“Proper onboarding isn’t done to prevent churn; it’s done to ensure the customer achieves their desired outcome. Retention comes from that”, were the famous words from a renowned speaker, Lincoln Murphy.
Customer onboarding may be defined as the process of acquiring new clientele for a business enterprise. This ensures customer profitability increase.
Why customer onboarding?
Assurance of faithful clientele
Customer onboarding ensures a group of customers who are loyal to the company. A certain level of profit is therefore ensured in every financial period from this group of customers.
Discovery of new customers
Onboarding directs a focus to the client’s needs and ensuring these needs are addressed. Clients therefore are easily satisfied and are highly likely to recommend your services or products to other potential customers. This is likely to increase the number of customers which will reflect an increase in sales.
Increase in sales is directly proportional to increase in profits. Higher retention equals higher profits.
A case study by Harvard School of Business indicates that a 5% increase in customer retention leads to a more than 25% increase in profits.
Repeat customers, having received good enough services or reliable goods enough to have them demand for more are likely to spend more. This will in turn increase sales leading to an increase in profits.
From the Harvard research mentioned above, it can also be concluded that repeat customers are cheaper to retain compared to acquiring first time customers.
Maintaining repeat clients will therefore lead to a reduction in the company’s expenditure. This will result from reduced advertisements and other expenditures required to draw in more clients.
Kapow reports that a 2% increase in customer retention has the same effect as decreasing costs by 10% as shown in their infographic. It also reports that acquiring new customers can cost as much as five times more than satisfying and retaining current customers.
Knowledge on client’s needs
Onboarding enables you to reach out to clients and learn of their specific needs since you are interested in maintaining them as your clients.
It offers a better insight into the services rendered and products that would appeal most to customers. In this case customer’s satisfaction is guaranteed and a happy customer equals increased sales.
Generating leads and making them your first priority is not as important as prioritizing your available customers to ensure their satisfaction.
As shown in Kapow infographic; satisfied customers tell 9 people how happy they are while dissatisfied customers tell 22 people about their bad experience. The dissatisfied customers will definitely divert some of your leads while satisfied customers will bring in more leads.
You need to strategize on how to keep your customers if you are focused on achieving good returns for your company. Understanding the value of your customers is key in any business venture.
A study by Genroe (Australia) Pty Ltd showed that customers who are effectively onboarded have a substantially higher retention rate, lower cost to serve and higher cross sell rate than customers that are not.
It is therefore of great benefit to note that as a startup, the odds of going wrong with customer onboarding are close to zero.