Research shows a very clear link between successful onboarding and long-term customer loyalty. The first few days of the relationship can practically predict whether your customer will still be with you in four years' time! That's why putting an effective onboarding process in place is absolutely vital. In this article, we share the tips and resources that will help you stand out in your customers' eyes.
The impact of onboarding on churn
Onboarding vs churn: the short-term impact
In the SaaS era, the cost of switching is extremely low. If your product doesn't add value, customers will happily move to a competitor. So customers need to be convinced quickly that your product delivers enough value. A study by Sixteen Ventures Research found that 80 to 90% of customers who cancel within the first three months cite a lack of perceived value as the reason. Deliver value and your customers will be satisfied. And satisfied customers spend more, for longer.
Onboarding vs churn: the long-term impact
While it's clear that onboarding has a direct impact on short-term churn, especially for vendors offering contracts with no minimum term, it also has long-term effects.
A study by ChurnRX shows the key role onboarding plays in customer loyalty: customers who don't reach a minimum usage threshold within the first 10 days have a cancellation rate 10 times higher in their first year than the rest! In detail, customers with minimal usage of a solution within 10 days have a churn rate of just 4% at 12 months, whereas those who started using the product after 10 days show a 40% cancellation rate over the same period. Extend the line further: after four years, 87% of customers who got started within 10 days are still customers, compared with just 6% of those who got off to a slower start. That's brutal! It shows that a good onboarding process isn't just important: it's absolutely vital to the business.
The key steps of effective customer onboarding
Putting an effective onboarding process in place requires a methodical approach:
- During the pre-sales phase, Sales plays a crucial role in surfacing the goals the customer wants to achieve by buying a tool. Ideally, this should be captured in a structured document that enables a smooth handover of information between the sales team and the CSM who will own the account, during the sales handover.
- From there, the Customer Success Manager or a Customer Onboarding Manager takes the lead on the relationship. They need to start from this initial roadmap to define the success KPIs with the customer that will be tracked and measured throughout the relationship. These need to be quantifiable and measurable for it to work. It's by starting from these goals that you can help the customer prioritise the use cases to put in place.
- Next comes the notion of "value": the first time your customer manages to get a concrete result with your tool. That result needs to be achieved as quickly as possible. This is known as time to value. To get there, you absolutely must pace your onboarding and give your customer visibility, then secure the adoption phase. Each of these steps will be a win to celebrate!
- At each of these stages, avoid the 5 classic onboarding pitfalls.
Tools that make your customers active players in their own success
- To get your customer fully involved in the project, you can share a Success Plan with them. This mutual action plan sets out the goals to achieve and the resources committed. Each step involves actions from every stakeholder: the document gives everyone clear objectives and lets you track progress. A Success Plan should be realistic, measurable and achievable.
- Don't hesitate to provide as many resources as possible so your customer can choose what suits them best. Online help, product tours, in-app messages, playbooks, videos... each user will consume the content that suits them best, whenever they want.
- Define one or more target journeys based on a target audience and/or a need, then systematise the approach with automated workflows (playbooks). Playbooks help you move your customers forward efficiently and at a steady pace. Two SaaS companies share their experience on video: Fasterize: scaling onboarding with playbooks and Karnott: combining a human approach with automated journeys.
