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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 your best and brightest executives with the best and brightest ideas and solicit feedback from these influential and important customers. You play a round of golf. You create strong friendships.
There's a new model emerging 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 most interested in co-creating your strategy so that it meets their goals.
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 people 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.
Most Customer Advisory Board programs justify their existence based on the ROI they deliver to the company. What key accounts will we retain? What new business will we book? What strategic insights will our executives gain? How much validation will we get? What costly mistakes will we avoid by testing the waters?
There's a different, and perhaps better way to justify your executives' investment in meeting periodically with groups of insightful customers to discuss strategic issues. What's the return on your customer's time and engagement?
What Customers Value from Customer Advisory Boards
(Please download the formatted PDF to see the table at: http://www.psgroup.com/detail.aspx?ID=846.)
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.
WHY DOES A CUSTOMER PARTICIPATE IN A SUPPLIER'S 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.")
"I learned some really useful investment tips," one sophisticated investor remarked after participating in his first "lead customer advisory board" session. "It was great to hear what industry sectors others are monitoring, what 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."
COROLLARY: Recruit Customers from the Same Community of Practice. Whether your Customer Advisory Board is for business executives, like CIOs, or for consumers, like individual investors, 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.
2. Gain Insights into Issues They Have in Common
Once you get your customers together and create a "safe space" for them to share their issues with one another, your first order of business is to ensure that they have an opportunity to get to know each other and to discover the issues they have in common. Since you will have done your homework, recruited a group of peers, and interviewed each one beforehand, it should be easy for you and a skilled facilitator to get the conversational ball rolling. We usually start with their biggest challenges and issues, and then move the discussion to their ideal "if anything were possible, I would be able to do X" shared brainstorming. Your community of practice will have no trouble finding common ground.
For example, retail CIOs have a common set of challenges such as fraud prevention, seasonality, cross-channel inventory optimization, delivering a seamless experience in the store, online, and through their catalog operations.
Active investors in similar age brackets with similar assets share many of the same concerns: which assets should they cash out first to pay for their kids' college education? Which industry sectors will yield the best returns over the next 10 years? Should they invest in a second home or in exchange-traded funds?
Once you get them talking about their top-of-mind issues, you'll unleash a torrent of invaluable domain knowledge and context. It's important for your company's participants to listen deeply and not interrupt with suggestions or advice. This is not a selling opportunity. It's an important bonding ritual among your CAB members.
In fact, each time this group reconvenes (often with a few new members to replace those that have moved on), this bonding ritual becomes richer, as each member brings the others up-to-date on what issues he has confronted and what lessons he's learned since their last gathering.
COROLLARY: Give Customers Ample Time to Discuss Common Issues and Insights. You've recruited a group of smart, insightful customers who have a lot in common. Don't make the mistake of giving them presentations about your company's strategy and product roadmap! Instead, craft your agenda to give your CAB members a lot of opportunities to share with and learn from their peers. Your executives will learn the most by listening deeply to your customers' conversations with one another about what issues they all face and how they've dealt with those issues.
What to Avoid. We've been amazed to notice that some executives are so unused to listening deeply to customers talk among themselves about their common issues and goals, that the supplier's top execs make excuses to leave until it's time for them to present and answer questions! If your executives don't see the value in listening to your customers talk passionately about what they care about for a couple of hours, you're not ready for a CAB!
3. Solve a Thorny Problem
It's comforting for customers to discover that they aren't alone in dealing with what may seem like an intractable and annoying stumbling block. Sometimes the issue is one that's directly within the supplier's control. In that case, and with some careful advance planning to be sure the right subject matter experts are in the room, customers love to roll up their sleeves and co-design their own solutions.
"As retailers, we have a very short window to get new technology up and running before we have to lock down for the holiday season," another retail CIO explained. "So we need to be able to evaluate, select, negotiate, finalize a contract, install, pilot, integrate, test, deploy, and test again in less than six months. But our supplier has very complicated business models and contracts. It takes our business execs and lawyers months to do this kind of deal. We don't have months. We have about three weeks to get a contract finalized. So, in about two hours, as a group, we redesigned the end-to-end evaluation, testing, and contracting process to work for our timeframes. Because we worked on the solution with our supplier's execs, together, as a team, they understood our issues deeply. They were able to make the policy, process, and business model changes we needed very quickly. It was a win/win. They implemented the changes we co-designed within a couple of weeks. They reduced their time to close sales by 15 months. We gained the three months we needed to do our jobs."
If you do your pre-meeting homework well, you'll often discover that a thorny customer issue intersects with a project that is already underway. Here's one example: In redesigning its Web site to better serve current customers, the investment firm wanted to know what life events triggered customers to withdraw funds and how their firm's Web tools could streamline withdrawals and make reinvestment quick and easy. The active investors they had recruited to their advisory board quickly identified two big areas that had been problematic for them: 1) Withdrawing funds for their kids' college tuition and reallocating their portfolios appropriately, and 2) Dealing with the death of a parent, settling their estate, and reinvesting the inheritance. They divided into two teams and co-designed their ideal scenarios with subject matter experts and key executives. The result was a clear set of priorities for the new Web redesign along with a streamlined set of revamped supporting policies and business processes. (This was the equivalent of six months of market research in a couple of hours, with solutions both created and validated by the target customer group.)
Sometimes the issue at hand is outside of the supplier's direct control. A VP of Network Services at a Fortune 500 firm shared this CAB story: "We discovered that many of us had had problems getting sufficient bandwidth in specific regions of the world. The root cause was government regulation that prevented our supplier and their competitors from investing in offering high bandwidth solutions at competitive prices. We worked together to lobby the regulatory bodies to change their policies to be more business-friendly. Our first success was in India; the second was Costa Rico. Now we're tackling South Africa." In this situation, the decision to pursue the lobbying effort was made at the CAB meeting, but the actual leg work took several months with active engagement on the part of committed CAB members—all of whom had skin in the game.
This report continues...
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