Educating your target market with Appcues' Jackson Noel
Educating your target market with Appcues' Jackson Noel
Jackson Noel (00:03):
If I'm really being intellectually honest about that position, we're probably inches ahead today not miles ahead. It's our job to make that differentiation way clearer than it is today that, anybody can look at our market and say that, wow, Appcues is not inches ahead they are miles ahead. They're doing stuff that's very innovative. That's very different.
Peep Laja (00:27):
I'm Peep Laja. I don't do fluff. I don't do filler. I don't do emojis. What I do is study winners in B2B SaaS. Because I want to know, how much is strategy? How much is luck? How do they win? This week Jackson Noel, co-founder and CEO of Appcues, a product onboarding and adoption platform for product led companies. Since being founded in 2013, Appcues has served over 4,000 customers and reached over 200 million end users. They continue to grow recently announcing a successful series B funding round raising 32 million dollars. In this episode, we discuss how they build brand awareness and authority through a robust content strategy and how they're focusing on being a specialist in a market where competitors go wide. Let's get into it.
Jackson Noel (01:14):
Appcues was really born out of the pain that both myself and my co-founder felt. My co-founder, Jonathan, was an engineer at HubSpot. He grew frustrated that users weren't discovering the features that he was working on and at the time, HubSpot really relied on their excellent support and services team to hop on calls with customers and walk them through all the functionality of the product. And in parallel with that, I was a growth marketer at the very early stages of growth at an Ad tech company and I started off by focusing a lot top of the funnel, you know, really dialed in our ad campaigns and our website conversion and then, as you may expect, users were signing up for the product and just like falling completely flat on their faces.
Jackson Noel (01:58):
And so, I shifted my focus to work on activation. And when I did that, you know, was experimenting with our onboarding... Our in product onboarding and felt the frustration firsthand that, unlike everything I was doing top of the funnel, there was just zero tooling to help us move faster. You had to start by writing a Jira ticket, wait a couple weeks for it to get picked up, wait a couple weeks for it to ship, wait a couple weeks for it to measure. It just felt like there had to be a better way to do this. It was those shared frustrations that really brought Jonathan and I together to get Appcues off the ground.
Peep Laja (02:33):
So you started because there was nothing. How long did it take for competition to spring up?
Jackson Noel (02:39):
When we started, there was already one incumbent, I guess, in the space called WalkMe. You know, now I think the market has developed where, you know , there are a lot of different people doing what we do today. Some of that happened in our first year, first two years, but I think it's actually accelerated a lot where, over the past few years, it just feels like there's a new competitor popping up every month or every quarter.
Jackson Noel (03:06):
(Upbeat music)
Peep Laja (03:09):
If you look at the SaaS landscape in general, over the last 10 years, the number of SaaS companies has increased about 50 times. That's a lot of competition. When winning on product was a viable strategy 10 years ago, it's increasingly hard today. Most every competitor has every feature. So, what should you do when you admit to yourself, we're actually not that different from our competitors? I confronted this myself when I was looking at my company CXL and E-learning platform for marketers. I came to the realization that we weren't that different from others out there. Well, sure if you had 20 minutes, I could tell you how we're different and why choose us. But if you only have a fleeting moment, you come to the website and you want to quickly understand what we're about and what sets us apart, the differentiation is, subtle. If you're in the same boat, here's what you need to do.
Peep Laja (03:57):
You need to build a vision of your company, where you are unique. What would that look like? What kind of a cornered resource would you need to get? What kind of a mode would you need to have? What kind of a game do you need to play to win? That will become the roadmap for your business. It's your destination. Something you start building towards. It might take years, but it's worth the pursuit. What is the story you want to tell to the market? As Ben Horowitz from the VC firm and recent Horowitz has said, "your story is your strategy".
Speaker 3 (04:30):
Most companies, they, oh, well the story that's just like, whatever. That's like a marketing thing, but it turns out that the story of the company, the long version, the 30 minute, hour, two hour version of the story is the strategy. However you describe your company at length, that's the strategy. And so if you don't have a great story, you don't have a strategy that people in your company actually understand and that's a huge mistake that CEOs make all the time because your culture has to support your company and just an example on this. So, Amazon, which is like one of their cultural elements is frugality. They used to give you a door on two by fours and that was your desk just to let you know they were cheap, but their company strategy was to be the price leader in retail. And so that went together.
