Solid Customer Onboarding Drives Higher Retention, Willingness to Pay
This episode might reference ProfitWell and ProfitWell Recur, which following the acquisition by Paddle is now Paddle Studios. Some information may be out of date.
Originally published: February 20, 2019
To answer J-Kim’s question, we looked at just under 500 different software products spread between B2B and B2C and nearly twenty five thousand customers of those products. Here’s what we found.
This was actually the trickiest question to date, because coding onboarding perception and then measuring willingness to pay is a non-trivial task.
We coded respondents perception of a company’s onboarding before measuring their willingness to pay.
But first, if you like this kind of content and want to learn more, subscribe to get in the know when we release new episodes.
Those customers who perceived a company’s onboarding positively had between a 12% and 21% higher willingness to pay than the median. Those on the negative side had a 3% to 9% drop in willingness to pay, indicating that poor onboarding doesn’t necessarily detract too much, but can certainly miss out on some large willingness to pay gains.
Digging further, we compared those companies with purely functional onboarding to companies making a greater effort, doing things like introducing the team, pointing out how the product’s going to help the customer, etc.
Those with purely functional, but well perceived onboarding, did boost willingness to pay for the product between 8 and 17 percent, but those who additionally focused on value squeezed roughly another 10% in terms of willingness to pay.
Retention is where things get really interesting. When comparing the first 60 days of customers with poor perceptions of onboarding to those with positive perceptions, those customers with positive perception have much less drop off in the first 21 days of being a customer.
One point to keep in mind is that we found extremely high fragmentation amongst customers in their perceptions of company’s onboarding. Put simply, most customers didn’t agree that a product had good or bad onboarding, which indicates this is still a new area we’re trying to master as a community within our products.
That being said, data indicates that great onboarding is essential to engraining the value of a product within a customer or at the very least greases the skids of your customer to start to see the value in your product, accelerating their journey significantly.
That's all for this week. Want to learn more? Check out our latest episode on Competition and subscribe to the show to get new episodes.
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You've got the questions,
and we have the data.
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This is the ProfitWell Report.
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It's Jonathan from Appcues.
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Obviously, we think a lot
about onboarding here.
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And one thing that I'd love
to know is how you see onboarding
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typically affect willingness to
pay as well as the customer's
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retention over time.
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What's up, everyone? Neil here.
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Welcome back to the
profitable report.
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This was actually a really
tricky question because coding
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onboarding perception and then
measuring willingness to pay is
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a non trivial task.
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We got it done though because
we promised Jonathan we would,
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so give us some extra credit.
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To answer Jake Kim's question,
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we looked at just under five
hundred different software
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products spread between b to
b and b to c and nearly twenty
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00:00:44,575 --> 00:00:46,950
five thousand customers
of those products.
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Here's what we found.
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We coded respondents
perceptions of a company's
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onboarding before measuring
their willingness to pay.
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Those customers who perceived
a company's onboarding positively
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had between a twelve percent
and a twenty one percent higher
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willingness to pay
than the median.
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Those on the negative side had
a three to nine percent drop in
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willingness to pay,
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indicating that poor onboarding
doesn't necessarily detract too much,
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00:01:09,200 --> 00:01:12,935
but can certainly miss out on some
large willingness to pay gains.
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Digging further, we compared those
companies with purely functional
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onboarding, things like pointing
out the features, how tos,
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along with those who mix the
functional with brand and value
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proposition onboarding, things
like introducing the team,
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pointing out how the product's
gonna help the customers, etcetera.
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00:01:29,585 --> 00:01:31,185
Those with purely functional,
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but well perceived onboarding
did boost willingness to pay
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for the product between
eight and seventeen percent.
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But those who additionally
focused on value squeeze
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roughly another ten percent in
terms of willingness to pay.
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Now retention is where things
really get interesting.
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When comparing the first sixty
days of the customers with poor
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perception of onboarding to
those with positive perceptions,
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those customers with positive
perception have much less drop
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off in the first twenty one
days of being a customer.
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One point to keep in mind
though is that we found
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00:02:00,650 --> 00:02:03,370
extremely high fragmentation
amongst customers in their
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00:02:03,370 --> 00:02:05,345
perceptions of
company onboarding.
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00:02:05,345 --> 00:02:10,065
Put simply, most customers didn't agree
that a product had good or bad onboarding,
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00:02:10,065 --> 00:02:12,705
which indicates that this is
still a new area we're trying
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00:02:12,705 --> 00:02:15,490
to master as a community
within our products.
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00:02:15,490 --> 00:02:19,970
That being said, data indicates that
great onboarding is essential to
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00:02:19,970 --> 00:02:23,250
engraving the value of a
product within a customer or at
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the very least greases the
skids of your customer to start
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to see the value
in your product,
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significantly accelerating
their journey.
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Well, that's all for now.
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If you have a question,
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send me an email or video
to neil at profit well dot com.
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And let's also thank Jonathan
for sparking this research by
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clicking on the link below to share
on LinkedIn and give him a shout out.
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I'll see you next week.
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This week's episode is
brought to you by Ad Evolver.
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Get more clicks and conversions
for every penny spent on ads.
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Ad evolver dot com.
