Customer Onboarding Metrics։ How to measure the ROI of Customer Onboarding

Which customer onboarding metrics can you use to track the success of your onboarding efforts?

Customer onboarding can be tricky. There is always the possibility that something will go wrong, making your users leave or downgrade. This makes it all the more important to select the right metrics to optimize your customer onboarding.

So without further ado, let’s see what these metrics are.

TL;DR

What is customer onboarding in SaaS?

Customer onboarding is a process through which new users get started with an organization’s product and continue to get value from it over the course of their customer journey.

In SaaS, the term “onboarding” usually refers to primary onboarding. This covers the user journey from the initial Aha! moment to product activation to the first use.

The purpose of customer onboarding is to provide value to users as soon as possible, preferably during the first use.

Why is customer onboarding important?

Failure to retain users on day 1 is a common problem in SaaS companies. A user won’t stay unless you make the path to the activation point simple and frictionless. This is where customer onboarding comes in.

Onboarding allows you to highlight the value of your product and gain customer success.

A good user onboarding process keeps users engaged. It helps them clearly realize and experience your product’s value. Thus, it gives them a reason to return to your product again and again.

Moreover, onboarding boosts the trial to conversion rate. If you provide a discount or a free trial, onboarding is where the trial users get value from your product.

So, if you can deliver real value during the onboarding process since the beginning of the trial, they are more likely to convert to paying customers.

Later on, continuously educating your customers through secondary onboarding drives further value since it allows customers to learn more about the secondary features.

Customer retention is what ultimately generates money for your business. The more features your customers find useful, the less likely they will be to churn. And the lower the churn, the more the repeat subscriptions and the greater scope for growth.

Furthermore, the financial benefits of a good customer onboarding process aren’t limited to revenues alone. An optimized onboarding process means there’s less need for big, salaried customer support and customer success teams.

Top 10 metrics to effectively measure the ROI of customer onboarding

You need to ensure that you receive a positive return on your investment in customer onboarding. To do that, you have to track some key metrics and use the insights to make adjustments to your onboarding strategy.

So, here are the 10 most important customer onboarding metrics:

  1. Time to complete onboarding
  2. Time to value
  3. Trial to paid conversion rate
  4. Customer engagement rate
  5. Feature adoption rate
  6. Customer lifetime value
  7. Net promoter score
  8. Customer retention rate
  9. Customer churn rate
  10. The cost spent on support

Customer onboarding metric #1 – Time to complete onboarding

Your onboarding process should be focused on showing how your product can help your customers. It lets the users know how your product fits into their workflows and how they can use it independently to get maximum value as soon as possible.

Therefore, the time users take to complete onboarding is an important metric to measure. To calculate this metric, find the number of days it takes for users to start using your product independently.

If you target a fast onboarding process from the very beginning, you can use the figure as a benchmark for the future. After you onboard a few users, you’ll realize how long it should ideally take your users to complete onboarding and work on improving it.

Customer onboarding metric #2 – Time to value

In SaaS, time to value (TTV) is the time a user takes to realize the expected value of your product. It measures the time it takes for users to reach Aha! moment and start experiencing the value they expected from your product.

Users expect to benefit from your product as fast as possible. A long TTV tends to cause a low trial to paid conversion rate.

Moreover, a short time to value means there’s little to no friction in your primary onboarding journey. And you can provide a better user experience to stand out and motivate users to stick to your product.

Thus, the shorter the TTV, the better the first impression on users.

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Time to value

Customer onboarding metric #3 – Trial to paid conversion rate

The trial-to-paid conversion rate is the percentage of users who sign up as paying customers after the trial period is over.

To measure this metric, divide the number of free trial users who converted in a specific period by the number of all free trial users within that period and multiply the ratio by 100.

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Trial to paid conversion rate

Free trials provide users with a glimpse of what they’re going to get if they subscribe to a paid plan. Once users get first-hand experience of the value, they activate.