Peep Laja (05:22):
So you built the first version of Appcues... How long did it take before you achieved some success?
Jackson Noel (05:31):
We built the first version of the product and we're frankly like having trouble gaining traction with it. You know, we had some early sort of friends and family customers who were, you know, beta customers giving us feedback. The initial point where we start getting traction is we decide to start marketing during this, the very inception days of having that product. And, and we started writing something called the user onboarding academy because we, again, we were having trouble getting people to latch onto this. So we were just like, okay, let's just go start writing and evangelizing this problem. Getting more people interested in it, trying to shift the focus of the market. I remember we wrote a few posts and we were like four posts in.
Jackson Noel (06:12):
And I think our fifth post went viral on hacker news and growth hackers at the time, which was a big community back then and we got like 1500 blog signups in the course of a couple months after starting to write that. And that's when we really knew that we were onto something, we were just generating a lot of buzz and noise and dozens of customers at that time for the product.
Peep Laja (06:35):
What channels of, you know, besides, those viral hits, what other channels did work for you back then? And how has that changed over the years?
Jackson Noel (06:43):
We've really stayed committed to content marketing and to, you know, evangelism and education of the market. The great thing about content marketing is it compounds over time, right? So we started writing in 2014 to a certain extent. We're, we're still seeing the benefits of some of those even early pieces that we wrote seven years ago, eight years ago. That's the core of our demand function today, right? And we've augmented that with ,you know, some events and a very small amount of outbound. But most of our demand in marketing really comes through content.
Peep Laja (07:16):
Appcues is not an exception here. Content marketing has fueled and is still fueling most SaaS companies out there. The trouble is that if you are a new startup, banking on content is not going to deliver results right away. Newcomers won't rank for much due to low domain authority, because the old guard, the company's been around for years have all the back links. And so they will outrank you for pretty much everything. Before you can start competing for rankings, you need to earn attention and back links. That being said, if you can afford it, start investing in content as early as you can. While it's not going to pay the bills today, it can be massively impactful three years from now. You have to think long term as run law, the be of content that animals explains.
Speaker 4 (08:01):
Yeah, I think that's where the kind of better ROI of content comes in. It might be in the early days you publish a blog post, you spend a fixed amount and you get maybe like a hundred visitors from it over a certain period of time. Do that same blog, post same amount of effort three years later and that could generate you hundreds of thousands of visitor is over the same period of time. The content isn't, you know, it's not like a thousand times better. It's just the product of all the other content that's come before it has fueled it to this new height
Peep Laja (08:30):
While building Appcues and planning your, you know, next move, how much attention to pay to competition and does that influence your decisions?
Jackson Noel (08:40):
I like to think of it more as market awareness, rather than awareness on competitors. We are aware of what our competitors are doing, but I think that there's a fine line between that awareness and getting distracted by it. We always want to be... Know what we want to be best at and when a competitor, you know, releases a feature or does something that we're not doing, that's just the tip of the iceberg to understanding our market better. So the next thing that we want to do, you know, if we see signal that, Hey, we're losing deals to this competitor because of this reason, let's not get distracted by that particular competitor or that particular feature, but let's dig in deeper. Let's go talk to their customers. Let's find out, you know, what they like or dislike about that. Let's inform our roadmap and prioritize our roadmap based on what we hear from those customers or what we hear from the market. Not just what we see a competitor doing.
Jackson Noel (09:36):
(Upbeat Music)
Peep Laja (09:39):
Companies focused on just what the customers want end up building identical solutions to the competition because the market gives you category level insights. When Tesla was conducting focus groups with mobs about their model X, they learned the exact same things to you to learn when doing research for Sienna. If you just follow what the customers are saying, you're gravitating fast towards sameness. You need to have your own brand vision, your own point of view. And then you mix it in with awareness of your customers and awareness of your competition. It's hard for you to take a differentiated position in the market if you don't know what others are doing. Knowing where your competition is rock solid and choosing to focus on the areas they're the weakest, or not choosing to compete with the strengths, is one competitive strategy play. Here is Alex Smith, strategist and founder of basic arts describing a compelling example of how this strategy could have played out in the real world.
