From Signups to Sales: How to Define and Use Product Qualified Leads (PQLs)

Bridging the Gap Between Product and Pipeline - For PMs who want to power revenue, not just releases

In most SaaS businesses, growth looks deceptively simple: get users in the door, show them value, and convert them into paying customers. But somewhere between acquisition and revenue, the funnel clogs. You have leads, but not buyers. You have usage, but not commitment.

That’s where Product Qualified Leads (PQLs) come in.

If MQLs (Marketing Qualified Leads) are about interest, PQLs are about intent. They signal who’s not just browsing, but who’s buying. They show you which free users are serious, and which ones to hand to sales before they even ask.

Not only do PQLs drive your business, they also play a key role in bringing the R&D and sales organizations closer together. There is better understanding across the organizations, greater alignment on goals and objectives, and deeper trust throughout.

Your Customer - Sales People!

Before we get into the specifics of a PQL, we need to understand our customer. No, I’m not referring to the person using the product and paying for it. I’m talking about the person who is going to use the PQL - the sales team. In my career, I have come across too few product-people who have an appreciation of what sales actually does, how they do it, and how hard it is.

We need to understand this to ensure we’re producing PQLs sales can and will actually use. With this appreciation, you’ll be in better shape defining and executing a PQL generation strategy. So here is a very, very brief primer.

Why Should a PM Care?

The role of Product Management is constantly evolving, and it’s happening again. With greater emphasis on how the product impacts the business, PMs should already be looking at how they can drive unit economics. This transition has been accelerated in the era of AI. When a GenAI model can formulate a pretty good set of user journeys in the blink of an eye, PMs need to be looking out more to the business as a whole and not just at users and features.

With that in mind, why should you care? We want to get better at generating PQLs to drive up the sales person’s close rate because that will lower Customer Acquisition Costs (CAC) and ultimately shorten your CAC Payback period. A key unit economics metric your board and investors track very closely.

Key Characteristics of the Best Sales People

The best sales people are not just good with people. They are incredibly process oriented, metrics driven, pragmatic, and ferociously driven. They are also ridiculously busy. Especially in the final 3 weeks of any given quarter. They have high quotas they are motivated and incentivized to hit and exceed.

If a PM doesn’t ship a feature on-time, there’s a bad performance review. If a salesperson doesn’t hit their quota (repeatedly), they are fired. Let that sink in and then please, go into your next sales meeting with patience and appreciation for what these folks are up against.

🎯 Sales Runs on MEDDIC - and PQLs Help Fill the Gaps

If product teams obsess over usage metrics, sales teams live and die by qualification frameworks. One of the most enduring is MEDDIC. This is a simple but powerful structure for assessing deal readiness and predicting close likelihood.

As with any good product person, sales folks think in terms of processes and they are constantly refining and improving the MEDDIC framework. Books have been written. But I’ll keep this short.

MEDDIC stands for:

• M - Metrics: Quantifiable results or improvements the customer wants to achieve, such as increased revenue or reduced costs.

• E - Economic Buyer: The person within the customer's organization who makes the final purchasing decision.

• D - Decision Criteria: The specific factors the customer considers when evaluating potential solutions, such as features, pricing, or ROI.

• D - Decision Process: The customer's internal process for making decisions and approving purchases, including stakeholders, timelines, and paperwork.

• I - Identify Pain: The customer's critical challenges and pain points that a product or service can address.

• C - Champion: An internal advocate within the customer's organization who supports the solution and helps navigate the decision-making process.

This is the lens through which every good salesperson evaluates an opportunity. But here’s the catch: sales rarely meets a lead with all this info on day one. They have to uncover it.

That’s where Product Qualified Leads (PQLs) come in.

PQLs don’t just show usage, they signal intent and potential. I roll both of these into a tidy qualification, the user’s propensity to buy. That’s ultimately what we’re trying to get to. PQLs help BDRs (Business Development Reps) or AE (Account Executives) prioritize who to talk to, with what message, and when. A well-crafted PQL surfaces:

• The problem the user is solving (Pain)

• The depth of engagement (likely Champion)

• The urgency or outcome they care about (Metrics)

• Even who might be the buyer (via account signals and firmographics)

Instead of chasing cold leads, sales teams can lean on real product behavior. What users actually do helps the sales organization focus their efforts. That makes their outreach sharper, their pipelines cleaner, and their close rates higher. (See above re. CAC Payback Period.)

In a sales motion governed by MEDDIC, PQLs are the pre-qualification engine. They reduce guesswork, tighten alignment with product, and help reps build the right narrative faster.

And in high-velocity or Product-Led Sales, that’s the difference between hitting quota and missing it. It’s the difference between a sales person hitting their quota, or getting fired. Because sales, especially in startups, is a high stakes game. “Hit your numbers or hit the road.”.

With this as context, I’ll now walk you through how to define, implement, and operationalize PQLs in your SaaS funnel. Including where PQLs fit in the acquisition funnel; How to identify and score them; What collaboration between Product and Sales should look like.

Let’s dig in!