Dennis Flaum of VCC Live shares his top three metrics that will give you some great insights when onboarding customers.
What is customer onboarding and why is it relevant for your business? What customer onboarding metrics should you be tracking? Many businesses think that the customer-nurturing process ends with closing the sale. However, that is only half of the work.
In order to retain your customers, gain more clients, and build your company reputation, you have to pay attention to the period after acquiring a new customer.
Why Does Onboarding Matter?
The stage immediately following the period of acquiring a new customer, onboarding is the process that helps new clients get familiar with the full range of your product and services.
This can involve training sessions, tutorials and step-by-step guides, FAQ documents, milestone programs, and various consultancy services.
The importance of providing customers with an excellent onboarding experience can be seen in statistics. According to a recent SaaS metrics report, more than two-thirds of SaaS companies experience churn rates greater than 5%, meaning that out of 1000 customers they lose 50 over the course of a single year.
Additionally, it is important to keep in mind that most revenue comes from already established business relationships. According to a recent Inc. report, gaining new customers can cost up to 10 times more than keeping existing ones, while existing clients can spend as much as 67% more than newly established business contacts.
Key Customer Onboarding Metrics
Now that you know why onboarding matters, it’s time to look at the most important metrics that will help you measure the success of your onboarding process.
Given the sea of information on the topic, it can get overwhelming when trying to decide which metrics to focus on. The specifics of your business, industry, and client relationships are always something to keep in mind.
Nevertheless, having worked in a variety of sectors as a sales and key account manager, I’ve seen some metrics that have proven to be essential in most businesses. Therefore, if you are unable to decide which metrics to work with, here are three essential ones to start with.
Churn rate, sometimes referred to as attrition rate, is the number of clients that stop their relationship with your company. The lower the churn rate, the better your onboarding process is.
You can calculate churn rate percentage by dividing the number of customers you lost last quarter with the number of customers you started with. Alternatively, you can calculate churn considering the value of the recurring business lost.
The main reasons why customers churn are multi-fold. Your clients either don’t get any added value or don’t understand fully the service you are providing them. Proper onboarding, however, can help customers understand the full potential of your product.
The good news is that the fact that consumers are engaging with you means that they have an established need for your product or service. It is up to you to help them realize the full potential of your services. The onboarding process is the perfect time to do this.
First, make sure that you are indispensable by making their initial experience using your product as good as the sales process promised it to be. And don’t forget to make them sticky! According to Harvard Business Review, a sticky customer is likely to complete an intended purchase, become a regular customer, and recommend your business to others.
Regular customer interaction during onboarding is essential for creating sticky customers, even if your business model is not built on regular contact with customers. This could mean providing them with relevant articles and updates on industry-specific news.
Or, taking the example of other SaaS companies, a simple reminder of the benefits of your product during invoicing can also help.
Additionally, try to identify activity churn, or the inactive users of your product. Once you are sure that they are inactive, send re-engagement emails and offer to help them with getting into the habit of using your product again.
Another metric that can help you manage your onboarding process is the tracking of customer retention rates (CRR). Retention is the number of customers that return to do business with your company.
In order to calculate CRR, first, you need to decide which period you are working with (yearly or quarterly for example). Then, collect the following data for that period:
- The number of customers at the start of that period (S)
- The number of customers at the end of a period (E)
- The number of new customers acquired during that period (N)
The formula: CRR = ((E-N)/S) X 100 (/)
What should be the aim of your retention program? During the onboarding program, you should focus on getting your clients to use your product or service multiple times a week. With this, you can aim at establishing a pattern of usage and make your product indispensable.
How to keep high retention rates? Try to delight your customers by rising beyond expectations. This can mean providing complimentary webinars, or providing instant, on-the-spot customer support. Additionally, setting up a customer loyalty program can also help.
Offering benefits for buying a product or service can provide direct incentives for making customers understand the value of your business.
By monitoring the progress of your customers in the adaptation of your service or product, you can create long-term, sustainable relationships. In order to understand the progress of your customers, you can track metrics such as time taken to meet implementation timelines, feature use, licence uptake, or rates of product access.
In order to improve on your progress metrics, try establishing programs that help your customers adapt your product or service in a seamless manner. For example, you can set up complimentary training sessions to help users with the fast adoption of features or licences.
Alternatively, you can help your clients with consultancy and advisory sessions when it comes to feature use and implementation. Whatever your progress metrics are, aim to be as helpful and informative as possible when it comes to encouraging users to progress in the customer life cycle. This will gradually make your business indispensable to them.
Bottom Line: Be Helpful and Available
While customer onboarding can be approached from a multitude of angles, keeping these three metrics in mind should help you progress along the road to a seamless onboarding process.
As you add or refine your onboarding metrics, keep in mind the baseline in any onboarding process: When it comes to helping your customers understand your product, be helpful and available through the entire process.