Alex Smith (10:35):
If competition creates clustering, then, sort of goes out saying that refusing to compete creates declustering. Businesses separate from each other and the market, rather than them all competing over the whole pie, it becomes portioned with each business kind of looking after its own separate world garden within it. And if you think about it, this is effectively what the iPhone did, right? Like they didn't come in and try to be good at the things that NAIA were good at. They just looked after their own piece. Now, if you were Nokia in this situation, and if you were looking at things in a non-competitive manner, actually the emergence of the iPhone, would've been great news for you. I mean, this is fantastic. We can now use apple as a counterpoint with which to strengthen our own position and amplify our own attributes.
Alex Smith (11:25):
So, our job from this day forward is actually very easy. Everything apple do, we do the opposite. We both can thrive. Now I know what you're thinking. If you portion the market like this, aren't you limiting your growth? Aren't you putting a cap on your potential market share? Well, you know, perhaps, but that really doesn't matter. Because it is far easier and far more valuable and far more profitable to own a pocket of the market in a non-competitive monopolistic sense than it is to be competing over the whole pie.
Peep Laja (11:57):
As you said, there's a bunch of companies doing the exact same thing as you guys are doing and the new ones propping up. What have you guys done to succeed where others haven't succeeded as much?
Jackson Noel (12:11):
From the product stand point, we've really just tried to narrow down what we want to be best at and, we want to be the best experience builder in the market. And so, we've tried to double and triple down on design flexibility, being the most important parts of Appcues. This is a journey we still have a lot more to go there, but in these crowded markets, I think it's really important to just make sure you're aware of how you want to distinguish yourselves and stay very focused. Going back to those early days of Appcues, when we started writing the user onboarding academy, I think we learned so much what evangelism and educating the market can do for our business and do for our brand position. We are recognized as, as leaders in the space we hear from customers all the time that they find us through our blog,
Jackson Noel (13:06):
That they love what we've written that, you know, even well before they signed up for the product or certainly became a customer that they were using things like our product launch planner, that they were, you know, learning with our user onboarding academy and stuff like that. So, we have elevated our brand in a way that has separated us from certainly some of the newer players on the scene.
Peep Laja (13:30):
When the category is only emerging, all the BCS up in the air and there's a land grab, wherever gets big first, wins. Small brands need to be two to three times better than established big brands just to compete. Goes for B2B soccer, as well as, social media influencers. Gary Vee can tweet, "go get it!" And get 100,000 shares and you can craft the most insightful post ever and get like 19 likes. It's an example of the double jeopardy law in action; small brands are always punished twice. They have fewer buyers and those buyers buy less. Large brands have the most mental availability, inputs. And if they were early to the scene, they're likely also have the most content ranking on Google. Making it easier to find them. People are not com pairing every single vendor out there when making purchasing decisions. They satisfy; meaning ,they choose a good enough option from a small consideration set comparing brands they have heard of.
Peep Laja (14:26):
The momentum is on the big brand side and they keep winning, even if the product is no better than the alternatives. Smaller brands need to try much harder and deliver way better work to have a fighting chance. Hence, the idea of emulating the top brands is a road to nowhere. Those companies only show you the benchmark to beat.
Peep Laja (14:46):
Tell me about your pricing strategy and what was the thinking there?
Jackson Noel (14:49):
We have customers with five employees who sign up completely no touch through a free trial. They're paying us a couple hundred bucks a month on a credit card, all the way up to some very big fortune five hundreds enterprise companies who, who are paying us six figures a year. So, our pricing strategy, which by the way, is not perfect and we'll continue to tweak it as we go, is really... We're trying to capture our customers at all sorts of different price points with our essentials plan. That is really meant for those small startups, our growth plan, which is meant for mid-market growing companies and then our enterprise plan at the top and so, I think we've taken a lot, lot of inspiration from some dev tools. You know, you think about a company like Twilio or Datadog, you know, these are companies who have, you know, hobbyists paying them tens of dollars a month, all the way up through enterprises who are paying them probably millions of dollars a month and we're really trying to achieve the same sort of breadth in our pricing as well.
Peep Laja (15:52):
Pricing is a huge growth lever, hard to get right. When I ask my audience how most companies set their pricing, 78% do it by looking at competitor pricing. If you're a new entrant to the market, you can start with lower pricing as your competitive advantage and even differentiation, but without structural advantage, it's not sustainable. Cutting price is insanity if the competition can go as low as you can. Being priced higher will give you better margin and attract richer customers. The good thing is, you don't necessarily need to get your pricing right from the get go. ProfitWell CEO Patrick Campbell explains why it's okay to be tweaking your pricing as you go like Appcues is doing.
