For organizations with subscription-based offerings, onboarding is the most critical step in the go-to-market strategy. The impact of customer onboarding on the market is similar to that of a 7.0 earthquake in a major metropolitan city–the ripple effects are still being felt by marketers with the force of a tsunami. However, many companies have not evolved their go-t0-market strategy, and specifically their sales funnel, to adapt to this market change.
Organizations still struggle coordinating marketing and sales efforts between the top and the bottom of the sales funnel — while the real war with subscription models is being fought after the initial purchase. The traditional sales funnel has doubled in complexity by inverting another half at its end. The scary part is that many organizations have not acknowledged the additional complexity to the sales model (and continue business as usual) while customers believe the most important thing is the customer experience after the sale.
Today’s best-in-class marketers have transitioned to outcome-based marketing in order maximize the life-time value of a customer, increase share of wallet and build strong brands. However, even some best-in-class marketers fail to truly embrace the customer experience because doing so requires the entire organization’s active participation. To be successful in the long-term, organizations must focus on delivering a holistic and integrated customer experience, because this is quickly becoming the differentiator in progressive markets.
The stakes are high since 91% of customers leave after a bad customer service experience — and will not willingly do business with an organization that treats them poorly. Treating customers is expensive. As a result of poor customer treatment, interaction times are longer, costs are higher and customer frustration levels increase. This is significant, since it can cost up to five times more to acquire a new customer than retain an existing customer.
Onboarding – After the Purchase
In a sense, the relationship between the organization and the customer really begins after the sale. Four key stages occur after the sale that shape the relationship and directly correlate to an organization’s customer satisfaction rating, revenue, market share and brand. These four stages are Customer Onboarding, Brand Promise Realization, Renewal and Net Promoter.
Go-to-Market Strategy – Customer Onboarding
Once an organization closes a deal whether it is online, on the phone or via a face-to-face sales call, the real question is “Now what?” Agreed, many organizations coordinate a hand-off to the services team and some even allocate a customer success manager to an account (some charge for this function). Some important questions to ask include:
- How much time and how many resources were deployed to build the infrastructure (systems, processes, people) to find, engage and close that customer?
- Has the organization invested more or less in the amount of time and or resources that are allocated to the customer after the sale?
- Is the entire organization committed to the customer’s success or is that the role of services?
It should go without saying that it is crucial to build trust and customer loyalty early on in the customer relationship. Customer onboarding is about solidifying a relationship between the customer and the organization to fulfill the brand promise that was made to the customer. There is no better time to build a healthy relationship with a customer than the first 90 days of a new relationship. An organization’s goal should be to build trust with a customer and for the customer to reward that organization by being loyal—this is the ideal time to deliver on an organization’s brand promise.
In a sense, customer onboarding is a lot like a development initiative or a launch plan—there are phases, resources and key deliverables. The key customer experience drivers need to be identified and then decomposed in a cascading manner. Relevant and meaningful content needs to be accessible to customers in the format that they want, on the device that they desire and at the time that is appropriate for them. Combinations of video, audio, images and the written word need to be fed in an intelligent manner through emails, blog posts, webinars, videos, FAQs, not to mention human intervention. Marketing can play a huge role here as this should be a nurture path — and probably the most important nurture path.
Everyone learns differently and at a different pace. It’s crucial to know how to communicate and what to communicate across all channels. Customers expect that an organization has all the answers to their questions. In a world of big data and social media how can an organization not know answers to fulfilling their brand promise? Yes, it’s impossible for an organization to think of everything and customers know that. However, it is possible for an organization to be responsive to what it doesn’t know and to develop institutional memory to minimize any gaps–that’s what customers expect.
Measuring Customer Onboarding Effectiveness
Metrics, dashboards, KPIs and analytics are a huge part of any successful business and they play and even larger role in a subscription-based world. Step One is to collect the data, Step Two is to monitor the data and Step Three is to act on the data. While some organizations focus on renewal rates or churn rates, the most effective customers move upstream to predict these rates. Analytics need to be embedded throughout the process, and the rule of thumb is that more is not necessarily better. Analytics should be correlated to the customer experience and accountability and authority need to reside as close to the customer interaction as possible. Organizations need to be proactive in finding customers whose onboarding experiences is sub-par as some will not raise their hand to show dissatisfaction before they terminate,but, a portion of them may be negative promoters through word of mouth and social channels if neglected.
