Deepak Kumar, Chief Customer Officer at ContractPodAI, delivered a session on using onboarding to accelerate expansion and NRR/NDR.
When we think about onboarding in the context of customer expansion, growth, and increasing the net retention rate, we have viewed onboarding as a critical feature. Deepak gave attendees a tiny glimpse into what the session was all about, and began with why NRR is important.
As an often implored question, the net retention rate (NRR) is actually highly correlated to the delta in enterprise value to your revenue multiple from a market cap standpoint. Higher the NRR, higher the multiple. Markets, both public and private, value NRR a lot. And obviously, NRR comes from having very low churn numbers. But, it is also driven up by increasing cohort revenues or by increasing revenue from the same base through upselling or cross-selling.
Everyone has a playbook that they adhere to. Whether you are in the customer success space or are with the sales team, you always have a playbook. Be it product lead growth companies or seat expansion growth companies; you start with aiming to increase the usage, feature, and functionality adoption. You then identify additional use cases, try to think about new products, cross-enterprise use cases, geo expansion, and become really strategic for your customers. In other words, you run on that particular product, and the business runs on your product, and so forth.
But what's missing, or what people probably do not put that much emphasis on, is how much of an impact customer onboarding can have on NRR expansion. It certainly has a tremendous impact on churn. But it has just about as big an impact on NRR expansion. And we call this the iceberg effect. A term coined by Deepak himself, it is a true description of what's almost visible in front of you. You don't see it quite directly, but it is foundational. And when you focus on onboarding with an intention to increase NRR, you see a lot of benefits arising out of it.
You have to ask yourself 'what is it that you do differently in onboarding that will give you the edge for NRR expansion. Undoubtedly, the onboarding process must be seamless, collaborative, visible, extremely efficient, and yield high NPS. But you have to focus on the things that are on the top. And to do so, you can use the understand,-collaborate-listen-advocate framework.
1. Understand: Firstly, get a deep understanding of the customer's business problem. The immediate use cases are where you have to focus, and a classification of what is nice to have versus what is a must-have is required right upfront. You could even use a playbook to define that and hone it from time to time to get things up and running. Or your onboarding team could get a solid understanding of the business. Of course, your sales and marketing teams will give you this information. However, since this would be your first ever interaction with the customer, the customer will share far greater details on what exactly is happening in the business.
2. Collaborate: It is pertinent to establish close connectivity with the CSM and onboarding folks so that the value expectations are bound tight from the start. With enterprise companies, think about the steps you need to do to drive better retention. For example, creating tighter integration touchpoints into the enterprise or the customers' ecosystem gives you better retention modes. Similarly, if you were to expand across multiple business groups within the company, that gives you additional retention modes. Deepak explained that his team has a very strong collaboration with the product team on the functionality gaps. They also discovered that onboarding is one of the most prominent groups contributing to product functionality enhancements that go back into their roadmap. He reaffirms that it's not easy to set up such tight collaborations, but in the end, the rocky roads do lead to greener and brighter pastures. So, make a significant effort to build that bridge with product and CSMs.
3. Listen: Get your onboarding folks to start thinking deeper about any early warning systems, understanding the organization's structure a little better, and seeing who the champions are versus the retractors. Provide vital feedback through your onboarding experience about whether it fits the ICP. Because if it were not to fit, it would more likely end up in churn, and you don't get to see the expansion you expected to see. Continuously reevaluate and see whether the customer fits into your ICP.
4. Advocate: With the customer in a post-purchase high, you have to capitalize on that high to establish a good rapport with them and drive them to be all in on your product or offering.
These are the more essential things that one needs to focus on by using the understand-collaborate-listen-advocate framework. Treat onboarding as a fundamental and competitive advantage critical to driving the NRR expansion. And once you begin doing so, the entire frame through which you view the problem will change. The kind of investments you need to make for onboarding to be seamless becomes very different. You tend to invest a lot more prudently in onboarding both from an engineering perspective and a resources perspective.
The defense metrics are the ones protecting your revenue and supporting the customers. But treat onboarding as part of your offense metrics. NRR expansion is an offensive metric, but time to revenue and unrealized revenue is something you need to focus on while keeping a tight focus on NPS.
And when you start treating onboarding as part of your offense mechanism, you make a shift. Because initially, you would think that onboarding is essentially something you need to make great so that the customer is happy and they don't churn. But now, you start looking at onboarding as something that has to be built so that it is a competitive differentiator, and you can drive rapid expansion. And that's what gives your CFO a different capability to make those investments.
However, this doesn't quite apply to all types of customers. Think about mapping a few parameters by yourself to check if it is effective for you to use onboarding as an offensive strategy or not.
You can watch the recording here.