Efficiency Matters: Customer Onboarding Done Right

While the sales process might be a customer’s first impression of your MSP, the onboarding process is their first impression as a customer. This is an important distinction. Signing up with an MSP is one of the most critical decisions a business will make and it’s during onboarding that customers find out if they made the right decision. Onboarding is an important part of the customer journey to get right and with all the moving parts to even the smallest onboarding, they are not easy. Regardless, for the customer it’s where the rubber first meets the road, so to speak.

But the importance of the onboarding process goes further than just making an impression. In an MSP’s quest for what can be elusive profitability, onboarding plays a surprisingly big role. By gathering knowledge about the customer and preparing key internal stakeholders with this knowledge, as well as effectively migrating the customer to the MSP’s technology stack, onboarding lays the foundation for efficiently handling the customer’s needs, and ultimately how profitable that customer can be.

Make onboarding a project

To begin with, onboarding should be a well-defined and standardized process that is used for all new customers. This means treating onboarding like any other project, with its own project coordinator or manager who will lead a project team. Also on the team should be sales (at least initially), the post-sales account manager, and a lead tech. 

Sales will have the most knowledge about the customer, including pain points, goals, and key personnel. The account manager will be responsible going forward, so it makes sense for them to be involved as early as possible to start building the customer relationship and ensuring quality results are being delivered. The lead engineer will be able to document and start working on tech stack implementation that will be needed, including whether any new technology will need to be purchased. Resist the temptation to put an upper-level (and thus more expensive) engineer in this position as it should be highly standardized, including assembling documentation and going through checklists. And if needed, the lead onboarding tech can always bring in a higher-level engineer for assistance.

Onboarding begins once all of these stakeholders meet internally as soon as possible after the contract is signed for an internal project kickoff meeting. Remember, speed matters, once the contract is signed, the clock is ticking on when a customer will need support. The project manager will specify everyone’s duties and set timelines for the project. Sales will present a document—ideally, a robust pre-sales assessment—summarizing the customer’s history and current situation; the lead tech can start gathering info and make sure that necessary resources are in place. Everyone shares in detailing all the information needed.

After the internal kickoff, the same team should meet with the customer for the external kickoff meeting. During this meeting, the customer will be introduced to the members of the team and instructed to contact the project manager with any questions.  The MSP will detail the timeline and various key events, as well as what they need from the customer in order for the onboarding to be successful.

Decide on onboarding structure

One department typically not on this project team is customer support (e.g., the help desk). Many MSPs make the mistake of trying to get new customers to contact the help desk as soon as possible, some offering support starting the date the contract is signed. This sets the MSP up for failure and is almost certain to lead to negative outcomes with the new customer. Without solid customer documentation and a standardized tech stack, the help desk will have a hard time providing an effective resolution, and more importantly, a good experience. Throughout the onboarding period, help requests should be routed to the project manager, who can bring the lead tech, and if needed, other technical resources, in if needed.  

The lead tech should use the onboarding period as the time to assemble thorough customer documentation. This is critical for the service desk, engineers, and account teams to provide your service in the most efficient way possible and to deliver outstanding results to your new customer. Even with an effective onboarding process, there will always be a learning curve with any new customer. But don’t make the mistake of skimping on documentation during onboarding; instead, have a “we’ll add documentation as we go along” attitude. If you do, your techs, customer, and profitability will suffer.

Wrapping up the onboarding process

When the project manager believes that the onboarding tasks have been completed, there should be a handover to the account manager and service manager, who should confirm that the help desk has the documentation needed to support the new customer. At that point, the customer should be notified that from the view of the MSP, the project is complete and that the customer can start contacting the help desk (and be trained in the various methods to do so). The SLA is now in effect, and shortly thereafter, the last step of onboarding occurs—an initial quarterly business review (QBR) led by the account manager and including the lead tech, service manager, and the customer. The initial QBR should focus on loose ends that need to be tied up, and a thorough survey of the customer’s satisfaction. At this meeting, the MSP will know how well the onboarding went and if there were, or still are, issues that must be addressed promptly to ensure the relationship is optimal out of the gate.

Project wrapup 

This first QBR with the customer is paired with a final internal project meeting for the onboarding team. The first order of business is to review how many hours went into onboarding, and whether that number was within budgeted expectations. If there was billing associated with onboarding (and there certainly should be a fee, more on that below), was it sufficient to cover the cost of the project and add a 50% gross margin? This meeting is also the time to glean lessons from the just-completed onboarding process and strategize how to improve it in the future. 

Charging the customer for the onboarding project

Many MSPs view onboarding as a “value add” that they need to throw in for free to land a new customer.  After all, these MSPs argue, it wouldn’t be fair to charge a new customer for the privilege of getting ready to do business with them. By not charging for onboarding, these MSPs will not be able to recapture the very real cost of onboarding and it will serve as a source of services gross margin leakage.  Ultimately, this will not only negatively impact their profitability, but it will lead them to underinvest in the onboarding project, shortcutting the process and delivering a sub-par onboarding experience.

Instead of giving away the onboarding as a “value add” inclusion, MSPs should calculate their cost of onboarding, including the hours of all employees involved with the project as well as the cost of any technology or tools, travel, etc., and then price it to include at least 50% gross margin on that cost. Many MSPs will include an “onboarding project fee” as a line item on the managed services quote, payable either upfront or upon project completion. An even better approach is to amortize the fee over the term of the initial agreement and “bake it into” the monthly managed services fee. At the end of the agreement, should an ”update” project be needed, this will provide margin in the renewal to do it and if that isn’t needed, the agreement becomes much more profitable in the renewal term. Either way, the MSP chooses to bill it, at least they are recapturing the cost of the project and making additional gross margin on it.

Final thoughts

For customers, onboarding can be an anxious time because livelihoods, brand reputations, and whole businesses are counting on the services MSPs provide. And it should be anxious as MSPs are usually one of the two most critical vendors for any business. For MSPs, it’s a chance to calm those anxieties and create a “raging fan” right out of the gate, thus laying a strong foundation for a long—and hopefully profitable—customer relationship.