How SaaS Companies Can Better Onboard Users

I’ve spent a lot of time over the past few months talking to software companies about how to better onboard new users.  By user onboarding, I specifically mean the following: how do you take a new customer who’s just signed up, and make them a loyal, happy, fully functioning user who will renew year after year, leading to low churn and high retention?  As these excellent analyses of SaaS metrics by David Skok and Joel York help illustrate, this process is at the core of every Software-as-a-Service company’s valuation.

The more people I talk to, the more I think this process isn’t rocket science; moreover, I’m convinced that 75% of the secret to great user onboarding is process and discipline.  Each of the companies I’ve talked to that is a great user onboarder seems to have basically arrived at the same process. It goes something like this:

1. Compare your customers who successfully onboard vs those who fall off the wagon.

Based on basic analysis and just looking through the key attributes of each, do there seem to be key drivers of what makes a great customer? Is it when they install your widget fully? Is it when they make 15 posts in the product?  You don’t have to be exact to start, but pick a number – and then try to get a sense for when they have to do these things. Is it within a month of signing up? A day? An hour? They key methodological point here is that you need to look 6-12 months post-sign-up to see which customers failed – and then keep those groups but rewind to 1-4 weeks in to see how they looked different then.


2. Create triggers and automate follow-ups.

Say you know that the typical user needs to write 5 reviews by day 14 to become a steady user – then you may want to create a trigger that automatically emails all new sign-ups who haven’t written a single review in the first week.  Likewise, if they’ve only written 3 by day 10, you may want to nudge them with another email.  Because you’ll have numerous triggers and milestones, customers will be getting very different communications from you – but each of those emails or messages will be directly based on actions they have or haven’t taken.


3. Iterate. Analyze. Repeat.

Once you get this system in place and automated, keep an eye on it and keep analyzing what makes your great customers different from your worst customers.  Over time you can get more sophisticated about how you reach out to customers based on what’s worked and hasn’t in the past. There’s a lot of room for improvement in how you do steps 1 and 2 – but the key thing is to just get started and not to worry about being perfect at it.

At the end of the day, improving your onboarding process is much like how most startups find their business model (or for that matter, how we improve government policy) – you try something, see how it goes, then keep trying.  In part 2, I’ll cover the tools needed to better onboard users. Incidentally, while these rules are tailored for Software as a Service firms, the fundamental process is the same for Ecommerce firms building lifelong customers.

If you are interested in more on onboarding, drop me a line at – I’d love to discuss some of the more advanced topics / analyses or just to hear more about topics you’d like covered here.


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