The Ultimate Guide To Customer Onboarding in SaaS

12 min readJun 30, 2021

So you’ve built a great SaaS product and generated some marketing buzz… but you don’t know how to do customer onboarding.

That’s a problem because it means that users will probably leave your platform before they really experience the value of what you have built.

As a result, you’re leaving money on the table. Lots of it.

Fortunately, customer onboarding is a skill set that can be learned. Allow us to show you how it works.

What is the purpose of customer onboarding in SaaS?
What is the customer onboarding process in SaaS?
What makes a good customer onboarding process for SaaS businesses?
How do you measure customer onboarding in SaaS?
How do you optimize customer onboarding for SaaS?
Conclusion

TL;DR

Onboarding is synonymous with customer education.
The purpose of onboarding is to increase the odds of users reaching the Aha Moment and activating.
You can’t onboard users without segmenting them and working out what the “AHA moment” and activation look like for each segment.
A typical onboarding sequence involves a sign-up form, a welcome screen, an onboarding survey, and a product walkthrough.
Only show users what they need to activate, and don’t get in the way of them using the product.
To track the success of your onboarding process, measure Product Activation Rate, Day 1 Retention, and Trial to Paid Conversion.
To optimize your onboarding processes, look to other companies for inspiration and best practices, and don’t forget to A/B test.

What is the purpose of customer onboarding in SaaS?

Most SaaS businesses see onboarding in terms of teaching their customers how to use their product.

There is some truth to this. But we encourage you to see onboarding more broadly, as customer education — a process that never ends.

If you see onboarding in these terms, you’ll be more likely to continue to educate customers later down the product adoption journey, such as when you release a new product feature aimed at advanced users.

This is often referred to as “secondary onboarding.”

Viewed through this lens, the ultimate purpose of onboarding is to demonstrate value to your customers so frequently and consistently that they allow themselves to be retained indefinitely.

As we’ve written before on this blog many times, retention is an essential metric for SaaS businesses from a commercial standpoint, because SaaS businesses make their money from repeat subscriptions, as opposed to one-off sales.

Put simply: if you don’t onboard your users, you are leaving thousands of dollars on the table in lost subscriptions and renewals.

Onboarding has value from the moment that your customer encounters your product and decides to sign up. Just like in the offline world, those first impressions matter a lot.

We call this first encounter “primary onboarding,” and it serves two main purposes:

1. Reach the “AHA moment”

This is the moment where your user understands the value of your product for their particular use case for the first time.

The italics are important here. Value is a subjective concept, and what one user sees as valuable might not be of value to another.

For example, a CEO using a project management tool is likely going to care about whether the bigger picture of his or her business is running according to plan. By contrast, the company accountant is only going to be concerned with collecting financial data.

These are completely different use cases, so each type of user will define the “AHA moment” differently.

For really simple products, the “AHA moment” can even occur before sign-up, but most of the time, this happens during onboarding.

2. Activation

This is the moment where the customer experiences the value of your product for the first time.

Again, the italics are important here. We’re talking about viscerally experiencing value, not merely appreciating value in abstraction.

So for a personal organization tool like Todoist, you’d have to actually create tasks and check them off your to-do list. Not just look at the todo list and think “that looks cool.”

I’ve observed that many top SaaS tools build activation directly into their product walkthroughs so that if a user follows through with the onboarding checklist, they will end up performing the tasks needed for activation as a matter of course.

Note: although most businesses only see the Aha Moment and activation as important during primary onboarding, the best SaaS companies will apply this same reasoning to new product feature releases across the customer lifecycle.

This brings us nicely on to…

What is the customer onboarding process in SaaS?

A caveat at the start: the onboarding process will look different from business to business, so there’s no guarantee that all of this will apply to your specific use case.

That being said, if onboarding were a chocolate cake, here’s the recipe that I would follow:

1. Segment your users and define the “AHA moment” and Activation for each segment

If the purpose of primary onboarding is to reach the “AHA moment” and activate, then you’ll need to define what you’re aiming at before you can set customers down their respective onboarding paths.

