When your team is struggling to figure out what feature to build next, what copy to use in the newest campaign, or how to price out the next installation of your software, a customer advisory board can be invaluable. Part of the lean model of company building, a customer advisory board acts like a regular marketing research panel of trusted superusers, providing constant customer feedback that is absolutely essential to building a long-lasting, constantly evolving and growing business. Best yet, you might learn more than you expected.
But given the benefits, a board of customers demands your time and energy -- so is it worthy creating and managing it? If so, how should one set such a group up?
Convening the Customer Board
A customer advisory board needs the same time and attention as any other key stakeholder relationship, not unlike investors or employees. Customer advisory boards tend to be the most valuable in complex, regulated industries like healthcare or with complex products and business models like enterprise software. The expertise of the customer advisory board can help founders understand the complexities faster and in turn act faster, creating a win-win situation: customers get the product they want faster, and your team is better informed on what to build (and monetize) for your uses.
Selecting your Representatives
The companies represented on a customer advisory board are important, but the people are even more crucial. Founders will get little value from having a marquee company on a customer advisory board if someone from the company isn’t engaged and truly committed to helping move things forward. People that make the most sense for a customer advisory board are the ones that -- in addition to being from the right kind of company and having the right kind experience -- also have the willingness to commit the time and energy to really dig in to help.
A customer advisory board is really an expert helping board. But unlike a board of directors and professional advisors like attorneys and accountants, their motivation isn’t and shouldn’t be compensation. It should be to share their experience and expertise to help the company progress. It’s okay to compensate members of a customer advisory board, but if someone is participating for the compensation alone, the founder got the wrong person.
Avoid Conflicts of Interest
The people and companies represented on a customer advisory panel should represent or closely as possible represent the perspective of actual customers or prospects. Founders need to make sure they are taking the time to confirm the people and companies being considered for a customer advisory board can still be do business with one's company, which means assuring that the relationship doesn't create a conflict of interesting that results in the advisor being unable to remain a customer. Even in the worst case, the founder should be aware of the situation and know which people and companies, because of their participation, are prohibited from being customers. Founders often want to put high value prospective customers on customer advisory boards, yet then find the advisors company can’t do business with them because of the advising role.
Steering the Board in the Right Direction
Aligning with and setting expectations with each advisor on the customer advisory board is critical to each advisor’s successful contribution and the success of the board overall. Founders should discuss with potential advisors what the advisor's expected contribution to be and get their alignment. Do not invite or allow someone to join the customer advisory board until with have alignment around their contribution.
I established a customer advisory board several years ago that included regional and national retailers. One of the key discoveries along the way was how important it was for the people to know who else I had already invited to be on the board. People who are going to invest the time and energy to help are going to want to do it alongside others, and may see it as an opportunity to connect with new colleagues for their career or business. Keep in mind, people will bring their own motives to the customer advisory board -- and that’s okay as long as the motives align with what the founder wants to accomplish.
Size, Structure, and Engagement
In my own experience, a customer advisory board works best with five people. Founders can make it work with fewer, but there is a diminishing return in differing opinions in smaller numbers, and a diminished ease of communication in greater numbers. If a founder can’t find the right five people, I advise having individual customer advisors instead of doing a formal customer advisory board. There is nothing wrong with engaging with some specific people in a customer advisory capacity, but you will probably find it takes as much time and energy as managing a board of them. If a founder thinks she/he wants and needs more than five advisors, I recommend heading down the path of a user group or some other structure. More than five people on a customer advisory board doesn’t allow for the level of engagement and value both parties want.
Once a founder has a customer advisory board in place the cadence of engaging is critical. Not developing a consistent cadence to engaging will cause people to become disinterested and the founder’s return on having the board will go down dramatically. The right cadence depends on the state and trajectory of the business and what a founder needs from the customer advisory board. Meeting quarterly seems to work well, as that provides enough time make progress and for new challenges or opportunities to surface. Monthly can work, too, but I wouldn’t go longer than a quarter without meeting. If a founder needs to, a user group is probably more appropriate than a customer advisory board.
A customer advisory board can be a great resource to help founders with many critical decisions around many facets of the product and company. Founders need to be as mindful of who and how a customer advisory board is leveraged as any other aspect of the company to ensure it provides the desired value.