Patrick Campbell (16:32):
Try saying monetization. So remember, it's more than just the price. It's all this other stuff as well. It should be a, for lack of a better phrase, lifelong journey. You should be optimizing over time. Now, in the earliest of stages, don't worry about the specific price point. What I like to say is, figure out your value metric, cause that probably won't change in the entire history of business, unless there's a major upheaval of your industry and then figure out for this type of customer, whoever you think you're going after, are you a $10 product, a hundred dollars product, a thousand dollars product, a 10,000. Like figure out where do you fit in that particular spectrum? Because those are the two things that are going to heavily influence you in the early stage and then the other stuff like over time should I put each here or there. You can figure that stuff out over time as long as you have like, Hey, I should be doing something with my monetization every three months, at least.
Peep Laja (17:22):
So, you guys recently raised a new round of money. So with this cash in the bank, are you betting more on building more product? Looking at what let's say depending what we are doing and becoming a bigger suite of tools or you focus more on brand? What are you betting on?
Jackson Noel (17:42):
As SaaS businesses scale, brand becomes much more of an emphasis. It will become more of a focus of ours going forward. And, I think the cornerstone of that brand is some of the content and evangelism that we've done, right? We've created a brand where people associate us as sort of trusted experts, domain experts in these topics and, that's how we want to continue building that. But the number one focus is product. We still have a ton of product to build. If you think of what the core problem that Appcues solves today is around improving adoption and that's done, you know, with user onboarding, ongoing lifecycle engagements, feature announcements, what have you? I think the story of where our product is going in the future is moving beyond adoption.
Jackson Noel (18:36):
And solving more problems for our customers and solving those alongside our first module of adoption. We will be expanding the footprint of the Appcues product but, unlike what some other people have done, where they've expanded sort of outside of the product experience, way more to analytics and road mapping and things like that, where we feel that there's still a ton of pain that manifests for our customers inside of their products. We want to solve more of that pain and grow our footprint that way.
Peep Laja (19:11):
So you've been at it now what like eight years or something? Or more even. Which bets did not pay off? What are some of the regrets?
Jackson Noel (19:20):
One, I'll go back to the early inception stage, right? We had a handful of early adopters. We started writing the user onboarding academy and we got out to our first 30 customers let's call it. These were all very sophisticated practitioners. They were power users of other product tools, analytics suites, things like that and they came in knowing exactly what they needed to improve, right? They really had their metrics and their analytics dialed in. And then as we started scaling, we started bringing on customers who weren't as sophisticated. And some of these customers like weren't using analytics and we would get these questions like, well, how do I know if this is working? Or how do I even know what to improve next? Like, I don't know which features actually correlate with long term retention or activation or, what have you. And a bunch of them, you know, kept asking us like, "Hey, why don't you guys build analytics into Appcues?"
Jackson Noel (20:19):
And this was right around the time amplitude came out with this free tier for up to 10 million monthly events. And at the time it was, it was really disruptive to some companies who were already in that space. You know, companies like Kissmetrics was big at the time, Mixpanel. We sort of looked at what was happening in that market and we said like, we think product analytics will become like, just as ubiquitous as web analytics, right? Like every website is using Google analytics or something. And if the analytics side is just going to become a race to the bottom, why don't we just not do any of that, pursue a partnership strategy and just focus on, the experience builder and being the best there. I think looking back on that we were wrong that product analytics would become completely ubiquitous. There's so many people still today who are using Appcues and don't really know what their metrics are and what they're trying to move.
Jackson Noel (21:22):
So we looked at our metrics, you know, our retention metrics and customer satisfaction metrics. And, and we saw that, okay, companies that are using us in tandem with a heap or a mixed panel or an amplitude, frankly, their retention is way stronger. Those customers are happier, but only 60% of our customers are, you know, have one of those tools. Ultimately, what we had to do is we had to backtrack on that decision a little bit and, our vision is still not to become an analytics company. But I think what we learned is that focus is great, but we also need to provide a complete solution. You know, you can't improve what you can't measure in the first place. And we can't, we also can't outsource our success to as somebody else, right? We can't say, "Hey, we're not going to be successful unless Amplitude or Heap or Mixpanel are going to be successful.
