When we talk about customer onboarding, we’re referring to the process of welcoming new users and guiding them through the first steps of using your product or service. Done right, onboarding can have a huge impact on how well new customers engage with your product, ultimately driving retention and loyalty.

In fact, according to a study by Wyzowl, 86% of customers say they are more likely to stay loyal to a business that invests in onboarding. That shows how crucial it is to get this right from the start.

So, how does a great customer onboarding process make a difference for your business? Here are five ways:

• Improved customer retention
• Reduced churn rates
• Increased customer satisfaction
• Higher product adoption rates
• Enhanced customer lifetime value

Now that you see the impact, let’s explore the five key customer onboarding metrics you need to track to ensure success.

1. Customer Activation Rate

Customer activation rate tells you how many of your new users are reaching a key milestone or performing a specific action that shows they’re getting value from your product. Think of it as the first sign that your onboarding is working.

Why is this important?
Because if users don’t find value quickly, they’re more likely to abandon your product. You’ve probably heard the saying: "First impressions matter." That’s especially true with onboarding. If your customers don’t feel the value right away, they’ll likely churn.

How do you know if your activation rate is healthy?

Consider this:

• Are new users completing essential tasks?
• Are they signing up but not logging in afterward?
• How long does it take for them to find the value your product offers?

These questions give you insights into whether users are finding value immediately or getting lost.

Example:

Imagine you’re running an app that helps users track their fitness progress. A key action, or “activation event,” could be completing their first workout or entering their fitness goals. If they skip that, they probably won’t stick around.

How to Calculate Activation Rate?

You can calculate it using this formula:

Customer Activation Rate = Activated Customers / Total Sign-Ups × 100

For instance, if you have 500 users who completed the key action out of 1,000 new sign-ups, your activation rate would be 50%.

What’s a good activation rate?

It varies by industry, but generally, you’ll want to aim for at least 60-70%. If it’s lower, it’s a sign your onboarding might need adjustments—perhaps more guidance or simplifying steps.

What can improve activation?

• Simplifying the onboarding flow
• Adding visual walkthroughs or interactive tours
• Personalizing the onboarding process

2. Time to Value (TTV)

Did you knw? 78% of the company feel that client experience improves if the time to value is shortened! 

Time to Value (TTV) is all about how long it takes for a new user to experience the value of your product. In other words, how quickly does the customer achieve their "Aha!" moment—where they realize your product solves their problem?

Why is it important?
The faster you can help customers see the value of your product, the more likely they are to stick around. Long onboarding processes or complicated workflows can frustrate users, making them more likely to churn. In today’s fast-paced world, no one wants to wait to see results.

What’s the average time it takes for your new users to reach that “Aha!” moment?

• Is it too long, causing them to drop off?
• Are there any unnecessary steps that can be removed?
• Can the process be shortened with guided tips or inline suggestions?

Example:

Let’s say you run a project management tool. For most users, the "Aha!" moment comes when they create their first project and add tasks. If your onboarding process takes too long to guide users to this point, they might give up before realizing how helpful your tool is.

How to Calculate TTV?

To calculate Time to Value, you’ll want to track the average time it takes for users to complete a key action that defines success for your product. Here’s a basic formula:

Time to Value (TTV)=Total time taken by all users to complete the key action/ Number of users who completed the action​

For instance, if you have 200 users, and it takes them a combined total of 1,000 hours to reach the value, then the average TTV would be 5 hours.

Faster TTV means customers are seeing value right away, which increases their likelihood of sticking around and becoming loyal users.

3. Customer Retention Rate

Customer retention rate measures how many of your customers continue to use your product after a certain period. It’s a key metric that reflects how well you’re maintaining engagement after the initial onboarding phase. A strong retention rate shows that your product isn’t just attracting users—it’s keeping them.

Why is it important?
Acquiring new customers is more expensive than retaining existing ones. If your onboarding is effective, it should lead to higher retention rates because users have successfully integrated your product into their routines. In fact, research shows that improving customer retention rates by just 5% can increase profits by 25% to 95%.

Are your users coming back to your product after the first few interactions?

If they aren’t, it could mean that while your onboarding is strong, your long-term engagement strategies might need improvement. Or maybe users didn’t fully understand the product during onboarding and abandoned it later.

How to Calculate Customer Retention Rate?

The formula to calculate retention rate is straightforward:

Customer Retention Rate=

Customers at End of Period−New Customers Acquired/Customers at Start of Period×100

For example, if you had 1,000 customers at the beginning of the month, gained 200 new customers, and ended the month with 900 customers, your retention rate would be:

900−200/1000×100=70%

Example:

Let’s say you’re running a subscription-based learning app. After the first week, you want to see how many users are still active. If the majority of them have logged back in to continue their courses, you’ve got a good retention rate. If not, it might be time to re-evaluate how engaging your onboarding or long-term customer experience is.

