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Is your sales team still using traditional selling strategies? Are they chasing cold leads in hopes of closing a sale before prospects experience the value of your product?
A sales-first approach is how companies focus on Marketing-Qualified Leads (MQLs). But research shows that only 2% of MQLs convert to paying users.
Traditional outreach isn’t the best use of your team’s time. It’s inefficient, expensive, results in dismal closing rates, and demotivates your reps. On top of this, most prospects aren’t ready to speak to sales about your product since they haven’t even tried it yet.
Instead, the solution is to create a Product-Led Growth (PLG) funnel where sales reps target Product-Qualified Leads (PQLs) — leads that convert up to 15x better than MQLs.
You'll learn how to build a PQL funnel in this article.
Data infrastructure: key for tracking PQLs at scale
To identify your PQLs and provide qualified leads to your sales team, you need to capture relevant data and define what a PQL is for your company.
First comes your tech stack. You’ll need:
Software to capture and store product usage data.
A CRM for PQL management and analysis.
Tools for recording and understanding product interactions.
These are the absolute basics, but there are many other platforms you can use to improve your PLG processes:
Source: Product Led. A diagram showing tech stack options for PLG companies.)
When your data stack is ready, it’s time to define your PQL criteria. Most companies define PQLs based on firmographics and usage data, but adding traditional MQL scoring is possible if you want to refine your funnel and optimize your product marketing.
Your PQL scoring and criteria will be unique to your product, but they’ll fall under three major categories:
Customer fit. Here, you’ll analyze a user’s firmographics against your Ideal Customer Profile (ICP). Metrics include their industry, location, company size, and role.
Product usage. Usage is every action (or lack of action) a user takes. Actions can signal how much value a user is getting. Metrics include usage frequency, features accessed, and usage velocity. Since product usage data is usually very high volume, select specific key conversion indicators and group your data accordingly. You can build out product ‘scores’ similar to behavioral scoring with your more traditional marketing activities. Make sure to regularly test accuracy of your defined ‘high intent’ product usage behavior to increase conversion.
Quota usage. This can be anything from an increase of number of seats or users by organization to getting close to a limit on API calls or data storage. Driving continued product usage and building triggers for sales teams when limited quota is near can result in shorter deal cycles on average.
Buying intent. Intent is the final piece and signals that a user is ready to buy. Metrics include pricing page visits, interactions with Bottom Of The Funnel (BOFU) content, and quickly approaching usage limits.
You want to be strict with your PQL criteria rather than have sales waste their time with the "spaghetti at the wall" approach of cold outreach. You want your team to know what to address for a prospect to upgrade to a customer.
How to build a PLG funnel for your sales team
A sales-centric PLG marketing funnel needs to highlight leads that are ready for interaction.
Here’s how:
Step 1. Fix your mindset and define MQLs vs. PQLs for your business
For most companies, MQLs are the predominant lead type that sales reps receive. But with a PLG approach, you must focus on product-related interactions rather than marketing interactions.
Examples of product-related interactions include:
Invitations
Message sent
Projects started
Data uploads
Notification interactions
It will depend on your product, but usage criteria always revolve around the main features users can access. Some marketing-centric criteria are still relevant for PQLs, though. For example, viewing a pricing page, help docs, or content related to your product — especially if viewed after a user signs up.
Step 2. Merge your PQLs and MQLs into a comprehensive account view
Next, you’ll need somewhere to view the status of your leads. Not everyone will immediately become a PQL, so it’s still crucial to highlight MQLs that may be ready for the next step.
Depending on your CRM, you may be able to view this data with some additional development, or you may need a different platform. Either way, the main information you’ll want to see includes:
Whether the lead has engaged with your product
Overall ratings for MQL, PQL, and firmographic criteria
Specific criteria that a lead has met
Merging your PQLs and MQLs into a rolled-up Account (PQA) view in your CRM gives your sales and marketing teams a comprehensive way to understand intent beyond the individual level. Stitching product usage intent signals with marketing behavior gives you the full picture.
