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You Can’t Afford to Onboard Your Customers. 4 Ways to Dramatically Improve Your Profits




Do you know how much customer onboarding is costing you? I mean, really costing you?

I’m alarmed by the number of companies who lose money when it comes to onboarding their customers. Run-away expenses erode your margins and delay your profits, and you don’t even know it. Read on to calculate what customer onboarding is costing you and how to turn losses into wins, for both you and your customers.


B2B software is complex.

Most business-to-business (B2B) software products are complex, taking weeks if not months to implement and deploy. I find this to be true in my Orchestrated Onboarding™ Masterclass. Over 77% of participants indicate their products have medium to high complexity when it comes to onboarding customers and implementing products. See the image below. With data to migrate, systems and APIs to integrate, and code to configure, the intricacies of going live with B2B products often leave customer-facing teams stuck in manual and high-touch approaches. Whether customers spend a few thousand dollars or hundreds of thousands for your products your teams are compelled to handle every customer with special care. While that might feel good in the moment, all that hand holding is sinking your company.


How complex is the product you are implementing?

Customer Acquisition Costs.

Your company probably calculates the number of weeks or months it takes to break even on a new customer. Most companies do. You examine Customer Acquisition Costs (CAC) to understand the Sales and Marketing expenses required to bring on new customers. For simple “back of the napkin” calculations, let’s say the average selling price of your product is $30,000. If CAC comes to $50,000, which means it costs you just over $1.7 dollars for every new dollar you bring in, then it takes you 20 months to break even on every new customer, which is not uncommon. See the image below which illustrates the break-even point.



Introducing COCO and COCA.

While you may know the costs to acquire your customers, do you pay attention to the outlays every time you bring a new customer onboard? If you are like most companies, you’ll discover costs that exceed what customers are paying you. A critical part of the equation you must include is the Cost of Customer Onboarding (COCO). COCO includes the time and resources required to onboard new customers and go live with your product. Including the missing costs of onboarding often doubles the time to break even when you bring on new customers. Adding together Cost of Onboarding plus the Cost of Acquisition (COCA) unveils the full picture. In our example, adding $30,000 COCO to $50,000 CAC brings you to $80,000 COCA and 32 months before you start taking profits. During turbulent or even prosperous times can you afford to wait nearly three years to break even? Most likely not.


The compounding effects of COCO.

COCO compounds month after month and year over year. When you onboard just ten new customers each month in our example, you end up spending a third of a million dollars every month on COCO alone, and by the end of 12 months you rack up over three million dollars. No wonder so many customer facing teams are being cut these days. They are seen as expensive cost-centers with no regard for the business bottom line.


4 ways to dramatically improve your profits.

If you, your team, and even your company want to stick around, it’s critical you start tracking COCO and COCA. First, understand the true time and resources required to onboarding your customers. Don’t assume onboarding usually takes 60 days when in reality it’s closer to 90 days. Get the facts, then calculate the costs. Next, explore ways to reduce the manual workload currently in use to onboard your customers. Below are four of the approaches I use to help companies scale customer onboarding and get them to profit faster:

  1. Customer segments: Stop treating all customers the same regardless of what they spend with you and create onboarding playbooks for each unique segment.

  2. Software tools: Onboarding software reduces the repetitive administrative tasks your teams are stuck with and keeps customers accountable and engaged.

  3. In-product guidance: Instead of delivering a one-to-one approach to enable each new customer and user, drive user adoption through workflows and training within your product.

  4. Charge for customer onboarding: Those millions of dollars you spend to onboard customers become new revenue when you charge for customer onboarding. I helped a company create standard and premium packages to cover their runaway onboarding costs. Instead of spending millions of dollars each year to onboard their customers they are bringing in additional revenue of $2 million. We turned their expensive cost center to a break-even center.

Using these and other approaches, it’s reasonable to quickly reduce COCO by 20%. The company in our example saves almost $750,000 every year. What might you do with that money? Would you add resources to your teams, invest in onboarding software tools or in product guidance to scale? Consider the options available to you if your team was responsible for millions of dollars of new revenue every year. A Chief Customer Officer (CCO) I talked with has no fear of cuts. His team is secure because they reap millions of dollars of recurring revenue each year for Customer Success and Onboarding services.


Tracking COCO is crucial to achieving profitability.

Customer onboarding costs are often overlooked by companies, resulting in significant losses that erode margins and delay profits. By understanding the true time and resources required to onboard customers and then implementing strategies to reduce manual workload, such as customer segmentation, onboarding software, in-product guidance, and charging for customer onboarding, you can dramatically impact your bottom line. Ultimately, tracking COCO and implementing efficient onboarding strategies will benefit both your company and your customers, leading to increased profits and customer satisfaction. Reach out if you want to calculate COCO and how to reduce onboarding costs at your company.



DONNA WEBER is the world’s leading expert in customer onboarding. For more than two decades, she has helped high-growth startups and established enterprises turn new and existing customers into loyal champions. Her award-winning book is Onboarding Matters: How Successful Companies Transform New Customers Into Loyal Champions. Learn more at donnaweber.com.





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