The benefits of user onboarding in product-led growth

March 07, 2022

Tips on using AI to simplify workflow and increase productivity

Did you know that customer acquisition cost or CAC in the B2B industry grew by 70% over the past five years?

With the CAC cost soaring every year, businesses are looking for ways to attract customers without causing a dent in their financial statements. It all boils down to the first impression a user has during their onboarding experience. A positive product-led user onboarding experience communicates that they made the right choice by choosing your brand. 

But, what is user onboarding? User onboarding is a system of guiding users to find value in your product. The process includes the initial experience a user has with your product. This onboarding helps your users to know about your product’s functionality and advantages, making it the building block of product-led growth (PLG).

Perks of user onboarding in product-led growth

Here are a few reasons why user onboarding is essential in a PLG:

Increases retention rate

Regardless of the industry in which you’re working, there would be instances of customers not returning your product. There could be four possible reasons for this:

    • Your users no longer require your product
    • Your users are using an alternative option
    • Your product doesn’t meet their requirements
    • Your users find it challenging to use your product

Usually, the last scenario occurs when you don’t onboard your users effectively. For instance, some companies might send you an email giving information about your login information of the SaaS tool you purchased. 

Such a terrible user experience destroys every chance of renewal because your user performs the R&D to understand how to use your product.

A positive user onboarding experience can set your entire customer relationship. Interestingly, effective user-onboarding increases your product adoption speed, enhancing user engagement and resulting in customer loyalty.

Enhances revenue and lifetime value (LTV)

As the retention increases, so does the revenue. Interestingly, revenue compounds overtime for a company with a good retention rate.

A positive onboarding experience works as a revenue multiplier because the CAC of acquiring new customers is higher than retaining an existing one. By onboarding users with a series of email sequences, product tours, and help documents, you increase their chances of staying loyal to your brand. 

With 80% of your revenue coming from 20% of your existing customers, it makes sense to actively guide your users towards greater product adoption until they can’t imagine solving their problem without your product. Moreover, when revenue increases, it enhances your customer’s lifetime value. LTV measures the revenue you earn from a customer throughout your relationship with them.

Helps build relationships

A positive early experience of a user can set the tone for their entire customer relationship. When a company knows the user and their requirements, it becomes easy to use an onboarding strategy that resonates with them. 

Also, a better user onboarding process speeds up the product adoption rate and enhances customer loyalty and engagement.

Once you successfully create the ‘aha’ moment and users know the worth of your product, they are likely to stick with your product for a longer time. This not only reduces the churn rate but fosters a great relationship with your customers.

Reduces customer complaints and queries

Providing new users with detailed steps and guides on using your products can significantly reduce the number of queries your support team receives. This can drastically cut down your overhead cost, and you can engage your team in solving complex customer queries.

Also, when you share every information with them, you increase the product experience, and the user no longer has to wait for a customer service agent to answer a simple question.

Netflix is a perfect example of how a seamless user onboarding experience results in PLG. 

When using Netflix for the first time, you don’t have to talk to a sales rep or book a demo to watch a film. You can purchase their subscription without any difficulty. In this scenario, the product handled the positive onboarding experience.

Helps you stay ahead of the competition

Have you ever faced a situation where a customer signed up for a free trial of your product but didn’t see any immediate value and churned away without looking back?

Such scenarios are bound to happen if you have a weak user onboarding process. A frustrating onboarding experience is a boon for your competitors because customers shift to their product. So, to stay ahead of the competition, it’s essential to create a seamless user onboarding experience. It can result in high drop-off rates after product signup, low free-to-paid conversion, and a large volume of support tickets.

However, when creating a positive onboarding experience, don’t overwhelm your customers with too much information. Sharing too little or too much information can both be determinantal for your product’s success.

Increases customer loyalty

If your customers hit roadblocks every time they try to purchase or use your product, they’re likely to get frustrated and stop using your product.

As you have only one chance to make an impression, make the best use of it. A great onboarding experience ensures that your customers gain the most value from using your product without having to go through multiple loops. A smoother onboarding experience is the key to winning customer loyalty.

Conclusion

User onboarding is an essential part of the PLG because it has a snowball effect on your growth. With a positive onboarding process, you can provide the inherent value of your product to the users. When you successfully create a positive first impression, your customers will likely remain loyal for months and years to come. Start creating a positive user onboarding process!

More must-read stories from Enterprise League:

Related Articles