Leads can either skyrocket your business or bring it to its knees. It all depends on which leads you choose.

There are leads that look promising but are fleeting. Then there are the high-value leads—leads who are more likely to convert into paying customers.

In today’s post, we will review an innovative method for qualifying leads and talk about the hot topic in the SaaS industry—Product Qualified Leads (PQL) vs Sales Qualified Leads (SQL).

You’ll understand the difference between the types of leads and be able to reap their benefits. Ready, set, go!

An Introduction to Leads

Let’s start with the basics. A lead is a potential customer for your SaaS company. Your leads will either convert into your customers, or they will walk out of your business unsatisfied. It depends on the quality of your product and how well your services satisfy your leads.

If a lead walks out, don’t be discouraged. This lead might just be a bad match for your services.

Let’s look at who your leads are with an example.

You have launched an email segmentation tool for B2C clients. You email 100 people about your business. Out of them, 67 people plainly ignore your email, 30 people read your email but send it to the trash, and 3 people get curious about your tool and click on your CTA button.

These 3 people are your leads. Why? Because they showed interest in your business through an obvious action.

There’s no guarantee that all 3 leads will convert into paying customers. Before you invest your marketing and sales efforts into them, it’s essential you first qualify these leads. That’s exactly what we will talk about in the next section.

How to Qualify Your Leads in SaaS?

Generate leads first, then qualify them.

To generate leads:

1 – Capture your prospects’ attention with valuable content, such as blog posts, infographics, educational videos, or eBooks.

2 – Build your social media presence by using paid ads, publishing consistent content, or collaborating with influencers.

3 – Organize online and offline events to introduce and discuss your brand (preferably in an indirect manner—you don’t want to sound too salesy).

4 – Ask your existing customers for referrals and offer them incentives.

Position yourself as a helpful source in your market while you implement the above strategies. People will rely on you and eventually trust what you have to offer—your SaaS brand.

“The way you position yourself at the beginning of a relationship has a profound impact on where you end up.” – Ron Karr

To qualify leads:

Identify your prospect’s goals and what they are expecting from your services. If you think your SaaS product can offer them a solution, qualify them as your ideal customer.

For example, Glance takes the time to understand its leads’ requirements before arriving at a solution. This way, both Glance and the prospect know whether they are a good fit for each other.

When prospects sign up for a free trial of Glance’s services, they are asked to enter:

  • Their email marketing platform
  • Supporting channels they use
  • Email campaign goals
  • Ideal customer profile

Here’s a sneak peek into Glance’s welcome screen.

Representative Picture: Glance welcome screen – 1

Representative Picture: Glance welcome screen – 2

You can also ask your lead one simple question—how can I help you?–and proceed with your conversation from there.

Lead qualification is an essential aspect of the sales funnel. To understand it better, let’s talk about the different categories of leads—PQL, MQL, and SQL.

“By far the most efficient approach to deal with your leads is always to use a process that automatically brands you, supplies worth to your prospects, follows up with them, and sorts out the uninterested people” – MLM Lead Generation

What is PQL in SaaS?

A PQL, or product-qualified lead, is generated through your SaaS product. This means that your prospect experiences your product’s value firsthand through a free trial or freemium signup. If they hit a certain usage milestone with the free services, they are qualified as a product-qualified lead.

Having a large number of product-qualified leads tells you your product is valuable and in demand. It also means that you’ve targeted the right prospects—kudos to your marketing team!

How do you know if a lead is a PQL?

Your lead’s product usage insights can paint a good picture. If they are using your product or some of its features regularly, they might like your product and are more likely to pay for it.

For example, MailChimp lets you add 500 contacts on their free plan. If you exhaust this number, you are making good use of MailChimp services and might need more slots for your contacts. Enter MailChimp’s paid plans.

Because you hit MailChimp’s free contact limit, you become a product-qualified lead. MailChimp will contact you via email or call to notify you about your usage limit and prompt you to expand your plan. That’s how a PQL is pushed to the sales team to close a deal.

How to generate product-qualified leads?

Step One: Find your ideal customer profile (ICP). Ask yourself, what age group does my customer belong to? Where do my customers stay? Is my customer an individual or an organization? What is the customer’s profession? Is my customer’s pain point?

Step Two: Determine which features are most valuable to your ideal customer.

Step Three: Only offer one of those features for free, whether in a trial version or the freemium model.

Step Four: Limit the usage of the free features. For example, Loom, a popular video messaging app, lets you record only a 5-minute long video on their free plan.

 Representative Picture: Loom Pricing Page

What is SQL in SaaS?

Before we dive into SQL, let’s talk about its predecessor, MQL.

An MQL, or market-qualified lead, is a lead generated by your company’s marketing efforts. For example, a SaaS organization’s marketing team can put paid ads on social media, and users can click on those ads with the intent to explore your product.

Do you remember the last time you entered your email for a social media ad that said “free ebook on SaaS branding strategies?” That’s exactly how you turned into a market-qualified lead.

A market-qualified lead is not sold on your SaaS product’s value. Enter the sales team. They walk the market-qualified leads through the sales funnel until they close the deal—converting the MQLs to SQLs.

An SQL, or sales-qualified lead, is a lead to whom you can sell your services. Before you wonder, we are not talking about spamming people with calls and messages to ask them to buy your product. This is a person who is willing to speak to the sales team and make a purchase. That’s why they are a sales-qualified lead.

To generate SQLs, you can start with MQLs and refine them into SQLs. Even though your goal is to persuade an SQL to purchase your product, don’t try to push or manipulate them. This would damage your brand image for your leads, and they might walk away from your product in frustration.