And because the “AHA moment” and activation are different for each use case, you’ll have to first segment your users before you can do anything else.

Criteria you can segment by include:

Demographics (age, gender, income)
User attribute (plan, language, device)
Account age (new, established, power user)
Sentiment (detractors, passives, promoters)

You can find more details about how to segment your customers using Userpilot here.

To work out what the “AHA moment” and activation are for each segment, put yourself in the shoes of your customers. You should have an intuitive sense of what they find valuable about your product and why they use it.

Then, validate your educated guess by looking at product data.

Compare the features that regular customers use against the ones used by customers that churned.

There’s a good chance that the features used by the customers you retained are the drivers of value that make your users activate.

2. The sign-up form

The customer journey for most SaaS products begins with the moment when a user creates an account with you for the first time.

At this stage of the process, your goal is to make their sign-up as quick and easy as possible.

To achieve this, we suggest the following:

No-one likes having to put 4 numbers, 2 upper-case characters and 3 special characters into a password. Get rid of these types of conditions.
Users don’t want to type in their email to make an account. If you can allow people to sign up through massive platforms like Google or Facebook, so much the better.
You wouldn’t want to sign up for a product that has 36 fields on its registration form, and neither does your customer. Keep the number of fields to an absolute minimum.
If you must take data like phone numbers during the registration form (beware that privacy-conscious users won’t appreciate this), use autofill so that users don’t have to manually input dashes into the field.
If there’s any way you can get customer data after registration is complete, then do that. Your customer wants to use your product, so let them do so!

3. The welcome screen

This is the initial modal pop-up your customer will see after they log in to your platform for the first time.

In general, you want your welcome screen to:

Greet customers by their first name
Introduce your business
Include a photo of one of your team
Communicate any next steps

All of these elements will make your customer feel like you are friendly and care about them.

The welcome screen is also your opportunity to work out which user segment your customer belongs to.

You figure this out by giving them a microsurvey that asks for data like their job title and what main task(s) they hope to perform by using your product.

Once you know what segment your user is in, you can serve them with a product walkthrough that is specifically tailored to their individual use case.

4. The onboarding survey

Like with the sign-up form, keep this as short as possible.

Remember: your user is here to use your product, not to be caught up in filling endless forms.

Common themes in onboarding surveys include:

Purchase intent — why did the customer choose to work with you?
User goals — how does the user measure a successful outcome from your product?
Market experience — which of your competitors has your user worked with?
User sentiment — how does your user feel about their experience so far?
Unknown unknowns — can your user point to anything you could do better that you’re not aware of?

Astute readers will notice that the answers to all of these questions can be fed back into improving the onboarding process, and indeed improving positioning in general.

For much more information on how to create an onboarding survey, we recommend that you check out this post.

5. The product walkthrough

Unlike what many SaaS types seem to think, this doesn’t mean that you need to show every single tiny feature of your product. Nor that the features have to be shown in the same way, in the same order, every time.

Nobody enjoys generic, top-down product tours like this. It’s a bit like that old college professor who would always drone on in lectures, regardless of how (dis)interested you were.

Instead, you want to show users only those specific features that they need in order to activate.

You’ll choose which product features to show them on the basis of the answers they gave earlier during the welcome screen.

If a top-down product tour is like a boring lecture, a walkthrough like this is more like a two-way conversation with someone who knows you well.

If you’ve done everything correctly, this is the latest point in onboarding during which your user should experience the “AHA moment”. As previously discussed, there are some products that are so simple that this can occur even before sign-up.

Your product walkthrough should lead your user to activation.

If you have an onboarding checklist that includes the tasks needed for their use case to experience the value of your product, it will literally be impossible for them to finish the checklist and not activate.

How long is the onboarding process?

Short answer: it depends.

The more complex your business, the more time you will need to devote to customer education to ensure that your users get the most out of your app.

And remember that onboarding in the sense of customer education is technically an evergreen process that never ends. So another answer to this question could be: infinitely long.

All that being said, in my experience, primary onboarding for most SaaS products can be completed in less than 15 minutes.

