6 Steps to Successful Customer Onboarding, a Critical CX Activity that Most Companies Fail


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By John Goodman and David Beinhacker

Based on our assessments of over 200 organizations in the past five years, customer onboarding is the most poorly performed function in most companies. It is important because 20 to 30 percent of customer problems at most companies emanate from incorrect expectations or predictable customer errors.1 Both these problem areas can be significantly reduced through an effective onboarding program.

This article will cover:

  • The definition of customer onboarding (“onboarding”) and the cost of not doing it well, and why most companies fail to do a good job
  • The six critical aspects of onboarding and many examples of successful approaches
  • The range of options for getting customers’ attention focused on needed product education
  • How to demonstrate the return on investment in onboarding

What is Customer Onboarding and Why is it Important?

Onboarding is educating the product/service purchaser and user (who may be different than the purchaser) on what has been purchased, how to use it while avoiding problems and questions, and how to get the most out of the product.

Customer errors account for 20 to 30 percent of all problems and questions, including simple, easily answered questions and incorrect expectations. Most of these questions and problems emanate from the fact that the customer has not read the directions or contract or has been misled by sales and marketing.

As an interesting aside, the 2017 CCMC National Customer Rage Study found that many more women than men read the directions. Computer interfaces have convinced customers that if they tinker with a product they will be able to figure it out, and thus, few read the directions. Easily consumed product information must be put in front of the customer just when they need it (e.g., just in time [JIT]). One smart insurance company put the hyperlinks for the top four questions prominently on the account home page for quick and easy access. This approach reduced unnecessary contacts by over 20,000 per month.

In business to business (B2B) environments, the challenge is even larger. In a recent survey of 250 CEOs of small and medium-sized firms, over one-third reported that the customer usually does not read or understand their contract, even when monthly fees are six figures. Complicating things further, the purchaser often is not the person who is using the product.

Think in terms of the purchaser of software versus the person who uses the software or device. In many cases, there is no internal communication. I know of two tech companies that have educational teams who visit the business customer after the sale to educate the front-line users on what was purchased. These companies have learned that the buyer in IT will not effectively pass the information down. Further, these customer success teams monitor the ongoing use of the product to identify users who are not using most of the functionality and then retrain them. The logic is that if the full value is not being achieved, customer satisfaction and ultimately loyalty will be damaged.

Four Reasons Why Most Companies Fail to Effectively Onboard Customers

Many companies fail to effectively onboard customers because:

  • Responsibility and accountability for onboarding is not established.
    Often the sales function will conduct a perfunctory delivery of the product, but no other function is assigned to complete the task and assure understanding. If sales does provide onboarding information, it is often done in a rapid-fire manner, which the customer often does not fully absorb.
  • There is an assumption that the customer will read the directions, contract and labeling, especially if there is a quick start booklet.
    For appliance and internet installation, handing the customer the quick start booklet, usually with a request to read, is where onboarding ends. Several auto companies provide a CD or flash drive with information, but the viewing rate is below 25 percent due to the perceived time commitment.
  • Marketing and sales functions genuinely do notwant to fully disclose product limitations.
    Their fear is that sales will be jeopardized.
  • In many B2B environments, the purchaser is educated but other staff, who are actually the users of the product or service, do not receive education.Many tech companies incorrectly assume the purchaser (e.g., the IT department) will do the necessary internal education.

Without effective, proactive education of the customer, any immediate problems, questions, and calls to service or support will result in a negative first impression. On the other hand, if customers are educated on basic use, their first impression is positive. This is the rationale for quick start directions that are prominently displayed with many products.

In a B2B environment, education is more challenging due to the complexity and multiple levels of customers. For example, the sales team of one transportation company tells customers that “If you lease 50 of our trucks, your downtime will be low and life will be beautiful.” To his credit, the GVP for Sales requires the sales team to add, “When one of those trucks breaks down, we’ll take two hours to try to repair it before giving you a replacement truck because spares are very expensive.”

Customers appreciate being told of the limitations before they buy. In fact, such education builds trust and actually is a delighter. One of the biggest delighters our research has identified is “you cared enough to warn me of the glitches I might encounter; your competitor did not mention that.2

The Tangible Cost of Not Onboarding Customers

If you do not educate the customer, problems will be encountered, and a range of damage and cost will occur.

