Learn the definition and formula of customer onboarding as well as calculated examples.
Customer onboarding is a recent phrase in the business world. However, it would have come earlier, since it is important to improve the experience of customers for sustainable business growth. In general, one customer onboarding definition refers to it as the process of developing a business relationship with a customer, in order to sell them various products and services. It is important to create the best impressions when dealing with potential customers, since it will determine if they will come back or not.
Customer onboarding formula
Math formulas are used to assess customer onboarding levels of an organization. They also help to explain different components, which make up the client onboarding process. Multiple formulas are applied in measuring the customers’ success. One of them is the churn rate, a conventional metric, which is used to diagnose the health of a business. It refers to the number of customers that leave over a certain period. If customers are leaving the business, it means then that customer onboarding process is not effective.
Customers like to hear a couple of things when they are in the onboarding process. First, they want to know everything about the products and services you are selling. Next, they would like to know if their expectations would be met upon agreeing to the business deal. Furthermore, they are looking forward to a warm welcome to your business, and a resultant good relationship. If they feel that your onboarding process did not cover all the aforementioned elements, leaving is inevitable. Therefore, calculating churn rate is one-step towards retaining customers. To calculate the rate, take the number of customers who have left, and divide the sum with that of the customers who are present at the end of the month.
For example, assume that the number of customers who have churned in the month was 5 and the total number of customers at the end of the month is 20. Then, the churn rate, in this case, is 5/20*100 =25%. This indicates a serious churn rate that requires attention. The organization should establish what they are doing wrong in their customer onboarding process.
Other metrics of measuring customer onboarding success include “sessions per day.” This entails calculating the number of times that the customer engages with the product. It works best with products that have subscriptions. The more a customer utilizes the product, the more they are engaged. Last, it is the free-paid conversions, a common metric used in software selling businesses, when they are determining the effectiveness of customer onboarding.