Let’s face it—not everyone on the sales team recognizes the impact client onboarding has on client retention until it’s too late. Studies show that 44 percent of companies focus on customer acquisition, while only 18 percent focus on retention.
“It’s our responsibility to prove the value of our product to customers, and we also must prove the value of our customer success services to management,” said Donna Weber in her book, Onboarding Matters: How Successful Companies Transform New Customers Into Loyal Champions. “This is both a challenge and an opportunity.”
As part of the customer success team, Weber emphasizes that it’s up to the team to demonstrate how to decrease churn, reduce internal support costs, shorten the time first to value, and increase customer net retention.
“The costs associated with winning new customers — the customer acquisition costs (CAC) — are often well-documented since they involve ad campaigns and targeted marketing efforts,” says Peter Ord, founder and CEO at GUIDEcx. “But retaining that customer lays the foundation for customer loyalty, and often the costs associated with client retention — essentially the ultimate goal of onboarding — go unchecked.” Until now.
Collecting and analyzing data from the customer onboarding process offers valuable insight into retaining customers and improving the onboarding experience.
We believe onboarding progresses roughly through three phases: the initial phase includes trial conversion and onboard completion rates; The mid-phase metrics measure the customer response rate; and the final stage measures new customer adoption and churn rates.
Let’s discuss them.
1. Trial Conversion Rate
Trial offers are a great way to introduce product value to users and to determine if the new subscriber set up your software to start using the subscription.
To find the trial conversion rate, divide the number of conversions during the last 30 days by the number of completed trials, either by conversion or cancellation, in the previous 30 days.
2. Onboard Completion Rate
From the moment your new client signs on, your team should focus on achieving results. How long does it take for your new customer to transition a new customer from the onboarding phase to one where they can incorporate your product into their operations? Is it days? Weeks?
Only through onboarding completion does a new client discover your product’s actual value.
3. Customer Response Rate
Tracking ongoing engagement with your new customers via surveys, queries, and other forms for collecting feedback generates valuable data on the customer experience. During onboarding, your project manager prioritized total accessibility and transparency for the client.
The customer response rate indicates your team’s responsiveness to your customer’s inquiries, challenges, personal experiences, etc.
4. Customer Adoption Rate
How often do your new customers use your product? Which features do they use? Adoption rates quantify your onboarding process’s effectiveness by measuring how frequently customers use your product.
“The goal is to get as much feedback as possible,” says Mark Mitchell. “Some customers are busy using your new product or service and may be unable to provide feedback. But when given a short survey immediately after the onboarding process, they are more likely to provide insight into their experience. A little is better than nothing!”
A standard formula for computing customer adoption rate is to divide the number of account licenses purchased by the number of unique daily logins.
5. Customer Churn Rate
Customer churn is an inevitable part of doing business. While the reasons for churn range from a poor product fit, customer apathy, or being enticed to switch by a competitor, other causes like poor customer experience, a lack of product loyalty, or poor engagement are factors that your customer success team can track.
To determine your company’s churn rate, divide the total of customers you lost in the previous quarter by the number of customers you started with. The resulting percentage is your churn rate.
By analyzing these numbers, you can build a reliable customer health score that determines effective strategies for maintaining (or improving) that customer’s ongoing experience with your product or service.
“Understanding metrics helps you have better discussions with your leaders and prove value to both your organization and your customers,” says Donna. More importantly, by collecting quantitative data on your onboarding performance, you position your customer success team as an essential resource in establishing effective onboarding and customer retention strategies.
Talk With a Guide Today
Discover how GUIDEcx can help you improve efficiency by reducing your customer onboarding timeline and increasing the capacity of your project managers. Our unparalleled professional resources and unwavering commitment to excellence support our industry-leading customer onboarding solution.