How 10 SaaS metrics are improved with the right user onboarding.

Intro

Jason Lemkin recently shared an article alluding to the death of SaaS.

I don’t think SaaS will die anytime soon, but his gloom-and-doom prediction is somehow true.

SaaS is getting harder: companies are seeing increasing competition, users are becoming more and more allergic to subscriptions, and most importantly, users are actually becoming more sophisticated and the bar for great products is really high.

You can do a lot of things to make sure your users stay with you longer.

Unfortunately, because of the way products are designed and built, this one thing is often neglected.

I am talking about user onboarding.

User Onboarding

User Onboarding was first popularized by Samuel Hulick and it refers to the collection of screens and flow that guide users during the first-time experience with your product; obviously, we could talk about user onboarding for physical products, services, places (think a restaurant, coworking space, or hotel) and it would actually be pretty interesting.

For now, let’s just stick to digital products and SaaS in particular.

When user onboarding is done right, it can do wonders for basically every relevant metric.

When done wrong, users will stop exploring your products even before finding out the most amazing feature you’ve built.

However, as I said earlier, because of the way products are designed and built, onboarding is frequently ignored or just doesn’t get the right attention.

It’s easy to understand why: startups want to get their product to the market as soon as possible. They want to validate their product and ensure users will understand and use its features. They obviously start by designing and coding the product itself. Then, they usually slap a standard “Sign Up” form page on top of it, and they are done.

It makes sense when you are just starting out.

But after a while, you want to remove as much friction as you can and give your users the best experience possible as soon as you can.

How soon? Well, some people argue that real onboarding starts from the very first interaction your users have with your product. For example, Google or IG Ads.

This approach is effective because the ads they see shape their perception of your product, which changes everything (I will talk about SaaS positioning in a future post).

Now, if you are not doing any paid ads, the very next touchpoint will be your homepage.
Again, the way you are framing your product will be very critical for users.

One key element to designing a good onboarding flow is to keep yourself from showing ALL your features at once to your users. They are not there for that. They just have a problem and want your product to solve it as soon as possible.

This is why it’s super annoying to land on a product and have 12 different tooltips taking you to every corner of the page. And this is why most of us just “skip the tour”.

Another important decision you should take is to take a look at all the info you require your users during signup and wonder if you really need them (as in “they can’t use the product if they don’t provide this info”) or you just want to have them (because you will retarget them in the future, or just to show off on your page saying “300,000 people signed up last week”).

For example, it makes sense for a tool like Ubersuggest to ask you for your website URL because, after all, you want your website to be analyzed.

But if you are building a project management tool for teams, it doesn’t make sense to ask users for the URL of their company. Why should I give you the URL of my company? How does this help me manage my projects?

The same goes for a number of different fields:
- Name and surname: are they really useful right now? What if I just give you my email and my team will see that? Chances are they will recognize it’s me.
- My role at the company?
- What I am planning to do with the tool?

Metrics Affected

When you are doing your onboarding the right way, there are a number of metrics that are positively touched:

• Activation Rate: This measures the percentage of users who take a specific, desired action within your app shortly after signing up. A good onboarding process can guide new users to these actions more efficiently, increasing the activation rate.
• Time to First Value (TTFV): This metric tracks how long it takes for a new user to reach the “aha moment” or realize the value proposition of your product. An effective onboarding can significantly reduce the TTFV, ensuring users understand and appreciate the product’s value sooner.
• Customer Retention Rate: Onboarding plays a critical role in retaining customers. By educating users on how to get the most out of the product and ensuring they see its value early on, companies can reduce churn rates.
• Customer Lifetime Value (CLTV): Enhanced user onboarding can improve customer satisfaction and engagement, leading to longer subscription lifespans and potentially more upsells or cross-sells. This increases the CLTV, a key metric for assessing the profitability of a SaaS business.
• Net Promoter Score (NPS): This metric gauges customer satisfaction and loyalty by asking users how likely they are to recommend the product to others. A positive onboarding experience can boost NPS by leaving users with a favorable impression of the product and company.
• Daily/Monthly Active Users (DAU/MAU): These metrics indicate the product’s stickiness by showing how many users engage with it daily or monthly. Good onboarding can encourage more frequent use, increasing these figures.
• Conversion Rate: The percentage of users who convert from free trials or freemium models to paid subscriptions can be increased with an onboarding process that effectively demonstrates the product’s full value.
• Support Tickets/Queries: A comprehensive onboarding process can reduce the number of basic support tickets or queries by preemptively addressing common questions or issues, freeing up support resources for more complex problems.
• Feature Adoption Rate: This measures how quickly and widely users adopt new features. Through onboarding, you can highlight and educate users about new features, increasing adoption rates.
• Upgrade and Upsell Rates: By showcasing the value and benefits of premium features during the onboarding process, companies can encourage users to upgrade or purchase additional services.

Have you ever dropped out of a product because the initial onboarding was too long or messy?