Episode 66: Profitable Onboarding

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5 Keys to unlock profitable onboarding. Full transcript below…

Welcome to the Business Numbers podcast. I’m your host, Ben McAdam. I’m a profits coach, virtual CFO, and entrepreneur, and I’ve created this podcast to help you grow your business profits and understand your business numbers without judgment and without bearing you in a whole bunch of jargon that you don’t need.

Just actionable tips and case studies to help you grow your business. For show notes, go to the website www.businessnumberspodcast.com.

[00:00:38] I’m recording this episode in Miami. I’ve come to present a workshop, and I thought I would share it with all of you.

Now, this workshop is for 200 plus digital marketing agency businesses. So for those of you who don’t have a service-based business, you might not think this is very relevant, and to be honest, it might not be very relevant. Could still be handy to listen to because there may be some ideas that are helpful for you.

If you have a service business, not a digital marketing agency business necessarily, but any service business, this is very, very useful because if you don’t get it right, there are three things that tend to happen.

[00:01:25] Number one is you make a very poor first impression. With onboarding, this is the first thing you do for a client when they first start working with you, including gathering information as well as the first services you provide. And if your onboarding isn’t very profitable, or if you don’t implement some of the things I’ll summarize later, is that you’ll make a poor first impression, which will lead to more churn. Clients will leave you more often if you’re making a poor first impression.

[00:01:59] Another problem is that every new client digs into your savings. If their onboarding isn’t profitable, then your savings will limit the amount of new clients that you can take on. It’s like you have to have some savings there, and then the onboarding might be unprofitable for the first month or two, or heaven forbid three, and then hopefully afterward, there you are. It’s more profitable, and so it replenishes your savings, and then you can afford another new client.

Ultimately, though, you’ll be capping your growth. Because if clients aren’t sticking around for very long, then you have to sign up more clients in order to grow. But if each new client digs into your savings, then that caps the number of new clients that can sign up.

[00:02:49] So if you don’t get this stuff right, You won’t be able to grow very fast, and there will be an upper limit on the size of your business. You might not make it to seven figures. You might barely make it past into the six-figure range, and let’s not even talk about eight figures if you don’t get this right.

[00:03:10] The opportunity though, if you do get it right, is that you make such a great first impression, a rockstar first impression, that your clients, within the first month, start raving about you to their friends, and you get natural word of mouth marketing. As well as, the clients tend to stick around a bit longer because of such a rockstar first impression they are forgiving of later mistakes. Or you get such great results from them that they’re, you know, happy to stick around forever.

If you get it right, each new client funds the marketing and the onboarding cost for more clients. So not only do you get paid back a lot quicker for what you spent on the marketing, and it’s profitable doing the onboarding. Not only do you get paid back for that client’s marketing funds, but maybe your onboarding is so profitable that each new client that signs up allows you to sign up another two.

[00:04:08] Ultimately, it’s faster growth if you get this stuff right, you know, you make a great first impression, so there’s lower churn, and then you can actually afford to pay for the marketing to attract and convert clients, and the onboarding is profitable. And so your growth is much, much faster if you get it right.

So, a quick overview of what we’re going to cover.

[00:04:30] You need to first measure where your profits are at the moment, right now, before you make any changes. How profitable is your onboarding? How profitable is it between each month? Of on like the first month, the second month, or maybe it’s by weeks for you. The first week, the second week, the third week, the fourth week…

How profitable is your onboarding in each of those periods? Is it profitable at all? Is it so profitable you can fund multiple clients? So we need to measure the profits, that’s the first thing.

[00:05:06] Next, there are some strategies that I’ll talk about more in-depth in the workshop than I can cover here. That would make the podcast episode very, very long. If you want more details, reach out. Let me know.

So measure the profits, new strategies, and then finally, there needs to be an implementation plan. It’s great to know where you are, and it’s great to have some ideas about what you could change, but if you don’t actually make any changes, then nothing will change. Or it will only just decay.

[00:05:37] So the five keys that I’m going to cover in the workshop, again in more detail than I can cover here.

#1 Measure It 

[00:05:43] The first one is you need to measure it. I’ve got a spreadsheet template that I’ll be sharing and walking people through. It’s very, very simple. The different rows are the different types of costs that you incur in the onboarding process and during the ongoing month-to-month servicing of the client. And there are some columns. A different column for every month or for every week. And right down the bottom of each column, the final rows are how much you charge for the onboarding and for the ongoing monthly fee versus the costs, how much profit there is, and what percentage that is leftover as a profit of the amount that you charged for that period.

[00:06:33] So once you fill all that out, putting the different costs into the right periods on different rows, whether it’s onboarding or ongoing, and had a look to see where you’re at, it lets you know where you’re at. But also, this spreadsheet is useful because it helps you check the effect of changes so that you can think in advance.

[00:06:55] It’s like,” oh, I might try this idea to make my onboarding more profitable. “Then you can go and use the spreadsheet, make a copy of that sheet, that particular tab, and then on the copy, you can say, “All right, here’s what I’m going to change.” And you can actually see how much of an impact that change is going to have. So that’s what this spreadsheet is useful for.