Step 3. Assign PQLs to sales reps
The final step is to have a smooth process for PQL assignment. If you have a small team, you can do this manually, but it’s a good idea to use automation to assign leads if you want your system to scale well.
Alternatively, you can pre-assign leads to reps and set up notifications when a lead is ready for contact.
Whenever you assign a lead or it becomes ready for contact, you must provide your reps with insights about the prospect. This information should include:
The features a user interacts with most
The most active users and product champions for enterprise accounts
The type of upgrade an account will most likely need (e.g., more seats or premium features)
What a PLG funnel looks like
A PLG marketing funnel is much like the traditional sales funnel, except the product plays a significant role in moving prospects down the funnel.
Source: Martech Zone. A diagram of the sales funnel with the stages awareness, interest, consideration, intent, evaluation, and purchase.
Here's how a PLG approach works in a typical sales funnel:
Awareness. You'll share content and score your leads through typical MQL criteria at this stage.
Interest. Awareness and interest are relatively similar in that consuming content is a prospect's primary focus. But you can move prospects into the interest stage when they consume a certain amount or type of content.
Consideration. A prospect reaches this stage when they've signed up for a trial or freemium version of your product.
Intent. If users engage substantially with your product during a trial, they'll quickly progress to this stage. Once here, you can gauge intent through the features a prospect uses and product-related content they consume. If they meet your PQL criteria, you can move them to the next stage.
Evaluation. Once a user meets your PQL and firmographic criteria, you can pass them to your sales team. Now armed with product usage information, your rep's job is to find the perfect solution for the account and show how upgrading will benefit their business.
Purchase and post-sale. The power of a PLG marketing funnel doesn't end once a user becomes a paying customer. You can assess product use and recommend extra features or cross-sell complementary products that are helpful to your customers.
The four different PLG sales funnels
While most PLG sales funnels follow the general structure above, there are differences in when and how reps interact with prospects. There are generally four different approaches:
The self-serve funnel. Self-serve funnels give full autonomy to users. Users control how and when they move down the funnel while engaging with the product and your company's marketing.
The sales-assisted funnel. This funnel is the simplest way for PLG companies to improve revenue. You bring users into the funnel with content and free trials, monitor their product usage, and then send in a rep to get the prospect over the line if they hit your PQL and firmographic criteria.
The bottom-up funnel. This funnel is for active enterprise accounts (PQAs), so you'll need to analyze product usage for many users before moving an account down the funnel.
The ABM funnel. ABM funnels also focus on enterprise accounts, except reps play a bigger role in moving accounts down the funnel. The main difference is that you'll need a concrete plan for educating stakeholders and convincing them to try your product.
How to use product signals to build outreach for SDRs, nurture programs, and in-app campaigns
Product signals are vital for moving users down your PLG funnel. You can also use them for retargeting and nurturing campaigns when you feel a prospect is losing interest or as signals for SDRs to contact a customer.
You can trigger outreach tasks for SDRs using certain product signals. For example:
When customers are trying to use features that aren't available.
When active customers reach the end of a free trial.
When users reach freemium account limits.
Other signals can trigger automated lead nurturing. For example:
Upon signing up, you target users with content relevant to their firmographics — for example, "X ways enterprise users can make the most out of product XYZ."
You run re-engagement campaigns for prospects who haven't used your product for x number of days.
Finally, you can target other signals with in-app prompts. For example:
You can prompt users to schedule a call with an SDR if they try to access a premium feature.
You can notify inactive users that they're not making the most of the product and prompt them to complete a task.
You can offer feature suggestions based on previous product usage.
What a PLG funnel can do for your sales team
A PLG funnel streamlines the sales process for your team. It also highlights the most engaged prospects to target, leading to increased conversions and faster sales cycles. So sales reps can spend more time selling and problem-solving rather than educating prospects.
Want to make the switch to product-led growth but don't have the time to implement it?
At Matter Made, we help B2B tech companies reach unicorn status through tailored product-led growth and RevOps programs.
