How does the onboarding process affect your business’ churn rate?
Annually companies globally lose $1.6 trillion because of avoidable consumer churn. In general, online services all over the world experience relevant revenue losses due to churned customers. Long and complicated onboarding procedures are affecting attrition rates in most cases. Dmitri Laush, CEO of GetID, reviews the influence that new client onboarding has on your business churn rate and explains ways to reduce the level of potential customer drop off.
How churn affects your business
Churn is the rate at which your potential clients or customers leave over a particular period of time.
Commonly calculated monthly, your business churn rate is the number of clients who give up on your service over that period, divided by the number of clients you had at the beginning of the month.
If you gained a hundred new clients this month, but fifteen of them left for good, you would have a 15 percent churn rate.
Chun rates exist in all sectors that rely on subscription-based services.
And it hurts. When you work arduously to induce that new client onboard (ads and promoting, sales funnel optimisation, sales calls, etc.), it is frustrating to watch new clients leave your business.
Churn can prevent your business growth in the following ways:
Loss of revenue. High churn rates affect profit in the short and long run. As new customers leave throughout the onboarding method, you narrow your margins.
Loss of brand image. High churn suggests that a disproportionate number of disgruntled users go into the world speaking negatively about your business. And, with the increase of review sites and social media, having a bunch of sad, recently-churned users is less than ideal.
It’s more expensive to specialize in the highest level of the funnel than in retention. 65 percent of a company’s business comes from existing customers. It’s the core of any business. It’s much more cost-effective to encourage loyal customers to resubscribe than to attract new ones.
What is customer onboarding, and what is the role of onboarding in business churn?
Onboarding encompasses the methods and processes that a business uses to attract new customers.
These usually embrace the following:
– ID verification
– Document provision (NDAs, compliance documents, etc.)
– Account and profile creation
– The transition from sales to account management
– Training and package or app tutorials
– Email and chat campaigns
– Customer support campaigns
In short, onboarding is everything your business does to turn a new client into a loyal one.
However, your business has to make sure that the companies and clients you’re operating with are real and honest, especially if you are dealing with sensitive data or money.
You need to verify your users to stay compliant to the regulations, avoid online fraud and money laundering and more.
That is where you can lose your potential clients: during difficult or complex verification procedures.
If you implement methods that encourage your users to experience any kind of initial success, however, you’ll be able to cut back your churn considerably.
That success might be contact import, campaign launch, account creation, or any other goal you’ve determined could be a “point of no return” for your users — the level that, once reached, churn drops.
But what if users do not make it to that first success because of a difficult verification process?
Maybe you have been requesting a laundry list of verification documents (including birth certificates and apartment lease contracts). Maybe you are making the process overly long, or not engaging with people when they have questions — this is also problematic and results in costly early stage churn.
So how can you reduce your business churn rates in the onboarding stage?
Let’s take a look.
A Step-by-Step Guide to Reducing Onboarding Churn
Action 1. Authenticate your users in-app
The first, and easiest, step is to ensure your business can get the information you need is to run a quick identity check. Don’t make your users go to your KYC-provider website and then come back to your app. It is annoying for many people. Do it in one window.
Action 2: Use an identity verification API
If you have more complex user onboarding, it can be a long and frustrating manual process (before the user even gets into your software or starts seeing the benefit of your service).
When starting a relationship with a business or user, your business needs to A) Quickly get the information you need, and B) Ensure the information you get meets your business’s security and identification standards.
Doing it quickly reduces user frustration. Doing it well reduces the chance of a chargeback from fraud or failing to meet compliance requirements (which can cost your business $14.82 million).
With 323,455 reports of cybercrime in 2018 (plus the potential costs of non-compliance), ID verification isn’t something you can ignore.
That’s why I recommend using an identity verification API.
An identity verification API connects your business to the physical and digital identity of your users. This streamlines the onboarding process massively, as the traditional process (the back and forth of documentation and endless email threads) is eliminated.
Action 3: Implement onboarding automation
Automated onboarding tools allows you to form an optimized workflow that moves new users from signup through to first success with restricted manual interaction.
To determine, however, that the workflow works (and to optimize it), you’ll have to do an audit of your user’s current path from signup to success. To complete this, you might require a professional QA specialist.
Action 4: Personalize it if needed
I’ve just advised you to make the whole process automated, but sometimes new clients need an individual approach.
What can you do? Implement some good CRM or other customer software and hire some people as the help center (or outsource this).
– Trigger an automated chat once your user completes a selected action. If they answer the automatic chat, send it to a support agent. Let’s say, if you’re managing an associate email service supplier, trigger a conversation once a user imports their contact list. To your user, this feels like personalised engagement relevant to their wants in the moment.
– Trigger an automatic email when they reach a particular level of inactivity. Let’s say that your user has signed up but has not visited your dashboard in seventy-two hours, trigger an automatic email that asks, “I noticed you haven’t logged in for a while. Do you have any questions?”
Those are the main points which relate to the onboarding process affecting churn rate of the customers. Take action on these steps and positive results will eventually follow.
About the author
Dmitri Laush is CEO of omnichannel identity verification solution GetID.
DISCLAIMER: BiometricUpdate.com blogs are submitted content. The views expressed in this blog are that of the author, and don’t necessarily reflect the views of BiometricUpdate.com.