Onboarding – Brand Promise Realization
A value proposition is a clearly defined statement designed to convince customers that their solution will solve a business problem and provide financial incentives that are greater than the cost, relative to alternatives – i.e.competitors, doing nothing or attempting to solve it with in-house resources. The culmination of, the belief of value (at purchase) and the recognition and appreciation of value (post purchase), is Brand Promise Realization.
How Organizations Hook Customers With a Promise
There are four basic approaches an organization may pursue to establish value to a customer:
- Cost – Some organizations choose to pursue a cost or value approach through their value proposition. Here the bar is usually set relatively low on the value to be provided relative to cost. Many commodity offerings follow this approach.
- Best Product – On the other end of the spectrum, organizations may choose a premium product, premium price model. The bar in this model is always increasing as competitors try to incorporate the functionality of the premium model without incurring all of the development costs.
- Best Service – Other organizations choose to focus on providing a high level of service to their customers. Customers that embrace this value proposition are those that are willing to pay more to be treated with exceptional service.
- Best Customer Experience – The subscription model has created a fourth approach for customers. These customers may or may not pay a premium price but they do expect high levels of service (preferably online self service). The customer’s focus is entirely on whether the offering provides an exceptional user experience and delivers on the brand promise.
Onboarding – Renewals & Attrition
Renewal Rate is a measure of retention and is expressed as a percentage and it can mean different things to different people, depending upon what is being measures: customer, revenue, MRR or lifecycle.
The more heterogeneous your contracts and customers, the more important it is to understand the renewal rate characteristics by each segment. For decision making purposes a thorough understanding of the renewal rate characteristics of each segment is critical to being able to make informed decisions. Each organization will typically define their renewal rate metric and the method of calculation, and by doing so, there will not one, but a variety of renewal rates that need to be tracked, monitored, analyzed and acted upon..
On the other end of the spectrum is the attrition rate and it is the proportion of contractual customers or subscribers who leave an organization during a specific period of time. The argument against using the attrition rate as a key performance indicator is that it is a lagging indicator. In addition, the attrition rate needs to be granular enough to understand whether attrition is due to: 1) customer dissatisfaction; 2) less expensive alternatives; 3) additional functionality; 4), or the customer lifecycle. Even with these potential shortcomings, attrition is a key KPI as it is directly correlated to how a customer speaks with their wallet.
Onboarding – Net Promoter
The Net Promoter score measures the willingness of a customer to recommend an organization’s offering to others. It is a popular metric because it is relatively quick and easy to capture, calculate and communicate, especially when compared to customer satisfaction studies. As a result, many organizations use Net Promoter as a proxy for gauging the customer’s overall satisfaction and loyalty to the brand. It’s important to note that the Net Promoter score is not a replacement for a customer satisfaction study, as customer satisfaction studies provide a more complete understanding of a customer but at a higher price (cost and time). Also, it’s essential to analyze and act on negative scores, as well as positive scores, and to fine tune the customer experience that one’s organization delivers.
The Net Promoter score is a rather simple and straightforward metric to calculate that can be shared quickly and frequently with customer-facing employees. The Net Promoter score can also serve as motivation and focus for customer facing employees to convert customers with low scores into promoters (by providing the ultimate user experience) who will act as evangelists and will positively represent the brand.
Organizations that successfully incorporate Net Promoter scores into their go-to-market strategy usually have senior leadership sponsorship and a strong commitment to improving the customer experience. To be successful, the executive team must be actively involved as the effort extends across all functions of the organization. Cross-functional support is required to provide an exceptional customer experience that may require development, sales, services, support, marketing, finance, legal, etc. Accountability and authority need to go hand-in-hand and span the entire organization in order to deliver the ultimate customer experience.
Onboarding is the Most Critical Step in Go-to-Market Strategy
In the end, it’s important to remember that customers want organizations to deliver the brand promise offered, on time, on budget and with no annoying delays, gotchas or problems. It’s critical to continually optimize the customer onboarding process to ensure that it’s designed to make things easier for the customer. When customers realize the benefit of their purchase, attrition rates will remain low and net promoter scores high, all of which creates a healthy relationship and a strong sense of loyalty. Loyalty in a subscription based model is a function of an organization’s interactions with its customers and specifically, how well it delivers on those wants and needs. Organizations that understand this and build it into their values and culture will put themselves a step ahead of the competition and enjoy a competitive advantage.
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