL).

What is a Product Qualified Lead (PQL)?PQL is a data-driven approach used by SaaS companies for generating sales qualified leads. Interactions of a free user with the product are tracked to that of a paid user’s conversion trigger.

PQL is an evolved concept of MQL, but at the product level.


Like MQL, PQL is a no-touch lead qualification model.In MQL, you assign lead scores to prospect’s behavior based on the response to your marketing campaigns. Whereas, in PQL your lead scores reflect the velocity of product usage, referrals, and social mentions.Again, like the MQL concept, a threshold is put to the lead score. Once a lead crosses this threshold their marketing automation tool sends out an alert to an inside sales team to immediately contact the lead.

The Changed B2B Lead Funnel

When leads enter the system, they travel through the funnel matching a defined marketing engagement criteria until the visitor becomes a customer.

Marketing funnel with Product Qualified Leads

According to a report by Gartner, “80 percent of your company’s future revenue will come from just 20% of your existing customers.

This means that while your team may focus on driving leads on the top, what they should be focused on is opportunities at the bottom.

The traditional funnel is flipped 180 degrees, starting instead with product adoption. Time and energy is invested in those leads that have raised their hands, are engaging with the product and qualify for a more robust offering.

Advantages of using a PQL Method

  • Team Alignment – Tying product qualified leads to a revenue target will reveal an unparalleled level of team alignment. With cross-selling, up-selling and messaging being dependent upon feature engagement, all teams are vested in the success of the product.
  • ROI Focus – The PQL model enables teams to check engagement with new features or changes and tie those actions to realized ROI across the entire organization.
  • Higher Conversion Rate – As the prospect is already a PQL, it will be much easier to close him as a customer.

Taking the fundamental steps towards PQL should set you on a trajectory for joining the ranks of organizations that are thriving on a booming freemium model, fueled by the PQL model.

Team Znbound
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