 Our previous post outlined the essential definition and purpose of a customer advisory board (CAB). If you are embarking on this effort, be prepared for the potential to generate breakthroughs you never imagined.
During my interviews with advisory board experts and over two dozen B2B firms, I discovered nine strategies for designing an effective CAB. Many of them shared some impressive ROI from their program. These strategies will give you a foundation for success and will minimize time-wasting planning activities.
1. Define the purpose of your CAB. As stated earlier, do not confuse a CAB with a focus group, product user group, one time symposium, or client recognition event. According to Simon Angove, CEO of GMT Corporation, “Our advisory board has four key goals. First, we want to get our clients involved in early release programs so they can act as references when the product is released. Second, our board formally influences our products’ strategic direction. The result is a better quality product that is field-proven. Additionally, the board members act as ‘trusted advisors’ s on how GMT can act on key trends. Finally, the board provides a formal channel through which customers can share best practices and offer advice.” It’s no accident that GMT has boasted a 95 percent client retention rate over the past five years.
2. Create a written profile of the ideal CAB member. Keep your executive team at bay, and do not invite anyone until the profile is documented. For example, do you want them to be influential industry pundits? Are they passionate about some aspect of your business, such as employee development and retention, marketing, or federal tax laws? If you strictly invite your biggest clients or industry celebrities, you may later be thrust in an uncomfortable position to fire that member.
3. Give yourself ample time to recruit members. Bob Arciniaga, founder of Advisory Board Architects, asserts that “most people don’t understand that building an advisory board is going to take 150 hours and 4-6 months to identify and recruit members.” Provide member candidates ample time to consider your invitation; with their busy schedules, they may need at least a month.
4. Establish clear expectations with potential new members. A minimum of five days’ effort per year is a common time requirement. Much like a board of directors, your CAB needs time to prepare for meetings, contribute to the agenda, and reach out to other members for input.
5. Keep the group small and intimate. Among the twenty-eight B2B companies I interviewed, those with longstanding, highly collaborative groups averaged six to fifteen members. When groups expand beyond that size, they are forced to divide the group into special interest areas, and managing discussions can become unwieldy.
6. Mix it up. C olin Gounden, President and Chief Marketing Officer of Integreon, hosts a board which comprises an equal number of existing clients, top-tier clients, and a few prospects. The group also includes one or two industry thought leaders and executive board members. He has found that a variety of backgrounds creates a draw.
7. Address the compensation issue early. At a minimum, plan on covering out-of-town members’ travel and living expenses. If they are locally based, provide a modest but memorable event at an upscale location. As a special bonus, consider donating fees to their favorite charity. Some firms deduct their advisory board fee (typically $500-$1,000) from a future engagement or product invoice.
8. Develop a written advisory board member agreement. This should include an indemnification clause that holds members harmless from any damages, losses, suits, and fines against your firm. The agreement should also stipulate time expectations and grounds for termination. I am not a lawyer, nor do I play one on TV. Consult your legal team to generate a simple, straightforward agreement.
9. Stay fluid. Since every CAB has a shelf life, be prepared to replace up to a third of your members every year. You will achieve milestones that your group helped you reach. As your company reaches the next level of growth, naturally seek out different talent. Ask your group to recommend new members. Their willingness to help is a clear sign that you have succeeded with your CAB.
Bob Arciniaga, founder of Advisory Board Architects, comments that “most B2B and professional services firms (e.g., legal, financial, engineering, staffing, architecture, etc.) can be helped by a CAB, as their businesses are highly competitive and commoditized with few differentiating factors between them. Having a group helps a firm understand how it can better market, price and service those clients to meet their exact needs while expanding its market penetration. In these challenging economic times, who couldn’t benefit from this type of business intelligence?”
I couldn’t agree more.
[Photo courtesy of freedigitalphotos.net]
[This post originally appeared in FastCompany.]
Copyright 2011, Lisa Nirell. All rights reserved.
Lisa Nirell is the Chief Energy Officer of EnergizeGrowth®. She helps companies increase their wealth, improve their performance and attract great clients. Since 1983, Lisa has worked with Trend Micro, Zappos, BMC Software, Microsoft, IBM, and hundreds of entrepreneurs in nine countries. Lisa is also an award-winning expert speaker, business columnist and the author of “EnergizeGrowth® NOW: The Marketing Guide to a Wealthy Company.” To download your five complimentary educational bonuses and sample chapter, visit www.energizegrowth.com and register for EnergizeNews.
If you were the VP of Marketing of an Atlanta-based technology firm three years ago, chances are you were not having fun.
Jill, the VP, was working diligently in her office one day when the CEO walked in to pay a visit. The CEO, Don, proudly announced that he was ready to fund a customer advisory board (CAB). The company just recently received a hefty VC financial boost, and the CAB would help them grow faster.
Or so he hoped.
Don hand-picked the members he wanted to invite–over 30 individuals–and Jill had no say in the group nominees. Over a two year period, the CAB experienced sixty % turnover. Group members were tired being used primarily as a test bed for new innovations. The CAB disbanded with little fanfare.
When I recently interviewed more than 30 B2B companies with CAB experiences, similar debacles were reported more often than you would think.
What is a CAB?
If you are considering building a CAB program for your organization, tread carefully. Begin first with understanding its true purpose.
A CAB is defined as an ongoing customer membership program. Ideally, it contains fewer than 16 members. Well designed programs help B2B companies:
- Refine and validate strategic plans.
- Radically improve customer service.
- Uncover new product and service opportunities and ideas.
- Deepen customer relationships.
- Provide value added, confidential discussion forums for customers and industry allies.
Here is what a CAB is NOT. It is not a collection of hand-picked friends and diehard fans who will perpetuate  groupthink.
