NETTING IT OUT

Does your firm have one or more Customer Advisory Boards? How useful are they to your customers and to your business?

The traditional model for a Customer Advisory Board is an annual or semi-annual meeting with the most senior customer executives from your most strategic accounts. You trot out some of your executives who are working on current and near-term products and services and solicit feedback from these influential and important customers. You play a round of golf. You have a few drinks. You create strong friendships. You pat yourselves on the back that you've cemented relationships with your top customers by keeping them involved, engaged, and "in the know" about your plans.

Over the past few years, a new model has emerged for Customer Advisory Boards. It's a customer-empowered model in which customers' issues and priorities are the focal point for the meeting. The customers you recruit are your most insightful ones; not necessarily the ones who spend the most with you today. They'll be happy to be wined and dined. They'll comment frankly on your strategy and your roadmap. But they're more interested in learning from one another than they are in learning from you. And they're happy and delighted to engage in co-creating your strategy so that it meets their goals.

That's how you create customers for life!

Great Recipe for a Good CAB for a Supplier of Energy Services

(Click on image to enlarge.)

© 2012 Patricia Seybold Group, Inc.

1. In Customer Advisory Boards with business customers, each role in a particular type of customer is a "community of practice" – people who share a common discipline, vocabulary, and context. This makes it easy for them to bond. A good recipe for an effective CAB is to include enough diversity in the communities of practice that people can learn from one another.

MAKE YOUR CABS CUSTOMER-FOCUSED

Many customers are suffering from what I call "guinea pig fatigue." They're tired of being surveyed, interviewed, invited to golf resorts, and wined and dined by their "strategic" suppliers. They know that most of these outreach efforts are thinly disguised attempts to sell them more. Their time is precious. They have no interest in wasting their scarce attention units to further their relationships with your firm.

Yet some very insightful customers are willing to invest their time to meet with one another and with your key executives once or twice a year. Why is it that very busy and important people—customers who have the potential to make or break your company—are sometimes willing to give up a day or more of their time to meet with a group of their peers and with your top executives? What's in it for them? What are they hoping to achieve?

If you want to design and run Customer Advisory Board sessions that your customers will value and look forward to, start by understanding what your customers' current challenges are and design a session that is designed to address their needs; not the needs of your key accounts' sales team or those of your product marketers.

If you want to sustain vibrant Customer Advisory Board (or Boards) over time, you'll want to recruit customers who value each others' insights. You'll need to listen deeply to what they need to accomplish and work with them to co-design effective ways to help them reach their collective goals. If you want them to continue to participate, you'll need to help them build and sustain their relationships with one another. Above all, you'll need to show them that you've taken their advice seriously and acted upon that advice to make it easier for them to achieve the results they care about.

What Customers Value from Customer Advisory Boards
Download the PDF to see the table.
Table A. Here are the top benefits that customers value from participating in Customer Advisory Board meetings and the corollary principles you should adhere to ensure greater benefits for both customers and your company.

Most Customer Advisory Board programs justify their existence based on the ROI they deliver to the company. What key accounts did we retain? What new business did we book from CAB members? What strategic insights did our executives gain that we can attribute to the CAB? What costly mistakes did we avoid by acting on their input?

We recommend that you also monitor your CAB members' success metrics: For example, how much did their results using your products/services improve? How much money did they save based on insights they gleaned from other customers? What tangible benefits did they gain from any new products/services they advised you about?

WHY DOES A CUSTOMER PARTICIPATE IN A CUSTOMER ADVISORY BOARD?

1. Network with Peers

"I enjoy the Advisory Board meetings," the CIO of a well-known retailer explained. "It's one of the few opportunities I have to really hear what my peers are doing in a non-competitive environment....We all have similar issues, but some of us are farther along than others in wrestling them to the ground. I always come away with insights I can put to use immediately. I like knowing what the next challenges are that are on the horizon and how others have dealt with them." Notice that this CIO cares most about what her peers—other retail CIOs—are up to. So the advisory board to which she's referring is an industry-specific advisory board. (These are sometimes referred to as "industry councils.")

A consumer who considered himself a savvy investor reported, "I learned some really useful investment tips," after participating in his first "lead customer advisory board" session. "It was great to hear what industry sectors other people are monitoring, what financial instruments they like, what events cause them to reallocate their portfolios, and which ones they wait out...I even discovered that I had misunderstood one of the tax breaks available to me in saving for my kids' education, so I gained an immediate benefit."

A VP of Operations for a municipal utility said, "I gain an incredible amount of insight when we talk about the ways we each optimize our plants for different reasons. Each of us—commercial, industrial, municipal—energy producers optimizes for different things—because our business models call for that. But it's great to hear why people do what they do!"

COROLLARY: Community of Practice. Whether your Customer Advisory Board is for business executives, like CIOs or power plant managers, or for consumers, like individual investors or car-owners, it's critical to the success of your CAB that the people you recruit are members of the same community of practice. A community of practice is a group of people who share the same vocabulary, the same discipline, and the same domain knowledge. They may not know each other the first time they meet. But they have a lot in common. They'll bond quickly.

Start by identifying the communities of practice that will be of most benefit to your firm in crafting its strategy. Then discover what keeps these people up at night. Recruit people who share common issues and interests. Make it safe for them to participate fully by ensuring that there are no direct competitors in the room (for business customers) and by setting confidentiality ground rules to make sure that all of the conversations are for the benefit of the participants; not for public consumption.

For B2B advisory boards, we've found it's often really interesting to customers to ...