[00:07:16] One other thing I’m going to mention here is one of the ideas I don’t talk about in the workshop in full. It’s just this idea of productivity, you can usually improve your costs by at least 5-10% by focusing on the productivity of the team. You know, having good processes, helping them work more efficiently, that kind of thing.

[00:07:38] So once you’ve got that spreadsheet filled out, you wanna analyze; are you profitable during each of those periods? How profitable are you? Or if you’re not profitable, how far have you got to go? Like, how much does it cost you each month? Even if it’s profitable, still think about implementing some of the ideas that I’m gonna share or some other ideas you or your team might come up with. Because just because you’ve got a little profit does mean you can’t have a lot. It’s not like it’s greedy or anything. The more profitable your business is, the more people you can help, including your team, not just your clients. So that was the first key. Measure it.

#2 Charge For It… Or Don’t.

[00:08:18] The second key is to charge or not to charge for onboarding.

Imagine that I’m holding a skull, and I’ve got one of those weird little collars, rough things, and I’m declaiming on a stage in a Shakespearean play. “Do you charge for set-up and onboarding, or do you not?” Is the question here, and what you can do is pop that into the spreadsheet. If you don’t charge, you could try that out. Maybe instead of a one-off fee, maybe the first few months or more are a higher fee; it doesn’t matter.

I know this is a controversial topic. People usually have a strong opinion about this. If you are only using a setup fee as a sales tactic, and if they sign up quickly, then you can waive the setup fee or give them an amount off the setup fee or something, then really use that. It is an impactful sales tactic, so make sure you are actually using it and mentioning it and highlighting how much of a big deal that is and all of that.

[00:09:29] You might worry that a setup fee will make sales harder. I was like, eh, lowering your price is never the right answer to a sales problem. Or very rarely, I should say, very rarely the right answer to a sales problem. Either you don’t have enough leads, you don’t have the right leads, they’re not being warmed up enough, or there’s some problem with your sales process. But if you do it all well, then you can charge set-up fees, and you can charge higher prices.

[00:10:01] So the exercise for this bit is to go into the spreadsheet and add, change or remove your setup fee and see the effect. So that’s the second key.

#3 Spread Out the Onboarding Work.  

[00:10:09]The third key out of five is to spread out the onboarding work. You don’t have to necessarily do all of the stuff in the first month, and I know a number of people that do spread things out this way.

There are a couple of benefits. For the digital marketers who are making changes to websites, that’s better for SEO if there are many changes over time, I’m told. I’m not much of an SEO person.

[00:10:38] It gives the client a good sense of progress; you’re always working on something. It also makes the graph of results that you show the clients more consistently upward trending.

And so this big jump upwards, and then basically a plateau of slow growth; if the clients see you doing a whole bunch of work and a whole bunch of results initially, and then you’re not doing that ongoing, that’s going to make the clients unhappy. And they’re going to think that maybe you’re not putting in as much effort, and they’re not getting the most value out of their money. And they’re gonna start questioning things and maybe stop referring you and maybe listen to the marketing of other service businesses, your competitors. So it’s important that you can show consistent good progress and consistently good results rather than just one lump at the beginning.

[00:11:27] So spreading out the onboarding work can work in your favor from a client relationship standpoint and client happiness standpoint, not just the fact that it makes you a bit more profitable and spreads out the costs. It can also sometimes help for getting information from clients; this is one of the most annoying things about being in a service business apart from hiring. 

One of the most frustrating things is when clients don’t give you the information that you need, and you’re waiting on one little piece of information; that they’ve given you pretty much everything else, you’re waiting on one little piece before you can get started. But if you’re not doing all the onboarding all at once, then you don’t necessarily need all the information at once.

And so if you have a problem getting information from your clients, this might actually help solve that as a nice side effect, as well as making your onboarding more profitable.

[00:12:19] So the exercise here, we will be going back into the spreadsheet and trying to spread out the work and seeing what effect that has on the profitability of the initial months.

#4 Speed Up! It Doesn’t Mean Sacrificing Quality. 

[00:12:33]The fourth key is to speed up the onboarding work. So again, controversy. 

Maybe you could use some templates instead of doing everything custom. The ratio is about like only 4% of the people I suggest this to have actually reverted after they implement it. I know it can be something you’re a bit worried about initially, but the grass really is greener on the other side for pretty much everybody.

[00:13:01] Templates are really helpful here because they’re faster, they’re more profitable for you. You can improve the template, which means you get better results for the client. Faster, better results for the client because you’re improving the template each time you use it. And when you learn something new, or you learn a slightly better way to do it or a slightly more efficient way to do it, you improve the template.

[00:13:29] So it’s not just being cheap, or lower quality, or cookie cutter. You’re actually going to get better results by working on and improving a template. You’re probably already using some frameworks, anyway. Like there are certain ways that you do the service, and you use those ways over and over again; this is just expanding that concept.

[00:13:50] Usual objections I get is that clients won’t like cookie-cutter things or stuff that you’ve done for every single other client. Well, number one, they don’t really know that you’ve done it for other clients. Number two, you could charge them all for custom… But the most important thing is that you have refined a process that gets them results in the most efficient and effective way.

