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SetuplyNov 25, 2022 11:00:00 AM4 min read

5 Challenges to Understanding Customer Onboarding Costs

For any business to grow and sustain, it’s imperative to understand the costs associated with the client’s entire lifecycle to make accurate and well-informed decisions.

In the context of B2B technology solutions, just as sales and marketing teams keep track of Customer Acquisition Costs (CAC) to know where they stack against the Total Contact Value (TCV), and customer support teams monitor their costs against the revenue, so should onboarding teams ensure that onboarding costs are not siphoning away the profitability of the overall client relationship. 

Given the staggering statistics of failed onboarding projects, their impact on customer retention, and the fact that setup or onboarding fees are often waived or significantly reduced during the sales process, gaining accurate insight into onboarding costs is particularly critical. 

Unfortunately, many solution providers lack visibility into their onboarding costs mainly because client onboarding remains one of the last areas of company operations to adopt appropriate tools and technologies to track, optimize, and automate their onboarding processes. With many onboarding projects run in a “start-and-stop” manner with a single onboarding rep handling multiple concurrent implementations, how can solution providers accurately determine the cost of each project per rep beyond the basic metric, such as the reps’ salaries? 


1. Multi-tasking obscures the actual costs

With client onboarding representatives managing anywhere from five to ten or more customers simultaneously, tracking the time spent on each client’s project can be challenging. 

The amount of time and activities required for onboarding can vary significantly based on the products and services purchased and the onboarding stage. Some customers might be in a training call stage, while others are in the documentation or set-up stage, and still, others are working on getting their data together for onboarding. Further, some of the onboarding tasks or sub-projects completed by the different reps have internal dependencies, further complicating the process's time management.  

The time can be tracked manually or even using time-tracking tools, but logging, remembering, and estimating the time spent on each customer project while switching between different projects can quickly become cumbersome and error-prone. 

The inconsistent and incorrect signals about the onboarding process make it hard to predict where to focus efforts to identify the human and process bottlenecks to improve both of them. The combined effect of inefficiencies across many reps of varying experiences and skill sets can snowball quickly into an unmanageable and intractable mess.  


2. Customer onboarding teams wear multiple hats

At companies of all sizes, customer onboarding representatives can be pulled into other activities to help support the sales process, tackle a difficult customer support question, or provide product training. As a result, they've frequently directed away from their primary focus of getting new customers implemented, leading to longer onboarding times and, therefore, higher costs with no easy way to attribute the impact of distraction.


3. A-synchronous communications tools. Really :) 

Many of us have, at some point, been afflicted with the email-checking compulsion. It can also take shape beyond emails. One of the onboarding experts that we interviewed spoke about another time-consuming beast - synchronous communications. It may sound heretical in our age of instant gratification, but tools that provide clients with real-time unbounded access to the onboarding team may backfire with the said team operating in the “on-call” mode, more appropriate for the customer support role, waiting for the inputs from the clients and consistently being distracted from using their available time to complete onboarding tasks. 


4. Misunderstanding the ideal customer profile (ICP)

Through a formal and well-managed client onboarding process, businesses can identify customer trends and develop a deeper understanding of their Ideal Customer Profile (ICP) that will allow consistent, repeatable, and predictable onboarding and, subsequently, customer support experience. However, if the onboarding process is inefficient or poorly designed, onboarding reps may not have the time or ability to accurately collect this valuable customer data to make that determination. As a result, businesses can waste resources pursuing customers that are not a good long-term fit for their product or service. Sub-optimal ICP affects businesses of all sizes but can be particularly precarious for smaller firms with fewer resources.  


5. Incorporating the effects of seasonality 

Some industries, such as human capital management and insurance, may be affected more by seasonality than others. When the new customer onboarding load is not evenly distributed throughout the year, peak times may result in overtime and burnout for onboarding staff, expensive overflows to third-party onboarding providers, and reduced coverage in other departments that may be pulled in to help out. Proactive recruiting, hiring, and training to increase capacity further increase costs and raise questions about what to do with excess capacity after the peak season. 


Using the right tools to cut internal onboarding costs

A customer onboarding software or application can automatically track time spent working on tasks and specific projects and customers, pinpointing the bottlenecks and inefficiencies and providing accurate insights into the cost of delivering the onboarding experience. Automated customer onboarding tools will help automate manual tasks, reduce the need for multiple touchpoints, and increase transparency and collaboration, leading to an improved bottom line. 

Beyond helping with onboarding staffing and more proactive training decisions, automated next-generation onboarding solutions can provide insights to drive better sales and market strategies, positively impacting the business's overall success.