Why defining PQL Metrics is essential for PLG success?

PLG GTM motion requires a different way to think about sales!

​You can't just throw AEs at PLG signups and hope for magic (ARR) to happen - Andreas Wernicke

This is a soundbite that I came upon on talking with Andreas. A couple of weeks later we did a webinar explaining the concept of PQL Metrics in more detail based on the wonderful analysis that Andreas has put together about why 'large number of signups at PLG companies can be deceiving'

Introduction

In the new age of sales, the key focus is to create a pull model. Where inbound marketing creates a lot of qualified visitors and generates a large number of recurring sign-ups. The hope is that many of these sign-ups will automatically and on a regular basis convert to paid customers.

As Andreas Wernicke demonstrates in the webinar even with a large number of signups the number of qualified leads tends to be thin that sales can act on.

So Let's dig in

• Let's say the number of sign-ups is 10,000/per month
• This means that you have 2500 signups/per week
• Or 500 a day

500 Sign ups seem like a lot in a day but you are putting a few PQL metrics in there. So for example, even if we take

• 80% of these signups have business emails – 400 users remain
• 20% are active after Day 1 – 80 users remain
• 20 % are active after Day 7 – 16 users remain
• 20% have done high-value actions – 3.2 users remain

The valuable number of signup quickly come down to a handful of leads. Even if you assume that sales close these leads at 50% efficiency it comes down to 1.6 customers a day. This is the reality faced by numerous PLG startups.

So instead of hiring AE's based on the number of Sign ups. Defining Product Qualified Lead metrics is a much better indicator of how many AE's you need.

What should you do?

As was shown above going by signups to staff your Sales team can be very misleading.

The first step for a RevOps Leader is to define PQL metrics, such as:

1. Number of users who do successfully sign in and see the demo?
2. Number of users who connect at least one data set?
3. Number of users who create a single persona/template?
4. ... so on and so forth

Only after creating, observing and measuring the user flow through these gates, you can identify qualified leads coming through that can be converted by the sales team.

How to measure qualified leads?

The new age of selling is all about building relationships. There are so many tools and techniques salespeople can use to build relationships with their clients.

Relationship-based selling requires more time and effort, but the payoff is worth it. Salespeople need to be genuine and authentic in order to build trust with their clients

For the above two reasons sales people in PLG companies cannot be compensated based on just ARR but need to have a generous sprinkling of product sense. They need to be able to pinpoint the challenges users face and get product features implemented that allow for smoother progression of users within the product.

To Summarize

1. Salespeople need to be part sales and part product in their mindset.
2. They need to be measured based on just ARR! A company-wide component may be the better incentive.

With the right, PQL Metrics in place and the product focussed AE's magic can happen!