That’s because tools like Userpilot automates the whole onboarding process from start to finish.

You can onboard a customer without ever talking to them in person. Just let your onboarding tool segment them and send them down the track that is most relevant to their use case.

What makes a good customer onboarding experience for SaaS businesses?

One of the biggest lessons I learned recently from a mentor in Silicon Valley is that your customer doesn’t always view the problem your business is solving in the same way that you do as the business owner.

Thus, although you might see onboarding as a never-ending process (and you would be technically correct), if you tell that to a customer… they’ll probably run for the hills!

From the customer’s perspective, onboarding should be quick, easy, and intuitive. More concretely, that means three things:

Onboarding shouldn’t get in the way of using the product. This happens all the time with generic product tours that alienate users by showing them millions of features they don’t need.
Your UX should be easy for them to understand. Tooltips are great for explaining any elements that aren’t immediately intuitive.
If there is anything that they don’t immediately understand, they should be able to go to your Help Center widget to find self-serve support. This guards against the friction of having to speak to a support agent during the first 15 minutes of using a new product.

If you only take one thing from this article, let it be this: successful customer onboarding should only show the user what they personally need in order to activate.

This means that the onboarding experience must be one that is tailored to the user’s particular segment, NOT a generic one.

Furthermore, there must be a clear, measurable goal at the end, in terms of getting the user to activate.

Remember: your user signed up to experience the value of your product. They probably feel a sense of excitement in the first few minutes of trying you out. The least you could do is to let them experience the value they want.

How do you measure customer onboarding in SaaS?

While it’s good to see things intuitively from your customer’s perspective, you also need to be able to measure whether onboarding is a success for your SaaS by using hard data.

Here are some metrics that you should consider tracking:

1. Product Activation Rate

If activation is the ultimate goal of primary onboarding, then it stands to reason that you’ll want to track the percentage of users that end up activating.

The simplest way to do this is:

Define what an activated user is
Find out how many users have activated in a set time frame by using your dashboard
Divide by the total number of users during that time frame
Multiply by 100

Here’s a graphic, which might be a little easier to follow:

2. Day 1 retention rate

You’d be shocked at how many users the average SaaS company ends up losing just on Day 1 of their customer journey.

A good onboarding process should drastically increase Day 1 retention.

You can calculate the retention rate as follows:

To calculate Day 1 retention specifically, you could run this calculation every day for a month and then average out your results.

3. Trial to paid conversion rate

Many SaaS products offer a free trial as a way of enticing new users.

The conversion rate from trial to paid can be calculated as the percentage of trial users who end up as paying customers.

The higher this percentage is, the greater the chances that your onboarding process is doing its job.

Aim for a rate of at least 25%.

How do you optimize customer onboarding?

If your SaaS is still performing poorly on these onboarding metrics after reading this article, fear not.

It might take some time and persistence before you see the results that you want.

One tip I can give you is to study the onboarding processes of successful companies that you want to emulate. You won’t be able to copy everything, but you’ll often be able to derive inspiration.

We’ve written about some instructional examples here and here.

Failing that, you should be in the habit of testing your onboarding over time and reworking your best ideas.

Become a scientist: run product experiment after product experiment and let the data show you where to go next.

You can use Userpilot to run A/B tests, which is a great tool for this type of work.

Specific tests you could run to optimize your onboarding include:

Testing different employee photos on your welcome screen
Changing the colors of your modals during the product walkthrough
Varying the order of the questions in your onboarding survey
Adding contextual help to pages where users get stuck during onboarding
Using a checklist to see if reminding customers of the steps they need to take actually makes them go through with these steps

Conclusion

Having read this article, you should now know:

What the purpose of onboarding is
How long it takes
What steps users typically take during onboarding, and in what order
How to measure whether your onboarding is a success
And how to optimize it if it’s not

You may have noticed that Userpilot is a handy tool for your onboarding needs, including segmenting users, creating welcome screens and product walkthroughs, and even A/B testing.

If you want to give it a try for free, click here to book a demo.

Here’s to a world without generic onboarding tours that bore users!