- Investing in a delightful data onboarding process can yield a significant and immediate ROI for B2B SaaS companies.
- However, the business case must be justified based on your current scale, expected improvements to key metrics, and the total level of investment.
- Compared to doing it yourself, vendors like Dromo offer cost-effective solutions to start piloting improvements today in order to validate their impact on customer satisfaction.
Given the high costs of customer acquisition in B2B SaaS, it is hard to overstate the significance of curtailing churn and bolstering retention.
In this post, we summarize the literature about the drivers of retention and churn; explore how the data onboarding experience can impact revenue; and conclude with an ROI model that makes the business case for when you should invest in a better data onboarding experience.
How Data Onboarding Drives Retention
Data onboarding is a golden opportunity to reinforce each of the four pillars that drive B2B SaaS retention.
When done right, self-service data onboarding delivers values by helping the customer get started faster; increases the perception of value by unlocking other features that depend on user data to work properly; creates an emotional attachment through a great first impression; and creates trust through clear and personalized communication .
Homegrown data file importing tools have a cruddy reputation, so customers don't tend to expect much from them. When you surprise them with a state-of-the-art data onboarding experience, however, you create a halo effect that predisposes customers to view your entire product as reliable, trustworthy, and valuable.
On the flip side, a broken data onboarding process creates a negative impression of the brand, squanders opportunities to build emotional attachment, and delays perceptions of value .
How Data Onboarding Mitigates External Causes of Churn
External forces such as disruptive technological innovation, direct competition, and customers contemplating in-house solutions often cause B2B customers to churn from SaaS products. Unlike the drivers of customer retention, these forces are outside of your direct control .
Data onboarding can help mitigate the risk of churn from external factors by reducing the appeal of switching in the first place. Customers are more reluctant to move away from platforms that already house data they trust and rely on, because they have an emotional attachment to their own data.
By making it effortless for customers to migrate their current and historical data to your platform, you significantly lower the chances that that will follow through on switching, however tempting an alternative offer might seem at first .
The Financial Analysis: Customer Satisfaction and Revenue
Research suggests a relationship between customer satisfaction metrics like Net Promoter Score (NPS) and profitability. Companies with high NPS tend to have lower customer churn, more potential for upselling and cross-selling, and customers who are more likely to refer their product to others .
By this calculation, a 25% improvement from baseline NPS score – assuming it is due to organic changes and not sampling bias – could increase MRR by 10-15% for a B2B SaaS company in a moderately competitive industry .
Return on Investment: The Business Case for Buying a Data Importing Tool
Delivering a delightful data onboarding experience increases customer retention in many ways, but it is hard to isolate and measure the effect on such a lagging and multi-determined indicator.
It is much easier to estimate the effect of improving data onboarding on a leading indicator like NPS. In our experience working with B2B SaaS companies, we constantly see firsthand how the NPS score for new customers at the critical 90-day mark can be pulled into the gutter due to a painful onboarding experience.
We expect to see a modest-to-significant bump in NPS (in the range of 15-35%) after a customer upgrades to modern onboarding software. Your mileage may vary, so we strongly encourage customers to start with a cost-effective pilot and run an A/B test to properly measure the incremental lift to your relevant customer satisfaction metrics.
We now have all the tools we need to estimate the ROI of investing in data onboarding tools, whether or not you decide to buy them or build them in-house.
Projected Increase in Absolute MRR
This table estimates the potential increase in absolute MRR you might expect from improved data onboarding, considering various levels of NPS improvement and existing MRR.
|If NPS increases by 15%
Notional ROI Matrix
In this matrix, we compute the Return on Investment (ROI) that could be realized by enhancing your data onboarding process to achieve the aforementioned MRR increase, considering various levels of investment. The calculations in this table are based on the assumption of a 25% increase in NPS from the previous figures.
|At $250/mo, ROI is:
|At $1,000/mo, ROI is:
|At $5,000/mo, ROI is:
The level of investment is a function of the cost of the vendor you select, or the cost of labor if you decide to develop it in-house. Depending on their pricing model, purchasing a ready-made product can enable you to achieve this ROI in the first month, while the ROI from an in-house development may not materialize for several months or longer.
NB: a complete accounting of the buy-vs-build cost differential should take into account the lost opportunity cost of delaying this ROI, especially in a high interest rate environment.
This analysis demonstrates how investing in data onboarding can be a no-brainer with a quick ROI that scales alongside MRR. In other words, as you grow your user base, the return from delivering a great customer experience compounds on itself.
But making this investment is not always the right choice, especially if labor is expensive. If the anticipated costs are high compared to the current MRR, or the expected NPS increase is minimal, then it may not be a viable option.
That is why vendors like Dromo (for reference, Dromo Pro pricing begins at $250/month) make it highly cost-effective and quick to conduct a month-to-month pilot test of an improvement and observe the results firsthand before making a larger commitment.
Investing in a delightful and reliable data onboarding process can pay substantial dividends in customer satisfaction, and subsequently retention and revenue. But before you pull the trigger, make sure the business case is justifiable given your current scale and level of investment.
: Keeping the Customer Satisfied: The Four Pillars of B2B SaaS Retention
: The Hidden Links Between Data Onboarding and Churn in B2B SaaS
: Overcoming External Drivers of Churn in B2B SaaS
: Estimating The Impact of Customer Satisfaction on Revenue in B2B SaaS