Customers encounter more problems

A major auto manufacturer found that as soon as customers drove off the sales lot they had trouble with the technology control panel and became frustrated. While a minor issue at first, repetitive problems soon made this issue the largest point of pain and resulted in double-digit declines in willingness to recommend the brand. When a yogurt company brand manager removed a cautionary label on cherry yogurt, “Caution, Real Cherries Have Pits!”, the number of complaints about broken teeth from stray pits doubled. When the caution was reinstated, complaints declined to previous levels.

Service workload increases

A benefits insurance firm found that client HR departments made a huge number of mistakes filling out forms to add new employees or delete employees who left, causing multiple phone calls and e-mails for each error. Further, the client blamed the company for the errors and being hard to do business with.

Customers feel cheated

Buyers of durable products (e.g., autos and appliances) who seldom read or understand their warranties feel cheated and are harder to deal with when they have problems out of warranty. These customers often post their issues on social and third-party websites and demand full repair. In another example, homeowner insurance customers do not read their policies, thereby missing the valuable items limitation. When their house is destroyed and they submit a claim including $12,000 in jewelry and valuables, it is rejected because of the $5,000 limitation, which they were unaware of.

Customers spread negative word of mouth (WOM)

Two major SAAS software firms found many of their clients’ IT and Operations departments failed to aggressively train the front line on how to use many of the product features. In addition, many client executives were not trained on how to generate useful reports, resulting in widespread dissatisfaction, cancellation of software contracts, and negative referrals. CCMC’s 2020 National Customer Rage Study indicates that dissatisfied customers generally spread three times as much negative WOM as satisfied customers spread positive WOM.

Customer will leave and not buy additional products

Customers encountering problems are, on average, 20 percent less loyal to a company than customers with no problems. This means that one in five customers with problems will be lost. Additionally, dissatisfied customers are 40 percent less likely to buy other products from the company.

Financial Impact

Here is a simple calculation of the financial impact of onboarding. If you have five customers each worth $1,000 who encounter problems, one of them will be lost because, on average, problems cause a 20 percent damage to loyalty.

If you educate customers to avoid these five problems, you will retain that one customer who otherwise would leave, and therefore, retain $1,000 in additional revenue. The ROI on customer onboarding and education is almost always more than 100 percent and often five times that amount in terms of fewer problems and higher satisfaction and customer connection.

This is especially true when compared to the cost of acquiring new customers to replace the customers lost.

Is lack of effective onboarding costing your company revenue and success in the market? Answer these questions:

  • Do some or many of your customers have initial problems using your product or service?
  • Do customers call or e-mail with simple questions that should have been answered by the directions or common sense?
  • Do some customers return the product or simply not use it?

If the answer to any of these is “yes”, onboarding has significant improvement opportunities.

Six Steps of Customer Onboarding

Here is a logical six-step process for onboarding, which starts at identifying who needs to be onboarded through measuring process effectiveness. Most companies fail to effectively address steps one and two, rendering much of the rest of their effort moot.

Step 1: Identify Customer for Onboarding

You cannot educate new customers if you cannot identify them. In some cases, it is easy, such as when the customer signs up for a new service or contract. However, if the customer buys from a retailer, even when the product is an expensive item, they may not be identified to the manufacturer. Depending on the type of product and purchase channel, there are five basic ways you can identify the customer and get enough information to facilitate education:

  • When the customer signs up for a service or submits a signed contract
  • Registration of a warranty when purchased at retail
  • For small retail purchases, the customer can be persuaded to register with the manufacturer by offering extra benefits, information or join a loyalty program or online community
  • Provide a new customer tab on the website so customers know where to go to get onboarded
  • Direct onboarding via education of the customer by the selling retail sales or product installation staff

The basic information you need to facilitate onboarding is an e-mail address and what product the customer has purchased. In B2B environments, turnover among decision-makers, influencers, or users all can lead to more problems. One copier company offered clients a free box of paper if they would flag new machine operators so that they could be effectively trained, which reduced emergency repairs and machine uptime.

