Skilljar Blog

How to Measure the ROI of Customer Onboarding

Posted by Sandi Lin on April 19, 2016

In this blog post, we’ll discuss how to measure the ROI of training as used for customer onboarding.

Onboarding is one of the most critical touchpoints in your customer relationship. Whether you’re targeting SMBs or enterprise, getting your customer to initial product value – as quickly as possible – is vital for long-term customer success and retention.

In our experience, companies typically follow one of these models:

  • 1:1 – High-touch onboarding, delivered through instructors or customer success managers (CSMs), either classroom or virtual. Customers are typically at higher price points (mid-market and enterprise).
  • 1: Many – Low-touch onboarding, with automated and self-paced components. Customers are typically at lower price points (SMBs).

In either case, onboarding can be free, paid a-la-carte, or paid as part of a services package. Regardless of the pricing model, companies usually find that on-demand training is a very cost-effective way to improve their customers’ product usage and satisfaction scores.

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In an ideal world, every customer onboarding initiative could be tied directly to revenue impact. But there are multiple factors that affect a customer’s ability to renew, many of which may be out of a CSM's control, or take months to measure. So how do companies measure the ROI of customer training for onboarding?

Practically speaking, CSMs are better able to impact short-term metrics such as customer satisfaction (CSAT), net promoter score (NPS), and onboarding cycle time. Fortunately, these short-term metrics are also leading indicators for revenue, and your finance team may already have estimates of their revenue impacts.

Measuring ROI

Metrics that are commonly used to measure training for customer onboarding include:

  • Cycle time between key implementation milestones (e.g. kickoff, readiness, launch)
  • Customer satisfaction (CSAT)
  • Net promoter score (NPS)
  • Training revenue (in the case of paid onboarding and training)
  • Revenue (or # accounts) managed per CSM

Costs are typically calculated by totaling the hours spent by instructors/CSMs in delivering training, and multiplying by an hourly labor cost. There may also be technology costs, such as a learning management system (LMS), or facilities costs.

When calculating ROI for training as onboarding, it’s also important to consider the alternatives. In our experience, CSMs may be spending more than a quarter of their time on basic training, which has major productivity costs on the team at large. Companies seeking to scale onboarding faster than scaling headcount are actually saving money by creating a dedicated training function. The customer experience is often greatly improved as well, since customers have a convenient resource that is immediately available.

Conclusion

Helping customers use your product successfully is vital in today's world of continuous renewals. At Skilljar, our clients have found that on-demand training is an effective and scalable way to improve the ROI of customer success teams, by increasing customer satisfaction, decreasing cycle time, and improving CSM productivity. 

Next week, we'll discuss how to measure the ROI of training when used for ongoing customer success and support. To learn more, download How to Measure the ROI of Customer Training today!

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Topics: Training, Customer Success, Analytics & Metrics

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