How can you improve customer retention?

• Introduce gamification elements, such as rewards for completing onboarding milestones.
• Use surveys to gather feedback on the onboarding experience and identify areas for improvement.
• Provide personalized nudges and reminders to keep users engaged with the product.

4. Churn Rate

Churn rate represents the percentage of customers who stop using your product after a certain period. While customer retention tells you how many customers stick around, churn shows how many leave. It’s the flip side of retention, and it’s crucial to monitor because high churn can signal issues in your onboarding or product experience.

Why is it important?
If customers are churning, it means something is preventing them from seeing long-term value in your product. Perhaps they didn’t fully understand the product during onboarding, or maybe they encountered roadblocks that made them leave. Reducing churn directly improves your bottom line, as keeping existing customers is more cost-effective than acquiring new ones.

Why are customers leaving your product?

• Is the onboarding process too complicated?
• Are there technical issues or poor user experiences?
• Did they never reach the “Aha!” moment, meaning their Time to Value was too long?

Example:

Imagine you’re running an eCommerce platform. If users sign up but never complete a purchase, they might churn because they found it hard to navigate the product catalog or had issues at checkout. Tracking when users drop off can give you key insights into when and why they leave.

How to Calculate Churn Rate?

Churn rate can be calculated with this simple formula:

Churn Rate=Customers Lost During a Period / Total Customers at the Start of the Period×100

For example, if you started the month with 1,000 customers and lost 100 by the end, your churn rate would be 10%.

How can you reduce churn?

• Implement in-app messages and walkthroughs that offer ongoing support beyond onboarding.
• Use real-time analytics to track where users drop off and make improvements to those areas.
• Offer personalized nudges or rewards to re-engage users before they leave.

By addressing the reasons behind churn, you can make your onboarding process more effective and reduce customer loss over time.

5. Product Adoption Rate

Product adoption rate tracks how many customers are using your product’s key features over time. While activation measures the initial engagement, product adoption tells you how fully users are embracing your product. It’s a sign that customers are not only sticking around but also getting value from the features that matter most to their success.

Why is it important?
High adoption rates show that your onboarding is effectively teaching customers how to use your product’s core features. If customers aren’t using the most important parts of your product, they’re less likely to stay engaged, and their overall experience will suffer.

Are your customers using the features that drive the most value?

• Are they sticking to the basics, or are they exploring advanced tools?
• Do they know about all the features, or are they missing out due to gaps in the onboarding process?
• How often are users returning to these key features?

Example:

Let’s say you offer a marketing automation tool. If most users only schedule email campaigns but never use more advanced features like analytics or A/B testing, they’re not getting the full benefit of your product. By tracking which features are being adopted, you can identify where users need more support or education during onboarding.

How to Calculate Product Adoption Rate

Here’s a simple formula to track this:

Product Adoption Rate=Active Users of Key Features / Total Users × 100

For instance, if 300 out of 1,000 users actively use a core feature, your product adoption rate would be 30%. Low adoption rates indicate that your onboarding might need to better explain the value of these features.

How can you increase product adoption?

• Use interactive onboarding tours and inline widgets to highlight advanced features.
• Incorporate shoppable stories or videos to showcase feature use cases and benefits.

• Offer gamification rewards for trying out different features, encouraging exploration and adoption.

Tracking and improving product adoption helps ensure that your users are fully engaging with your product, leading to long-term success and loyalty.

How to Know If Your Onboarding Is Excellent or Needs Improvement

After tracking these five key metrics, how do you know if your onboarding process is truly effective? Here are some signs to look out for:

• High Activation Rate: If most users are completing key onboarding actions, that’s a good sign that they’re finding value quickly.
• Low Churn Rate: If your churn rate is decreasing, it shows that your onboarding and ongoing engagement strategies are working.
• Improving Time to Value: If users are experiencing value faster, it means your onboarding is becoming more efficient and effective.
• High Retention Rate: If users are sticking around after the initial onboarding, it’s a clear sign that your process is strong.
• Increasing Product Adoption: If customers are exploring and using more of your features over time, that’s proof that they’re finding real value in your product.

Conclusion

Getting your customer onboarding right is key to keeping users engaged and happy from day one. By tracking activation, TTV, retention, churn, and product adoption, you can spot what’s working and where you need to improve. The better your onboarding, the more likely your customers are to stick around and find real value.

Want to make sure your onboarding process is the best it can be? Book a demo with us, and let’s take your customer experience to the next level!

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