Step 2: Motivating Customers to Want to Be Educated

Unfortunately, the adage “you can lead the horse to water but cannot make it drink” strongly applies. Many customers, even if given the information, will not read it or will procrastinate, intending to read it later. CCMC’s National Customer Rage Study did find that women read contracts and directions significantly more often than men, but even women reported that they only read the directions carefully less than half the time when instructions were provided.

Here are four ways to motivate customers:

Scare them with messages implying problems if they do not read the information

  • “Avoid problems and unpleasant surprises”
  • “Three things most customers miss in their homeowner’s contract” – A property casualty insurance company added this phrase to a welcome letter followed by three short bullet points – customers read them and problems with valuables exclusions were reduced.
  • “Here’s the fine print you care about!” – Avis used this phrase in bold print in its printed contracts to highlight key issues – all bullet points, reducing surprises.
  • “Caution! Real Cherries Have Pits!” – This label on yogurt packages worked. When it was removed, complaints about dental injuries doubled. When it was placed back on the package, complaints dropped back to previous levels.
  • Make watching onboarding video mandatory.Tesla informs the customer the car will not be delivered until the customer has watched all 28 minutes of the onboarding video.

Bribe customers with discounts or extra features

  • Price discount– A Rhode Island credit union offers one-quarter point lower interest rates to customers who watch the video on how the home buying/mortgage process works. The credit union found that the reduced customer questions and problems more than compensated for the lost revenue from the discount.
  • Extra features or video tokens – Telecom and internet companies provide credits for watching educational videos on how internet service works and simple fixes to try before calling for support.

Use humor or entertainment

  • “Before you beat this valve with a hammer to make it fit, please call our support department for help with installation!” – A Pennsylvania valve manufacturer put a purple band around expensive refinery valves with that phrase and an 800 number. “Defective” valve returns declined by 40 percent.
  • Airline and airport safety videos which use visual puns or jokes (wrestler placing teddy bear under the seat) or comedy troupe (like Monty Python at Las Vegas Airport) going through security.

Slightly delay customer’s departure – “one last thing to assure a good start.”

Once the customer has bought the car or opened the account, they want to leave. You can gently delay the customer’s departure and let them know the fastest way out the door is to get educated.

  • Briefly educate and elicit promise to come back to be further educated. Audi found the most successful new car delivery process was the salesman asking, “What three things can I teach you before driving off the lot with this new car? I will not delay you further if you promise to let me call you in two weeks to educate you on the three things you were not able to figure out.”
  • Load the self-service mobile app on their phone before the customer leaves. One Las Vegas Credit Union loads the app on the phone and shows the three most important functions before releasing.

Step 3: Educate on Key Issues at the Start of the Customer Journey

Information must be either very easy to find or delivered JIT! Education must be kept short and to the point. One- or two-line bullet points work better than long paragraphs. Likewise, the limit is three to five items — listing 10 items is not effective – visually it becomes a gray mass. Focus on:

  • How to perform the three basic functions of the product or service and get started using it
  • Three most prevalent problems or surprises to avoid or preemptively address

One problem that should be addressed when appropriate is the product or service warranty. Most large ticket products and services come with a 10- or 50-page warranty which is seldom read until a major problem occurs. A short, but pointed, mention of the warranty and/or any critical limitation up front pays huge dividends. For example, CCMC found that when auto owners remembered being told of the limitations of their vehicle warranty, their willingness to take part in the responsibility for out-of-warranty repairs increased dramatically, and shared settlements produced much higher retained loyalty to the Brand at a much lower goodwill cost. Customers who had no memory of such education/warnings were more than twice as likely to be detractors on an NPS scale.

Gamification works well – offer the customer a three-question quiz and congratulate them for the right answers. Once the customer has been educated on those three items, tee up the next lessons or advanced product functions for delivery JIT via the appropriate channel.

Step 4: Encouraging Customers to Use Support Tools and Obtain Help

After the top three to six customer problems and questions, the diversity of customer questions expands quickly, and unless you can monitor exactly what the customer is doing, JIT will not necessarily work. At this point, the company should introduce support tools and online communities.

  • Remember 90 percent of people like to self-service
  • Highlight the support channels on a mobile app and website home page
  • If available, focus on three channels, FAQ, Chat and the online community, if there is one
  • Also suggest e-mail and an 800 number in the next line. While it is prudent to list the self-service channels first, forcing the customer to search for the 800 number is irritating.