Instead, highlight the ways your product will benefit them and why they should consider purchasing it. The final decision of whether or not to buy your product always remains with the prospect.

Know your SQL’s backstory. They might have encountered your product multiple times, heard good reviews about your product, or someone might have referred your product to them.

It is also possible that your SQL has previously interacted with your company through social media, online forms, or email, and they have received a positive response.

Your organization should have a clear separation between MQL and SQL. Look at MQL as a beginner’s level of interest and SQL as an advanced level of interest in your services.

To increase your chances of converting an SQL to a paid customer, educate your sales team about your lead’s score.

What is a lead score? It’s the value attached to your lead based on their actions. It helps you decide whether to focus your sales efforts on that SQL.

Some of the positive factors for your lead score are:

  • They have visited your website a number of times
  • They have downloaded content from your site
  • Their job title matches your ICP
  • They took part in your free webinars

Some of the negative factors for your lead score are:

  • They unsubscribed from your monthly newsletter
  • They stopped using your free trial plan
  • They don’t fit anywhere in your ideal customer profile

The Main Difference between PQL and SQL

For a PQL, the prospect’s product usage data determines when the lead is ready to invest in your services.

For an SQL, the marketing team qualifies MQLs based on their interaction with your brand and determines if they are ready to be transferred to the sales team.

The PQL has already used a slice of your services and, based on that, decides whether to make a purchase or not.

SQLs might or might not have used your services before. The quality of your sales team’s efforts decides whether the SQL will purchase your product or not.

A PQL may or may not want to talk to the sales team to make a purchase.

A SQL wants to talk to the sales team before making a purchase.

For a PQL to generate revenue, your product must be top-notch. The product is the main driver behind your brand’s success.

Your sales team must be exceptional for a SQL to generate revenue. The sales team is the main driver behind your brand’s success.

Focusing on generating SQLs is ideal when your SaaS business is advanced, complex, or proprietary software that can benefit medium-sized or large enterprises.

If your target clients are individuals, small businesses, startups, or boutique agencies, sticking to PQL is ideal. PQLs can also come from large enterprises.

Customer acquisition costs (CAC) are generally lower for PQLs than SQLs.

How Does PQL Matter to Your SaaS Business?

PQL is an example of how customer acquisition has changed in recent years. There are so many product options that prospects want to try before they buy your services.

A PQL paves the way for product-led sales. You know which leads to focus on. And it makes your sales team’s job easier when your prospect already understands your product’s value.

Sales calls can be shaped by your lead’s product usage. The sales team will know what words help a prospect decide to buy. And product-led sales raise the likelihood of free-to-paid conversions.

If you nurture your PQLs, they can convert into high-value and long-term customers. And they can provide you with valuable feedback for your product to make it better.

How Does SQL Matter to Your SaaS Business?

Sales-qualified leads are more likely to buy your product than random leads. They are sales-qualified leads because they have met certain conditions and are now targeted to be approached by sales.

The criteria that qualify an SQL can vary from business to business, but these four things are always true:

  1. SQL has the budget to purchase your product.
  2. SQL is the person in charge of making a purchase
  3. SQL voluntarily showed interest in making a purchase of your product. For example, they’ve scheduled a call with your sales team or asked for a quote.
  4. Your services have been proven to meet their needs.

When you focus on SQLs, you don’t lose potential leads. The marketing team passes a potential lead to the sales team. If the sales team finds this lead weak, they can discard it or send it back as an MQL for further nurturing. This way, there is a positive tension between the marketing and sales teams. Darwin’s theory even applies to sales – the survival of the fittest (lead).

By only focusing on the SQLs, your sales team is productive and efficient in closing deals.

Tips to Optimize PQL for Your SaaS Business

If you have a product-led growth business, follow these tips to optimize your PQLs:

#1 – Track your PQL journey on your product. Ask yourself, is this customer actively engaged with my product? It will show you what stage your PQL is at in the conversion funnel.

#2 – Segment your leads based on their key metrics such as product usage, location, or needs. Make use of a platform like Glance, which automatically creates hyper-segments for your SaaS context, using your first-party data.

Glance also provides you with content suggestions for the buyer’s journey. You’ll know which marketing efforts to use for each lead to push them to the bottom of the conversion funnel.

#3 – Nurture your PQLs. Establish consistent communication with them through content sharing, resource sharing, personalized emails, or one-to-one contact. The aim is to show your PQLs that you care about them, so they will reach out to you for a purchase when the time is right.

Tips to Optimize SQL for Your SaaS Business

Optimize your SQLs to push them down the sales funnel so they eventually make a purchase. Here are some tips:

#1 – Get familiar with your SQLs pain points and provide an effective solution to them. Offer surveys, track their product engagement, or talk to them directly to understand their challenges and what’s stopping them from making a purchase. Then, provide customized solutions for them.

#2 – Use chatbots for an instant reply to their standard questions. When your sales team is occupied with some other task, a chatbot can signal to your SQL that they are heard. It holds your lead’s until you can offer personal service.

“It’s about caring enough to create value for customers. If you get that part right, selling is easy.” – Anthony Iannarino


PQL, MQL, and SQL are three different categories of leads. They are equally important—no one is less than the other.

We hope these tips help you understand the importance of leads, and how to structure them for your SaaS business. If you are looking for more advice on how to qualify your leads, or how to structure your leads for specific SaaS stages, contact us and we’d be happy to help.

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