Are you 100% focused on the metrics that contribute to optimum customer happiness and retention?
There’s a clear line that runs through every subscription business from the customer retention rate, straight down to your bottom line. Happy customers stay and pay, and that’s where we all want to get to.
You would think that every single subscription business would therefore be 100% focused on the metrics that contribute to optimum customer happiness and retention.
But it’s not the case! Early results from this year’s survey are already indicating that only 30% are ‘always’ doing that measurement thing. It begs the question, what are the other 70% doing with their data?
At Taskfeed (now Precursive), it’s our mission to help you see success faster with your customers and we know for sure that watching and optimizing on the right metrics is the absolute key to your onboarding process. While speed is vital, it should not come at the expense of customer satisfaction later on in your relationship. Therefore to achieve long-term customer success, onboarding teams need to consider a combination of leading and lagging metrics when improving their process and approach.
So the question is, what are the ‘right’ metrics? That’s what we are going to be walking you through in this article.
“The faster we get customers onboarded, the faster they will start adopting the platform and getting value from it.”
TIME TO FIRST VALUE
You will no doubt be familiar with the term ‘Time to Value’, but in Customer Onboarding, the situation is a little more nuanced than that - in fact, the really important KPI to keep on top of is ‘Time to First Value.’ What do we mean? When we talk about ‘Time to First Value’, we are referring to the length of time it takes for the customer to first see value being driven by the use of the product.
Straightaway, however, there’s a problem with this definition - now you have to decide what ‘First Value’ means in your business. Unfortunately, I can’t give you the answer to this, as it’s going to be almost certainly entirely unique to you. However, I can give you an example...
Let’s take a CRM product. When using a new CRM, when do you first see the value? Is it when you have loaded the Accounts, or the first time everyone logs in? While this is all definitely good news, ultimately this does not generate value as such. In which case you probably want to measure something more specific to your value proposition. Let me give you two examples:-
If your CRM is all about helping the sales team log calls, then perhaps you pin your First Value metric to the point that a pre-specified number of sales reps have logged their first calls.
In another example, if your value proposition is aligned to forecasting improvements then it may be that the first pipeline review meeting where the CRM can provide an accurate forecast.
See what I mean? Your definition of Time to First Value is entirely unique to your business case.
Now you measure it, you can improve it.
Once you have understood and defined your First Value action and put in place a process to measure it, you are now in a position to start drilling down a bit further and to understand where you can optimize your processes in the lead-up. Where you see bottlenecks developing, it might be the case that you need to consider innovating your process or potentially consider investment in technology or product changes to support this step.
You’ve just moved your team up a few notches in the maturity model.
Now, if you only read this far and take one thing away from this whole article, let it be that you start to track Time to First Value. You’ll see results. But, if you want to do better still, then carry on reading. Time to First Value is an example of a leading metric. That’s to say it does, to an extent, predict future value. As our own Customer Success Manager, Jess puts it:
“There’s a window at the beginning of the onboarding process when the customer’s level of engagement with your product is at its highest - act fast now and you’ll see loyalty and even advocacy in the longer term.”
However, it’s a dangerous mistake to think that speed is the only critical measure. Work obsessively to improve performance in one area, and there may be an impact elsewhere. For instance, whisking your customers onwards too aggressively to their Time to First Value stage may mean that there is an impact on the customers’ overall discovery or adoption of another aspect of the solution. In turn, this may influence their adoption and satisfaction in the longer term.
What’s the answer?
Speed should not be your only focus
Define some stabilizing lagging metrics (e.g. a metric that ‘lags’ behind the activity, telling you what happened in the past but provides no insight into the future). This is your quality check to make sure that in your pursuit of Time to First Value there are no unintended consequences elsewhere.
An example of a lagging metric could be your first year renewal rate or the NPS score across a specific cohort.
The Catch-22 with this activity is that of course, you won’t know until later. The whole point of lagging metrics is that they only identify past performance issues after the fact.
But measure you must! Over time as you onboard more customers, the data will build a picture and you can see if the changes being made in the initial processes are playing out over the first year and through the first renewal cycle as you expect.
So yes, getting better takes time, but it take a lot longer and it’s a lot harder when you haven’t been collecting the data that really matters.
A quick case study on leading and lagging metrics: GoCardless
Online payment provider GoCardless based their point of First Value as the customer’s completion of a fixed number of transactions. They knew from their data that when First Value happened within a certain timeframe, down the road that customer was much less likely to churn.
With this knowledge at hand, they were able to work on optimizing their onboarding process around achieving this milestone, while never losing sight of the resulting churn rates relating to each customer segment. This combination of keeping across their leading and lagging metrics means that they are working on the basis of continuous improvement.
What’s the future?
Businesses are waking up to the fact that gathering these success metrics is essential, but the reality is that we still have a way to go: most companies are still operating a low maturity model when it comes to measuring their results and success with their Customer Onboarding.
For many businesses, that’s good news. In short, there is plenty of scope here to improve what they do and get their customer to value faster without compromising their renewal rate.
[Blog initially published on June 4, 2019]
What do you think? Are you getting serious about your Customer Onboarding metrics?