First impressions often have long-term implications, particularly when it comes to getting relationships with new clients off to a good start. In fact, the goodwill that’s created with customers during the onboarding process is both material and quantifiable.
For example, making even small advances in how clients rate their onboarding experience can have a big impact on future revenue, according to recent research by McKinsey & Company.
McKinsey found that for every one-point increase in customer onboarding satisfaction on a 10- point Net Promoter Score (NPS) scale, there was a 3% increase in customer revenue.
The fiscal implications of this can add up quickly: If a company onboarded $500 million worth of new customers last year and improved its onboarding satisfaction score from a five to a six, that would equate to an additional $15 million per year. A five- to eight-point improvement would translate to an additional $45 million per year!
How effective is your organization at client onboarding? If you’re like most companies, there’s room for improvement.
To learn more, Smartsheet commissioned a study on customer onboarding. Surveying hundreds of large companies, the study found that new client onboarding projects often cost more than originally anticipated. Additionally, more than 70% percent of companies reported that client onboardings are delivered late.
The incremental cost of a single delay may seem like a one-time hit until you consider the long-term effect of a negative onboarding experience. Whether it’s due to a lack of communication or poor visibility into scope creep, every day your onboarding program is delayed results in lost revenue. And it can also lower your client growth and retention rates.
4 common causes of over-budget onboarding
In addition to late delivery, 75% of the companies surveyed for the Smartsheet study acknowledged that the cost their new client onboarding efforts often exceed expectations—here’s why:
- A Lack of Structured Processes
Many study participants cited a lack of structured processes as one of the main causes of going over budget. And there are consequences when structured processes are missing, including: increased inefficiencies, redundancies, and errors; higher employee burnout and turnover rates; and lower employee productivity and engagement. Also, by causing employees to struggle to stay on top of each new client onboarding project, a lack of structured processes can keep a team stuck in reactive mode.
- Poor Communication
Poor communication is another common culprit in over-budget client onboarding. Successfully onboarding new clients requires solid communication across a company, among teams such as sales and marketing, customer support and service, finance, legal, and others. Yet poor communication, both internally and with clients, remains a top disconnect.
- Reliance on Manual Processes
A third factor in over-budget onboarding: relying on manual processes. When work is updated manually, there is zero visibility, which keeps customers in the dark on status. In addition to keeping teams stuck in reactive mode, the additional time and resources required to complete manual work can quickly results in lost revenue.
- Disconnected Tools
Finally, study participants cited siloed tools as a factor in over-budget onboarding. Similar to problems encountered due to manual processes, when there is no way to connect all the tools being used, there is no visibility into the work as it’s being performed. Not only does that affect teams internally, it also contributes to a poor experience for clients.
What’s the answer? Download “The Hidden Costs of Client Onboarding” eBook to learn about the top risk factors in customer onboarding and how to avoid them.