Nov 8, 2021

Every Monday I do a "MBA Monday" where I unpack an important topic in selling software and building a software company. You can read past posts here.

It's hard to find a B2B SaaS business that doesn't offer freemium or a free trial. If you're company is open source, then users may be deploying your product extensively without paying for it (yet). When your company is growing, those free users are your best sales leads. Let's see how GitLab turns their freemium users into paid users at an incredible win rate.

It's useful to define a product qualified leads (PQLs) for your product. Contrast this with potential leads from a form or ads, marketing qualified leads (MQLs).

GitLab has two types of PQLs

  • Usage-based: These are users who hit a certain threshold of product usage. GitLab uses historical data combined with input from product and sales teams to determine what this threshold is.
  • Hand-raise: Users who specifically request to talk to a sales person while using the product.

PQLs are often the bedrock of product-led growth, creating a virtuous cycle of delivering product, driving usage, and converting users to paid users or teams.

You can see GitLab's win rate for enterprise deals is best-in-class at 60%+. Not all of these are PQLs, but at the time a significant portion of them were. These users are often much easier to convert – they already use and love your product.