A customer advisory board (CAB) is a highly specific animal, with a focused, strategic reason for existing. The key to understanding a CAB’s role and importance is to first get a handle on what it is not:
It is not a focus group: The board is not there so that you can ask them whether your product should be produced in purple or green, or what they thought of your latest marketing campaign.
It is not a sales opportunity: You are not capturing your customers in a room under the title of advisory board just so you can sell them on your latest product, like some timeshare trap.
It is not a board of directors: They’re not there to tell you what to do.
So what is it? And why do so few startups seem to have one?
Rob Jensen, vice president of marketing for Ignite Advisory Group, a boutique consulting firm that helps companies form and facilitate customer advisory boards, explained that the boards are a two-way meeting with your best customers, a place to talk about strategy going forward in a way that will benefit both you and your customers.
For example, Jensen said, if your product is SaaS and your company and customers share a concern about data hacks or breaches, part of the meeting agenda might be to invite a data security analyst to talk about the latest risks and how to protect against them. Then, follow it with an open discussion on how your company can better incorporate data security into your strategy to meet customers’ needs.
With a customer advisory board you might discuss partnerships, mergers and acquisitions, or new markets you’re considering. If you’re pondering a new product—not so much a new feature—it would be something to bring before the board. These are big, strategic questions that could impact the customers’ relationships with you and could impact your value to them as a vendor.
These are big, strategic questions that could impact the customers' relationships with you and could impact your value to them as a vendor.
“These are not junkets,” Jensen said. “They are strategic, focused events with executives from your best customer companies, the CIO or the COO who whoever is in charge of the department that uses your product.”
Customer advisory boards are serious business
Jensen remembers when he was first asked to create a customer advisory board for a tech company he was working for.
“One day one of my bosses said, ‘We need you to manage our customer advisory board,’ and I was like, ‘Great! What is that?’” Jensen said. “I learned while doing, and made plenty of mistakes in front of our best customers.”
Frequently, he said putting together a customer advisory board is assigned to a junior-level person “as kind of a hobby. ‘Do your regular job but do this on the side.’”
But creating and running a customer advisory board shouldn’t be something where you “dip your toe in the water,” Jensen said. Unless the board meetings offer substantial value, customers will drop out, and it could damage your company’s relationship with them. In other words: do it right, or don’t do it at all.
The CAB must have an executive sponsor, such as the vice president of sales or chief marketing officer. It also needs a steering committee. It must be budgeted and sourced. And it takes time to set it up, to recruit advisory board members and prepare for the meeting—both the content and the logistics.
Philip Montgomery, an integrated campaign manager at Zendesk, who works frequently with partners and startups, suggests waiting to hit a particular stage of growth before attempting to create a customer advisory board. Most early stage startups are busy getting their product out the door and don’t know yet who their most valuable customers will be, he noted. Companies in early stages may benefit more from focus groups and market validation.
Creating a customer advisory board is for companies that have reached a certain level of maturity. “Maybe you’ve had a massively successful product and you’re looking toward the next phase of your company’s journey,” Montgomery said. “You might start a board at the inflection point for a product iteration and new product development.”
Still, startups at all stages should have in the back of their minds that the moment will one day be right for a customer advisory board, and should consider which customers might be good candidates and how a board would serve both the business and its customers.
Who should be on the board?
Customer advisory boards are for customers you have a deep relationship with, not for prospects, Jensen said. You’ll probably need to discuss both the good and the bad about what’s going on with your company, including customer and company pain points, and you don’t want to do that with prospects.
It’s tempting to bring your company’s biggest fans on as your advisory board, but that’s not beneficial, he said. Instead, participants should be:
- Valued customers from across your customer base. This might be people who represent different industries, geographical areas, or user types.
- People who use your product in as many different ways as possible so they can provide a broad spectrum of insight.
- People who are diverse in terms of race, gender, ethnicity, culture, age, and experience.
- Senior-level people who know their industries well and can speak to how their company interacts with your product. These have to be people who have the authority to speak to the relationship.
- Open, communicative people. If they are shy or circumspect or in a position to be very private, like many government contractors, they may not be much help, Jensen noted.
He recommends having about 20 people on the board because not everyone will be able to make every meeting. The magic number to have in the room is 12—half from the host company and half customers, he said.
Startups at all stages should have in the back of their minds that the moment will one day be right for a customer advisory board.
Members will have to be recruited. Usually, a group of stakeholders within the company will nominate customers, and the person with the closest relationship to that customer—often in sales—will make the pitch.
An article that ran in CIO Insight Magazine listed several reasons for customers to participate in customer advisory boards. Among the benefits, customers can:
- gain insight and have influence over a vendors’ direction around things like product development, mergers and acquisitions, and partnerships. Advisors can help drive strategy, which can make the vendor relationship even more fruitful.
- learn about industry best practices and trends. Learn how your peers are using the product, and what their wishes are for the future direction of the product you’re all using.
- network with peers in other industries, build relationships with them and the vendor.
- get a chance to test out and influence products in beta stages.
Of course, while board members may not be compensated with money or a junket to a resort, you still likely need to pay for their travel and accommodation to come to the meeting. And mostly, you have to make it worth their time.
[Read also: Want to grow your startup? Talk to your customers]
What’s the agenda?
Meetings should be held on a regular schedule, once or twice a year, with group calls in between to update participants about how the company is implementing CAB suggestions.
The meeting space needs to have all the necessary accoutrements, like audiovisual equipment, comfortable chairs, good food, and plenty of beverages. And the meetings need to be interactive and engaging. As Jensen said, “You don’t want to get them in there and PowerPoint them to death.”
In a piece for CMS Wire, Jensen outlined the process for creating content.
- Ask internal subject matter experts to put together a discussion guide of potential “top of mind” topics. Then interview CAB members individually to review those topics.
- Compile an executive summary of those interviews and use that to develop the agenda and content. This process ensures the meeting will be member-driven.
- Focus the agenda on the members, not the host company. Customers are there to be engaged, provide real input to the company, and learn from each other. Consider following the 80/20 Rule, which in this case would stipulate that members talk 80 percent of the time while the host company talks only 20 percent of the time.
And make it social. “It should be at a pretty good hotel chain and include social events like a nice dinner,” Jensen said. “We like to take members out at night to do something cool, something unique for that city. Like when we were in Nashville, we toured the Country Music Hall of Fame.”
The relationships that form between advisory board members are as valuable to them as the relationship they’re forging with you. And that’s another point: Having a good CAB deepens the relationship between you and your customers.
If the meetings are valuable, Jensen said, companies can have board members who serve for years without any extra compensation. All you have to do is get it right.
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