By Donna Weber, author of Onboarding Matters: How Successful Companies Transform New Customers Into Loyal Champions

Showing the Value of Customer Onboarding 

It’s not enough to hope leaders notice all the hours you and your team strive to onboard and enable customers. Most likely, management doesn’t fully understand what you do all day, nor the greater impact you have on the business. So, you need to tell them. 

Mikael Blaisdell, Executive Director of The Customer Success Association, notes, “The true goal of Customer Success is getting the decision-makers at both the customers and our company to acknowledge and confirm receipt of the tangible value that we deliver. It’s about money. That’s the proof of value that counts.” Measuring your impact helps you have better discussions with your leaders and prove value to both your organization and to your customers. 

No one cares if you don’t show results 

Blaisdell is concerned because Customer Success professionals often shy away from metrics, data, and financials. My experience aligns with his. When I spoke at a conference I asked the Customer Success leaders in the room whether their organizations run as cost, cost recovery, or as profit and loss (P&L) centers. I got back a sea of blank stares. (Don’t worry if these are new terms for you. Check out Chapter Fourteen in my book Onboarding Matters to learn more.) 

The challenge with defining meaningful metrics is that many teams are in the dark when it comes to data. In fact, several respondents in the 2020 Customer Onboarding Report said they want and need more data. One told me they are desperate to measure results and track progress in an analytical way. In fact, I find it challenging when I work with companies to get them to share relevant baseline metrics so we can measure the impact of working together—they just don’t have the data. 

As a result of the data gap, customer onboarding and success teams are often sidelined, disregarded, and viewed as an unnecessary expense. Then, when budgets get tight, guess who’s first to go? Admittedly, this is exactly what happened to me earlier in my career. I didn’t connect the impact of my team’s deliverables with the influence on the business bottom line. When cost cutting was deemed necessary, my entire team and I were let go because management just didn’t understand the advantage we delivered to the company overall. Getting laid off was a great lesson in the importance of measuring the worth customer-facing teams provide. Now, I make metrics a priority when I interface with companies, because when you measure and communicate the impact customer onboarding has on making customers successful, you’re perceived as an investment, not a cost.

Understanding metrics

Metrics come in two flavors: lagging indicators and leading indicators. 

  • Lagging indicators are available after a period of time and are probably what your executives care about most. Leaders want customers to renew and to buy more, however the renew and upsell opportunities may not happen for another 12, 24, or even 48 months. Common lagging indicator metrics include renewal rates, net retention, and total lifetime value. These indicators confirm trends and changes in trends but aren’t helpful for showing immediate impact on your onboarding efforts. While a renewal in the bank is the ultimate indicator of customer onboarding and success, you can’t wait until the end of the license period to know if onboarding and enablement programs have impact. 
  • Leading indicators are immediately observable and allow you to take the pulse of customers along their journey. These measurements can predict lagging indicators like renewals. Leading indicators may include metrics, such as the milestones achieved during onboarding, payment behavior, support tickets logged, product usage, customer satisfaction, and services used. 

Measuring what matters

To measure your impact, start by gathering what truly matters to executives and the board. Ask yourself if there is one metric that drives your company. You might hear the metric discussed at company meetings and reported at board meetings. This might be the annual contract value (ACV), annual recurring revenue (ARR), product usage, or lifetime value (LTV). Reducing such internal costs as support tickets might be a focus. Some businesses focus on ACV, others LTV. 

Next, explore how your efforts impact that master metric. Dig into existing systems to uncover influence. Don’t waste time trying to prove causation or wait a year to show that onboarded customers have higher renewals. Instead, explore leading indicators like product usage, Net Promoter Score (NPS), customer health score, and leading indicators which demonstrate how engaged customers are along their journey and to determine how well customer onboarding is progressing engagement metrics to show correlation between those measurements and your services. 

The main thing is to keep it simple. Start with straightforward explorations and see what you uncover. For example, a colleague of mine at a database platform company wanted to understand the effect his customer enablement programs had on customers, so spreadsheet in hand, he manually worked his way through Salesforce account records to compare companies that benefited from his services and those that did not. He uncovered data that showed enabled customers buy eight times more software than customers who don’t. Companies I assist regularly find customers who are proactively onboarded and trained are 50 to 150 percent more likely to renew and have higher NPS. Start with a couple leading indicators and see what you learn.

Beginning with a baseline

If a baseline doesn’t exist, then it’s up to you to put one in place. You might start by understanding how long it usually takes to onboard new customers. If it’s relevant for your product, explore the levels of product usage during the first 30, 60, and 90 days along a new customer’s journey. Make sure the metrics you capture feed into what’s most important at your company to measure. 

A good way to estimate your impact is to roughly calculate the internal costs to onboard each new account. For example, if it takes on average eight weeks to onboard new customers, you can easily get a ballpark figure for how much each new logo costs to onboard. For example, if an onboarding specialist makes $100 per hour, the average specialist spends 100 hours to onboard an account over those eight weeks, the internal cost to onboard an account is $10,000. If onboarding teams are onboarding 10 accounts per month, then the costs climb to $100,000 per month, or $1.2 million dollars per year, to onboard new customers.

Calculating the impact

Next, investigate ways to decrease the time it takes to onboard customers. Ask internal teams how to drive faster product usage and adoption, and then track your results. Let’s say you optimize onboarding and create a consistent and repeatable experience which reduces the time to onboard new customers by 30%. That means it takes onboarding teams 70 hours to onboard the average account instead of 100 hours. This improvement leads to a reduction in internal costs by $360,000 per year. Once you share these numbers internally, your management team will pay attention! In addition to improved margins, customers who are quickly onboarded tend to use your product more and they expand faster, which both lead to more recurring revenue for your company. 

Demonstrating your value

Others may not care about Customer Success and onboarding as much as you and I do. Constantly demonstrate your value to internal teams, management, and customers. There’s a common saying, “What gets measured gets managed,” so start tracking and measuring what you do. Make it a regular part of your week to measure what matters and then spread the word! People wonder what you and your team are doing, and it helps when you show them. Share your findings with others rather than waiting to be asked. The trends that appear just might help you get more resources. 

DONNA WEBER is the world’s leading expert in customer onboarding. For more than two decades, she’s helped high-growth startups and established enterprises create customers for life. Her new book is Onboarding Matters: How Successful Companies Transform New Customers Into Loyal Champions. Learn more at donnaweber.com.

For a step-by-step guide on how to define and standardize your onboarding metrics, milestones, and KPIs, check out TaskRay’s Play on Project Reporting.

 

 

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