The Purpose of a Customer Advisory Board
Customer advisory boards differ from focus groups, impersonal satisfaction surveys or celebratory recognition events. They are infinitely better than relying exclusively on your sales team to report second hand information. Most importantly, they serve to create a long-term, collaborative container for deepening your customer relationships and community impact.
While researching companies who deploy CABs, we found that their sponsor companies had several common traits:
- They are sincerely growth-oriented.
- They believe in gathering unfiltered feedback to refine their future plans and services.
- They are passionate about developing trusted advisor relationships with senior decision makers and industry influencers–and making a difference.
- They need to adapt quickly to industry and regulatory shifts to ensure continuity.
- They are action-oriented, and are willing to implement actions that advisors recommend.
If these traits describe your firm, you may just be well-positioned to build a strong CAB program. In our next article, we will discuss nine strategies to design an effective Customer Advisory Board and myriad examples of companies with high performing boards.
Until then, keep your office door closed and your CEO distracted.
[Photo courtesy of freedigitalphotos.net]
[This post originally appeared in FastCompany.]
Copyright 2011, Lisa Nirell. All rights reserved.
Lisa Nirell is the Chief Energy Officer of EnergizeGrowth®. She helps companies increase their wealth, improve their performance and attract great clients. Since 1983, Lisa has worked with Trend Micro, Zappos, BMC Software, Microsoft, IBM, and hundreds of entrepreneurs in nine countries. Lisa is also an award-winning expert speaker, business columnist and the author of “EnergizeGrowth® NOW: The Marketing Guide to a Wealthy Company.” To download your five complimentary educational bonuses and sample chapter, visit www.energizegrowth.com and register for EnergizeNews.
Yesterday, as Magnus and I were biking in Hilton Head, South Carolina, a huge, rotted spruce pine fell across Lighthouse Road, a main thoroughfare. The tree fall caused traffic snafus, and forced us to change our route.
Within two minutes, a cacophonous local emergency crew arrived on the scene and began clearing the debris. And within two hours, peace and normalcy were restored to the Sea Pines hamlet.
How often do we expect a beautiful, mature tree to rot and die?
Few of us could ever predict when the rotting tree in our company is going to collapse. To make matters worse, even fewer of us know where the rotting trees are located. As a result, sales stagnate, clients leave, and innovation halts.
Today’s successful, innovative companies know how to assess which trees are about to expire. Here are eight places they typically look:
1. A product that has lived past its prime, and is now considered a commodity–yet commands over 60% of their time and energy.
2.An executive team who continues to play “chief rainmaker” and are frequently used as the cleanup crew in contentious sales situations.
3. An employee that is brilliant at their craft, but is poorly equipped or incapable of marketing or sales – yet still remains in a customer-facing role.
4. A marketing strategy that incorporates few or no social or online interactions with customers and prospects.
5. Tolerating a “client from Hades” that pays slowly, refuses to be a reference, and expects miracles.
6. Continuously blaming the volatile, credit-challenged economy for a company’s growth problems.
7. Heavy aversion to risk. This attitude often surfaces as the common practice of favoring team members who protect status quo.
8. Tolerance of poor client communication standards. I continue to receive emails with no signature lines (containing contact information), static Web sites with outdated content, and so-called “professionals” who do not return phone calls.
Where are the rotting trees in your business development systems? Do you have firm (e.g. written) plans in place to address a delay in revenues, or will you be forced to call in the emergency crews?
When a tree falls across your main highway, how soon will you remove it?
This post originally appeared on FastCompany.com.
Copyright 2010, Lisa Nirell. All rights reserved.
Lisa Nirell is the Chief Energy Officer of EnergizeGrowth®. She is one of the only marketing experts with 27 years’ experience advising and working exclusively with B2B growth companies. Lisa helps her clients improve their top line revenues and attract more ideal clients. Lisa has worked with hundreds of entrepreneurs, as well as BMC Software, Sony, Wells Fargo, Microsoft, and IBM. She is also the author of “EnergizeGrowth® NOW: The Marketing Guide to a Wealthy Company.” Visit www.energizegrowth.com andhttp://blog.energizegrowth.com today to download free educational resources and join the Energize News community.
 Your business is a living organism – something that has potential to grow and thrive long after you’ve played your role in it. Yet many firms are still smarting from a very tough recession, and feel like they are on life support. The “new normal” has accelerated industry consolidation, longer sales cycles, fee pressures, and tight credit. If you are a seriously growth-oriented B2B company, what can you do to ensure that you swiftly return to wealth creation mode?
Most CPAs, attorneys, investment bankers and business brokers will tell you to focus on some fundamental issues to improve your wealth prospects; namely, your company valuation and viability. They will assert that certain criteria are the key to maximizing your eventual exit potential or sales price. They will refer to these as “value drivers.” According to Ned Minor, an attorney and author of Deciding to Sell Your Business, “Value drivers are those characteristics that influence a buyer’s decision about how much to pay for a company. These include–but are not limited to–a stable, motivated management team, effective financial controls, a realistic growth strategy, and a facility appearance consistent with asking price.”
While these value drivers sound logical on the surface, they only provide a partial definition of wealth for B2B companies. Today, many business leaders are seeking a more meaningful balance between money and happiness. And they understand that money and wealth are not the same. If you want to create meaning and significance in the world, it is essential to define wealth in a way that honors your values, your vision, and your core strengths. Continue reading » »
 Last September, BendBroadband CEO Amy Tykeson and her team made a bold move. In the midst of servicing one of the most economically challenged markets in the United States — Central Oregon — Tykeson and her team “em-barked” on a re-branding strategy.
Nearly a year has passed. Today, they are the premier local IT service provider, and have preserved their profits in a price-conscious, pit bull industry. If this sounds familiar to what your company is facing, you will want to watch this video interview.
Continue reading » »
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