Jackson Noel (22:17):
And I think in those early to mid days of Appcues, because we decided to just completely ignore analytics using Appcues was somewhat akin to, if you were using Mailchimp, but you didn't know who you were about to send emails to, and you didn't know how many people received them and whether they became customers and what the downstream effect was. And so, you know, we started building more analytics into Appcues today. It has not been so much like a pivot of like, Hey, we need to go into the analytics space. It has just come with the goal that we need to provide a complete product.
Peep Laja (22:58):
Strategy is all about trade offs, strategic choices. If the opposite of your choice is stupid, it's not a strategic choice. We're about high quality. What the opposite would be competing on low quality. And that will be stupid. Hence not a strategic choice. Non-stupid decisions are necessary to compete, but don't enable you to win. A strategic choice is about building a business model that enables you to win against competitors who are going after the same target segment as you. Developing a high profit business model to engage your target customer means lowering your cost to serve, or, in the case of Appcues introducing analytic capabilities, thus increasing your customer value. Something you should be regularly thinking about, how can we become more valuable to the customer? Add more value? Become more useful at different kinds of value? Become deeply embedded in their business. That's how you get customers who high profit, long retention and get the most value out of you. Which results in high word of mouth. Here's professor Jonathan Burns talking about the customer value footprint.
Jonathan Burns (24:00):
Have to understand how to integrate and get very close to their major high profit customers in order to give them what they need and it's going to be a little bit different from company to company. So you can't just give them a stamp it out product. And that's so different from the way that people have always done it. Which is, have a set of products say, would you like this? Would you like that? Would you like this? Would you like that? I want to be able to close. In a complex relationship with the super high profit customer, you never close. You never want to close. You want to keep getting better and better and doing more and more. You want them coming to you and saying, what else can you do? And you go to them and say, "Hey, I got an idea." And so you never want to close. You want to continually build the account.
Peep Laja (24:54):
Are you building moats? How are you thinking about building more differentiation and building more reasons to choose you over others?
Jackson Noel (25:05):
You know, if I'm really being intellectually honest about that position, we're probably inches ahead today, not miles ahead. Where we are going, is a place where we don't want to cover our weaknesses as much. I mean, we just sort of talked about that. Analytics being one of our weaknesses. It was important for us to cover it so that we could provide a complete product to our customers. And, we will certainly keep building some analytics, but the biggest boldest bets that we are going to bake are going to be doubling and tripling down on that strength of design flexibility. We just want to get to a place where if somebody's coming into this market and what they're focused on most is analytics that, you know, there's probably a different direction that they're going to go in. You know, they're probably going to choose our competitor Pendo.
Jackson Noel (25:57):
But, if what they care about most is experience and they want the most flexible experience builder that the choice is obvious. So that's where we are most focused. It's our job to make that differentiation way clearer than it is today. That anybody can look at our market and say that, wow, Appcues is not inches ahead, they are miles ahead. They're doing stuff that's very innovative. That's very different. And that's where we want to double down.
Peep Laja (26:33):
So, what are the three key strategies Appcues is building their business on? One, they developed a strong content marketing engine to educate customers about the problem they solve and drive demand for their solution.
Jackson Noel (26:44):
We're having trouble getting people to latch onto this. So we were just like, okay, let's just go start writing and evangelizing this problem. Getting more people interested in it. I remember we wrote a few posts and I think our fifth post went viral on hacker news. And that's when we really knew that we were onto something
Peep Laja (27:01):
Two, they focused on being the best at something.
Jackson Noel (27:04):
We want to be the best experience builder in the market. And so, we've tried to double and triple down on design flexibility.
Peep Laja (27:12):
Three they're constantly learning and considering where they need to add more value for customers.
Jackson Noel (27:18):
Focus is great, but we also need to provide a complete solution. Now that we've introduced some analytics capabilities ourselves, our retention profile has really changed.
Peep Laja (27:30):
One last takeaway from Jackson.
Jackson Noel (27:33):
This is a journey, but in these crowded markets, I think it's really important to just make sure you're aware of how you want to distinguish yourselves and stay very focused.
Peep Laja (27:44):
That's how you win. I'm Peep Laja for more tips on how to win, follow me on LinkedIn or Twitter. Thanks for listening.
