Welcome! My name is Eric Keating, and I'm here to talk about product adoption – both how to use it to create organizational alignment and focus, and how effective that can be at getting ahead of churn and boosting revenue.
Before we get into it, let’s take a look at what this article will cover.
- My background and role at Appcues
- What product adoption is and why it's important
- How to build a product adoption score (PAS)
- Appcues’ first PAS
- Putting your PAS into action
- How Appcues uses PAS
- The results so far
My background and role at Appcues
For some context, I head up marketing at Appcues. Appcues makes it easy to measure and improve product adoption without a developer. Our users are largely non-technical, and they're using Appcues to track product usage and publish highly effective in-app onboarding tours, announcements, and surveys all in a matter of minutes.
As for me, I’ve spent the last 15 years or so in SaaS marketing, growth, and GM positions, and for the last two years, I've been at Appcues, where I'm helping SaaS businesses solve product-led problems. We're also using a product-led strategy ourselves, so I’m very immersed in that world. My team owns customer acquisition as well as self-serve customer expansion and retention, and that's a pretty big part of our customer base.
What product adoption is and why it's important
First, I want to talk about product adoption, what it is, and why it’s important. Product adoption is the process of new users learning about, choosing, and using your product more deeply and more frequently over time. Ultimately, it's about maximizing the value that your product delivers to your customers.
I'm going to unpack that quite a bit today, but first, let me tell you why it's so important. To start, successful product adoption is an early indicator of retention. Every company I've worked at has had a retention or churn target and we've always paid a ton of attention to it – I'm sure that's true for everybody reading.
You can probably relate to hearing something along these lines: “Oh, no! This customer comes up for renewal in 90 days. We've got to jump on this to make sure they stick around ASAP!” The problem is that churn is the last thing that happens. It's an outcome. While you may be able to save an at-risk customer with 90 days of intense focus, it's not a sustainable or scalable approach and I'm sure we'd all like to avoid that.
Successful product adoption also drives expansion revenue. Upgrade and expansion revenue are so important. Everybody reading this is probably thinking more about net retention today than they ever have before.
Similar to the retention side, you've probably heard something like, “We need to boost expansion revenue this month! Let's run a campaign and try to sell this add-on to as many customers as we can.” Again, it's totally reactive and unscalable and often requires a ton of work.
There's a lot working against us with our churn and retention targets. You might be sick of seeing this, but for dramatic effect, let’s take a look at the latest Martech 5000, which is actually closer to 10,000 these days, and that’s just marketing technology. There's more competition in the market than ever, and the cost of switching to a new vendor is the lowest it’s ever been. We're seeing that across the board.
On top of that, Mixpanel’s Product Benchmarks Report shows that average retention rates are super low, and for many of us, they're declining. And then, to make matters worse, buyers’ preferences are evolving. They have higher standards for product experiences, more consumer-like expectations, and a strong preference for self-service. Those preferences are driving shifts in go-to-market strategies
Think about how much the buyer’s role in digital products has changed. Once upon a time, there was a whole process before users started using your product. Now, it's way more common for people to start a trial or get the freemium version of your product before they decide to buy. All that without talking to anybody at your organization.
Looking at it this way, it's easy to see just how much more important it is to show the value of your product quickly and ensure users are adopting it early on.