You are the expert. It’s your job to design the most efficient and effective way to get them results. The fact that it’s customized doesn’t necessarily mean that it’s going to work any better. And in fact, could actually mean that it’s going to work worse.

[00:14:31] Imagine that you have a client, you get great results, and you’re like, “Awesome! I can’t do it that way ever again because I have to custom-build everything”. So that means that every single client after that is going to have less impressive results, right? Doesn’t make sense.

[00:14:46] So another objection I get to using templates, finding ways to speed it up is that they don’t(maybe you, the business owner, or your team) don’t have any time to make these templates.

Just go to the last two or three clients who are getting results, go through what you did for them and use those as templates. Just remove their name from everything and then TA-DA! a template.

[00:15:12] Some examples here that I’ll be using for the marketing agencies I’ll be presenting this workshop for is for web design. You might use templates or themes for the copy and content, you might use certain frameworks or standard pieces of content, or you might just slightly tweak the title. 

For ads, you might have template ads that you can use. I know at least one agency that has templates where they can start running ads if the client is dragging their feet, getting them photos or images or copy for the ads.

[00:15:49] Another example is processes. You could use the same process every time. You could have templates for the emails that you send to clients, for example. 

So the exercise here is to go into the spreadsheet and start estimating the cost savings if you use templates rather than doing everything from scratch, custom for every client. As an example, web design. Doing a custom web design can take many months and three to four times the amount of cost and time as using a template.

#5 Plan to Implement the Right Changes.

[00:16:24] Okay, so we’re up to the fifth key now, which is the implementation plan. The first thing is to go look at the spreadsheet and see, “Are there actually enough results to justify implementing any of these ideas?” or any ideas you come up with that you can pop ’em into the spreadsheet and see how much of a benefit it’s going to be.

Usually, it is, but you can see what’s the benefit for each individual month. Like if you’re not losing money in the beginning couple of months, then you can afford to sign up more clients. But also have a look at overall, have you actually saved yourself any money overall and made each client more profitable?

[00:17:04] Also, when it comes to implementation, you can run tests. You don’t have to like completely overhaul and do this a new way for every client. You could run a test on a couple of clients and just see how it goes, and if it doesn’t work, go back to the old method or tweak it.

[00:17:20] You need to synchronize with your team. You need to get them on board with the idea. Haha…. see what I did there? You should hear my Dad Jokes.

You need to get the team on board with the ideas you need to add it to their goals, KPIs, or their rocks and plans for this quarter. And you need to train them. You need to organize training in the new method. It doesn’t necessarily have to be you that trains them, but they need to know what they have to do. They need to know it’s a priority, and they need to be trained on how to do it. So that’s synchronizing with the team.

[00:17:59] You also need to get clear on what needs to change because you might need to change some things about your marketing and your sales funnel. Your sales call because of how you describe to your clients what’s going to happen after they sign up with you, or the promises you made and the expectations you set before they sign up. And then, after they sign up, you’ll probably have some onboarding processes that need to change if your onboarding’s changing, right? 

So processes, SOPs, written things, or screen recordings probably need to be tweaked. So get clear on what needs to change. Don’t be put off, it might only be small tweaks that you have to make. And you will potentially also have a team that can help you out, right?

[00:18:45] So, the exercise here, you need to get clear on what change you’re going to implement. Is it going to be improving productivity? Charging a set-up fee or charging it differently? Spreading out the work? Speeding up the work?

What is the idea that you’re going to implement? List the things that need to change, and then work out what needs to change and how you’re going to implement it. That’s the exercise there.

[00:19:11] So, I’ve been through the five keys that will help onboarding be more profitable. The next action is to make sure you go through and do the measuring. You choose a strategy, implement the strategy, and then you track the results and repeat it. 

You could do it every three months. Every three months, you could repeat the process again. Have a look at three to five clients who recently finished onboarding in the last few months, see how profitable they were, decide on what tactic you’re going to use to improve the profitability, and implement it, and then measure it and then repeat it. You could do it every three months.

[00:19:51] So that’s the speedy version of a workshop that I’ll be putting on in a few days, early November. This episode’s probably not gonna go live for a couple of weeks. If I’m going to see you there or then, or if I did see you there. Hello again! Hope this refresher helps. I hope you’re implementing and that it’s starting to get you some results.

[00:20:16] If you want more details, you can always reach out. Love to feature a question on the podcast if you’ve got one. Or, if you need my help, we can work 1-1 and talk about whether we’d be a fit or not. 

You can go reach out to me at www.profitscollective.com, or shoot me a message through Facebook or LinkedIn or something. Love to hear from you!

Hope this is helpful. I’ll see you in the next episode. Thanks for listening.

Before you go, two quick things. If this was useful, please give it a review and share it with a friend who it might help. And number two, if you want help from me to unlock growth and profits in your business and greater clarity around your numbers, you can book a call through www.profitscollective.com. And if we’re not a fit, I’ll point you in the right direction.

Thanks again for listening.​

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