Step 5: Providing Ongoing Educated JIT to Strengthen Retention

Most companies view onboarding as an event that happens once when the customer first buys the product. The key to retention is ongoing education – introduction to new product features or add-ons and, in B2B environments, identifying employees who were not users (or employees) when the original product was introduced. A copier company found that turnover within client companies often led to double the number of emergency repair calls due to employees not being trained on product use. This step should address:

  • Next three product functions or value adds – like recipes for food or additional functionality for software
  • Participation in customer communities and participation in social media events – before the Covid-19 crisis, the most effective customer community was the Harley-Davidson Owners Group (HOG) with millions of owners which drove hundreds of millions in accessory sales as well as companionship. Online communities exist for almost every customer group, from KraftHeinz (myfoodandfamily.com) recipe exchanges and Honda’s accessorized car clubs to Intuit’s CPA and Accountant group and the American Association of Clinical Chemistry’s pathologist group (complete with, respectively CPA and a dark coroner joke section). Technology companies like Cisco Systems and Hughes Communications find that online customer communities can divert many inquiries from inhouse support units, saving time and money.
  • Educating and cross-selling customers on products they can actually use strengthens the relationship and retention as well as enhances revenue. Further, intelligent cross-selling of something that adds to value is a significant delighter.3 Ongoing education and onboarding depend on a sophisticated knowledge of the customer’s particular circumstances and use patterns. Uninformed education can do more damage than good.

Step 6: Evaluation of Onboarding Effectiveness

Because onboarding is a key to customer success in using the product, it is critical that this process be evaluated like the rest of the customer journey. One logistics company measured the effectiveness of onboarding by surveying new customers after three months to ascertain if they were aware of key aspects of the contract. This survey drove account executive evaluations.

The steps for evaluation are as follows:

  1. Quantify the full range of customer problems and questions from workload reports and via a survey of customers using a granular list of problems they may have encountered. This survey is critical because many customers encounter problems that are irritating but do not complain.
  2. Identify the two to five key problems that are amenable to onboarding and implement steps 1 to 4 above.
  3. Quantify the reductions of support calls and, ideally, the satisfaction of customers who were onboarded versus customers who were not educated. The results will be compelling. For instance, one auto manufacturer found that owners who were aware of the provisions of their warranty were significantly happier and more satisfied with company resolution of out-of-warranty failures than customers who had not been effectively educated by the dealer at the time of vehicle delivery.
  4. Test further approaches to education using A/B testing methods.

Showing the Return on Investment (ROI) of Onboarding

The evaluation process described in step 6 is your roadmap for demonstrating an ROI

  1. Create baseline, ideally via new customer problem survey
  2. Conduct onboarding ideally via A/B test
  3. Measure reduced support volume and impact on loyalty

For a particular problem, obtain a baseline of the number or percentage of customers who encounter a problem, the cost of support for that issue, and the damage to loyalty and WOM the issue causes. Implement the onboarding process and then measure the reduction in contacts and the increase in loyalty and revenue.

A classic example of this approach is Millicom, the leader in Latin American cellular communications. CCMC’s problem research in Bolivia showed that most premium customers were inadequately onboarded by store personnel and the website, especially about the topic of using off-brand or gray market phones which were less expensive but provided much poorer service and many more dropped calls. A concerted effort was launched to address this issue. Support calls caused by that problem declined and satisfaction and loyalty among these valuable customers rose over 15 percent, resulting in an ROI of more than 100 percent.4

Summary: Onboarding Can Be the Easiest Road to Higher Loyalty

Onboarding fails to occur in most companies because management does not appreciate the level of problems encountered by new customers and the accompanying impact. Further, management fails to fix accountability or motivate customers for onboarding and measure its execution. When accountability, flagging of new customers, and motivation to learn are created, onboarding can increase retention and reduce support costs by double-digit percentages


1. Based on a detailed analysis of customer points of pain across the product journey for over 50 companies.

2. Goodman, J. Strategic Customer Service (Second ed.). Harper Collins, 2019, p 40

3. Ibid.

4. Goodman, J and DiSousa, Ari, TIGO Bolivia’s Service Quality Initiative, Call Center Pipeline, Nov 2016, p 32


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