Thus, to increase the trial-to-paid conversion rate, your customer onboarding needs to help users reach their activation point as soon as possible.

The activation point could be anything from a positive result in a user’s business to a feature helping them reach their personal goal. This is a critical turning point in your business that decides whether users stay or leave.

Customer onboarding metric #4 – Customer engagement rate

The customer engagement rate (score) tracks customer interactions across all touchpoints over the customer lifecycle. It measures how engaged your free trial prospects and existing customers are.

To measure the customer engagement score, first, observe the in-app user behavior and identify the key events that are the most relevant to customers’ success.

For example, you can consider a user active and engaged in the initial part of onboarding depending on their activation point key events.

Then, assign an engagement score to each of the key events based on their importance to your product and the user persona on a scale of 1-10.

To find the total event value, multiply the score for that event by the number of times the event took place (in days).

For instance, if the score is 9 for a user segment to reach an activation point and the users performed the event 10 times in the last x days, their total event value is 90.

Finally, add the total event value of the key events to find your customer engagement score for a specific period.

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Customer engagement score

The more engaging your onboarding is, the more users will interact with you. To boost customer engagement rate, your customer success team can personalize the user experience across all touchpoints.

A low engagement score during a trial run can indicate a need to test different methods of increasing engagement for a particular user account. This will also ultimately cause the trial-to-paid conversion rate to rise.

Customer onboarding metric #5 – Feature adoption rate

Feature adoption is when your customers adopt your product’s feature(s) into use.

To calculate the feature adoption rate, divide the number of monthly active users (MAUs) of the feature by the number of logins in a specific period, and multiply it by 100.

Along with the other feature adoption analytics, tracking this metric helps you improve feature adoption by making informed decisions regarding user onboarding. You can effectively create user experiences to steer users across their journey and optimize your product adoption.

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Feature adoption rate

The feature adoption rate indicates how well you’re helping users get their jobs done. It tells you what parts of your product customers value the most so you can focus more of your onboarding efforts there.

A lack of use of a feature may indicate that some users are not benefiting from it or didn’t find it yet. Thus, you need to form a feature discovery strategy as well as gather feedback to make improvements in the feature.

Customer onboarding metric #6 – Customer lifetime value

For SaaS companies, most of the profits come from repeat purchases by customers. Thus, your customer lifetime value (LTV) is a key metric for measuring your onboarding efforts.

LTV measures the expected stream of revenue from a paying customer over the course of their business with you.

LTV equals average revenue per account (ARPA) divided by the customer churn rate.

LTV is especially crucial for businesses with high transaction rates and big customer bases. On the other hand, if a business only has a few enterprise-level customers, it’s better to put more emphasis on the customer acquisition rate.

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LTV

For a financially healthy SaaS business, the customer lifetime value to customer acquisition cost (LTV-CAC) ratio should be at least 3:1. This means that your business should gain at least 3 times more value than it spends on acquiring new users.

If the LTV-CAC ratio is 1:1 it means you’re earning as much from your customers as you’re spending on them, thus getting zero profits. So, you need to ensure your ratio never goes below 1.

Customer onboarding metric #7 – Net promoter score

The net promoter score (NPS) is a measure of customer satisfaction and loyalty. An NPS survey asks users a simple question:

“How likely are you to recommend our product to friends and colleagues?”

Users can give answers on a scale of 1-10, as shown in the image below, with 10 being “Extremely Likely”.

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NPS survey

Your net promoter score essentially refers to the difference between the percentage of promoters and detractors.

Promoters are the customers who rate you 9 or 10, while detractors are the ones who rate you 6 or less. Promoters are your satisfied, loyal customers who are likely to spread positive word-of-mouth. On the contrary, detractors are disengaged from your product and are at the highest risk of churning.

Moreover, you can add a qualitative follow-up question to the NPS survey to solicit reasons behind the customers’ ratings. This way, you can learn their pain points and resolve their issues to convert detractors to promoters.

