Category: KPIs Library.


Understanding and utilizing Key Performance Indicators (KPIs) is essential for business success. One such KPI that has gained significant traction, especially in the SaaS (Software as a Service) industry, is Product Qualified Leads (PQLs). Let’s look into PQLs, how to calculate them, and their importance through real-life examples.

What are Product-Qualified Leads, and Why do they Matter?

Product Qualified Leads (PQLs) are leads who have used your product and shown a high level of interest and engagement with its features and benefits. They are different from Marketing Qualified Leads (MQLs) or Sales Qualified Leads (SQLs), who are based on demographic or behavioral criteria but have not experienced your product yet.

PQLs are important for marketing because they indicate a higher likelihood of converting into paying customers, as they have already seen the value of your product first-hand. PQLs can also help you reduce your customer acquisition cost (CAC), increase your customer lifetime value (CLV), and improve your customer retention rate.

How to Identify and Track PQLs?

To identify and track PQLs, you must define the key actions and metrics that indicate product usage and engagement. These can vary depending on your product type, industry, and target market, but some common examples are:

  • Number of logins or sessions
  • Time spent on the product
  • Features or modules used
  • Feedback or ratings given
  • Referrals or invites sent
  • Upgrades or purchases made

You can use a product analytics tool like Mixpanel or Amplitude to track these metrics and segment your users based on their behavior. You can also use a customer relationship management (CRM) tool, such as Salesforce or HubSpot, to sync your product data with your sales and marketing data and assign scores or statuses to your leads based on their product qualification.

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How to Nurture and Convert PQLs?

Once you have identified your PQLs, you must nurture and convert them into customers. You can use a variety of marketing strategies and channels to do this, such as:

Email marketing: You can send personalized and relevant emails to your PQLs, such as onboarding tips, feature highlights, case studies, testimonials, or special offers.
In-app messaging: You can use in-app messages or notifications to communicate with your PQLs while they are using your product, such as welcome messages, product updates, feedback requests, or upsell prompts.
Content marketing: You can create and share valuable and engaging content with your PQLs, such as blog posts, ebooks, webinars, podcasts, or videos, that showcase your product’s benefits and best practices.
Social media marketing: You can use social media platforms, such as Facebook, [Twitter], or [LinkedIn], to connect and interact with your PQLs by sharing content, answering questions, or joining conversations.
Live chat or chatbot: You can use live chat or chatbot tools, such as [Intercom] or [Drift], to provide real-time support and guidance to your PQLs, such as by answering queries, resolving issues, or booking demos.

The formula for Identifying PQLs

There’s no universal formula for determining a Product Qualified Lead (PQL), as ideal criteria can vary depending on your product, target audience, and business goals. However, several frameworks and metrics can help you build your PQL definition. Here are some key factors to consider


Feature Usage: Track what features users engage with and for how long. Define specific usage thresholds that indicate deeper product exploration and potential value realization.
Activity Level: Monitor user actions like sign-ups, logins, page views, and product interactions to identify active users demonstrating sustained interest.
Time Spent: Analyze the time users spend exploring your product or completing key actions. Higher duration could indicate increased product familiarity and potential conversion intent progress.
Goal Completion: Track user progress toward specific desired outcomes within your product. Completing key milestones could suggest that users are finding value and moving toward paid conversion.
Trial Utilization: If you offer a free trial, monitor trial engagement and progress towards trial goals. Reaching specific usage milestones or completing key steps could signify PQL potential.

Data Analysis

Conversion Rates: Analyze historical conversion rates for user segments based on engagement and activity levels. Identify patterns and identify user behaviors that strongly correlate with conversion.
Predictive Modeling: Utilize machine learning tools to analyze user data and predict the likelihood of conversion. Develop scoring models based on identified key factors to prioritize leads with higher PQL potential.


Determine which actions or behaviors within your product indicate a high interest in purchasing.

  • Number of logins or sessions
  • Usage frequency (e.g., daily, weekly usage)
  • Engagement with key features
  • Achievement of certain milestones (e.g., completing a trial period, reaching a level in a game)
  • Usage of premium or advanced features available in a free trial

An example formula might look like this

PQL Score = (Frequency of Logins * X) + (Key Features Used * Y) + (Milestones Achieved * Z)

Where X, Y, and Z are weights assigned based on the perceived value of each action.
This formula will differ from company to company. Some might place more emphasis on certain features over others or might consider additional factors like user feedback, interactions with customer support, or even integration with other tools. While the specific criteria for a PQL can vary depending on the product and company, a general formula might look like this:

PQL=User Engagement Score×Feature Usage Frequency

This formula considers how engaged a user is with the product (measured through metrics like time spent, feature interactions, etc.) and how frequently they use key features indicative of buying intent.

Measuring Product Qualified Leads (PQLs) KPI with OKRs

Measuring Product Qualified Leads (PQLs) as a Key Performance Indicator (KPI) using the OKR (Objectives and Key Results) framework involves setting specific, measurable objectives and identifying key results to track progress towards these objectives. Here’s an example of how this might look:

Objective: Increase the Number of High-Quality Product Qualified Leads (PQLs)
KR 1: Improve Lead Quality Scoring System from 50% to 75%

Initiative 1: Implement machine learning algorithms for more accurate lead scoring.
Initiative 2: Conduct bi-weekly team reviews of lead scoring criteria and adjust as needed.
Initiative 3: Gather feedback from sales teams to refine scoring parameters.

KR2: Enhance Lead Engagement through Targeted Marketing Campaigns from 30% to 50%
Initiative 1: Develop personalized content based on lead’s interests and interactions.
Initiative 2: Optimize email marketing campaigns for higher open and click-through rates.
Initiative 3: Implement A/B testing for different marketing strategies to identify the most effective approaches.

KR 3: Increase Lead Conversion Rate from 10% to 20%

Initiative 1: Streamline the sales process for a faster and more efficient customer journey.
Initiative 2: Enhance sales training with a focus on converting PQLs.
Initiative 3: Utilize customer feedback to improve product offerings and align with PQL expectations.

Real-Life Examples of PQLs

Here are some real-life examples of how some companies use PQLs to grow their business:

[Slack], a collaboration software, uses the number of messages sent, the number of active users, and the number of integrations as PQL metrics. It also uses email and in-app marketing to nurture and convert its PQLs into paid customers.

[Dropbox], a cloud storage service, uses the amount of storage, the number of files shared, and the number of devices connected as PQL metrics. They also use referrals, upgrades, and discounts as incentives to convert their PQLs into paid customers.

[Netflix], a streaming service, uses the number of hours watched, the number of titles viewed, and the number of profiles created as PQL metrics. They also use personalized recommendations, ratings, and reviews to engage and retain their PQLs as paid customers.


Product Qualified Leads have used your product and shown a high level of interest and engagement with its features and benefits. They are important for marketing because they indicate a higher likelihood of converting into paying customers, as they have already seen the value of your product first-hand. To identify and track PQLs, you must define the key actions and metrics that indicate product usage and engagement. To nurture and convert PQLs, you need to use various marketing strategies and channels to communicate and interact with them. Using PQLs as a marketing KPI, you can optimize your marketing efforts and grow your business.

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