Customer onboarding metric #8 – Customer retention rate

It costs 5 times less to retain customers than to acquire new ones. Customer retention rate gives the percentage of customers you retain over a given period.

To calculate the retention rate, first divide the number of paying customers at the end of the given period by the total number of paying customers at the start of that period, and then multiply the figure by 100.

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Customer retention rate

The retention rate provides insights into the renewal rates in your company so that you can predict your customer lifetime value and take steps to improve retention.

You should always use the retention rate in combination with the churn rate to fully understand your retention capability.

Customer onboarding metric #9 – Customer churn rate

Customer churn is on the flip side of customer retention. The churn rate measures the percentage of customers who leave your product by canceling their subscriptions.

To measure the customer churn rate, divide the number of customers lost during a particular period by the number of customers at the beginning of that period, multiplied by 100.

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Customer churn rate

Most businesses track the churn rate on a monthly, quarterly, and yearly basis to get a bird’s eye view of what’s occurring in the business.

This metric allows you to understand how customers are leaving and where they are leaving in the funnel.

Churn survey

Furthermore, you can use in-app churn surveys to know why they are leaving and thus, build better onboarding experiences to reduce churn.

Customer onboarding metric #10 – Cost spent on support

The cost spent on support is another key metric you should focus on. Your cost of support is your average expenditure on training customer support teams and addressing customer problems.

You can use this metric to figure out where your onboarding efforts need to be more cost-effective.

Best 3 customer onboarding software platforms

To feed the valuable insights from the user onboarding metrics, you need to use the best onboarding software and bring your ideas to fruition.

Here are the top 3 customers onboarding software platforms:

  • Userpilot
  • Consumer.io
  • Pendo

#1 – Userpilot

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Userpilot

Userpilot is a product adoption software platform that covers all aspects of onboarding, such as in-app guidance, personalization, help center, etc.

Userpilot helps new signups activate and discover the core features of your product faster. You only need a swift Java integration with your product to set it up without having to code.

It’s also a great platform for mid-market businesses looking to build adoption flywheels within their product and boost their conversion plus retention rates.

Userpilot’s key features include:

  • Customer segmentation
  • Advanced onboarding experience tracking
  • Behavior-responsive messaging
  • Audi0-visual walkthroughs
  • Data analytics
  • Support of onboarding maps and checklists creation.
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Segmentation in Userpilot

Pros and Cons:

Pros:

  • Easy to use and integrate
  • Intuitive interface that’s easy to navigate
  • Excellent customer support
  • Offers useful onboarding planning tools
  • Reasonable prices

Cons:

  • The UI is not always intuitive since you need some training.

#2 – Customer.io

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Customer.io

Customer.io is an email onboarding software that goes more in-depth than similar other platforms.

Pros and cons:

Pros:

  • Monitors the exact user interactions
  • Uses precise trigger points to send contextual messages.
  • Automates emails plus Slack messages, SMS, and push notifications.
  • Reasonable prices.

Cons:

  • It’s an early-stage onboarding software.

#3 – Pendo

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Pendo

Pendo Product Cloud offers a suite of products to cover multiple aspects of onboarding.

Pros and cons:

Pros:

  • Offers product usage analytics
  • Can customize onboarding flows.
  • Offers a lot of onboarding functionalities

Cons:

  • Needs CSS coding to get exactly what you want
  • Doesn’t provide all the different elements like Userpilot
  • Pricing is custom but is generally seen as a more expensive platform.

Wrapping it up

Now that you know the right customer onboarding metrics, track them regularly and use the insights generated to continually improve your onboarding experiences for users.

Your onboarding efforts are going to pay off once they can successfully drive engagement, retention, and the ROI of your customer onboarding.

Want to track customer onboarding metrics and boost your customer success? Book a Userpilot demo and see how easily you can do it!

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