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Value Creation Blog

Don’t Be A Chicken. Start A Customer Advisory Board

Posted by Josh Patrick

customer_advisory_boardA customer advisory board is a first cousin to a peer group.  The difference is the peers are all customers or clients of your company.  The purpose of a customer advisory board is to help you make your business better.  Like peer groups customer advisory boards have rules that if followed will increase the groups value.

My first experience with a customer advisory board was completely by mistake.  In the early days of my vending company I hired a marketing company to do a focus group on our food menu.  We hired a room where we sat behind a mirror watching our customers while a moderator/marketer ran the meeting. 

During the meeting I became more and more agitated.  I wanted to run out from behind the mirror and ask the questions I wanted asked.  The marketer kept asking horrible follow up questions.  After the session I expressed my frustration.  The marketing firm told me that if I ran my own focus groups I would get bad information because I would bias the members of the group.

That experience was one of the first where I realized that experts aren’t always experts.  I ran my own focus group and in fact, this group kept on meeting.  Later, I learned that I had formed a customer advisory board.  Ever since that experience I’ve found some of the best ideas and certainly the best analysis of my business has come from my customers.

Make sure you have a curmudgeon in your group.

The marketer was right about a few things.  It’s very easy in a customer advisory board to have what I call a nice bias.  We don’t like to tell people that they could do things better.  This is especially true with a customer advisory board. 

Again, by accident I put an outspoken customer in one of our groups.  Everyone was being “nice”.  This time we were working on strategies for our catering division.  For the first half hour of the meeting I felt like I was pulling teeth.  Everyone was being way too polite. 

Finally, the outspoken member saved the meeting.  He spoke up and in no uncertain terms had some “constructive comments” about our services.  It was like a floodgate opened.  All of the sudden everyone had ideas on what we could do better.  I went from getting no value to having to listen to all of the things we did wrong.  It was difficult to listen to the criticism.  At the same time there was two really positive and unintended results that came out of the meeting:

  1. I had a list of things to fix that would make a dramatically better company.
  2. The group that was at our meeting became some of our biggest supporters. They recommended our service and became some of our biggest customers.

Only let advisory board members speak from their point of view.

When I decided to go on my own with my focus groups there was another thing I had to learn.  This one cost me a little bit of money. 

I would start a conversation and members of the group would say that they thought something would be a great idea.  One of their suggestions was having health food in our vending machines. 

At one meeting several advisory board members were adamant that health food should be sold in our machines.  I was told that it wasn’t fair that we only sold “junk food” and we would put ourselves in a different league if we offered our customers healthy alternatives.

This sounded like a reasonable idea to me and we purchased a bunch of health food, put it in our machines and as the expiration dates came due we took the health food out of the machines and threw the health food away.  We ended up taking valuable space away from items that sold and our customers wanted. 

I learned that we should never dictate taste for our customers.  That’s their job.

At our next advisory board meeting I asked our members how many of them had bought the health food from our machines.  As it turned out none of them did.  The lesson I learned was that unless someone said they would spend their money on an idea, it was a lousy idea. 

I developed a rule that said only ideas where people would spend their own money would be considered.  This rule worked much better and allowed us to make improvements people would actually spend money for.

Make sure your members get take home value.

When a customer joins your advisory board they’re doing you a big favor.  I found that if I wanted continued participation I needed to make sure the members got take home value from the meetings.  This meant that I had to design meetings where information would be shared that would provide value to our advisory board members as well as me and my company.

I’ve participated on many advisory boards as a customer.  The ones where I enthusiastically went back were ones that had time allotted for the members of the board to speak with each other about best practices in their business.  This might not have anything to do with the agenda the sponsor had.  At the same time the sponsors learned that without this time they had a hard time getting advisory board members to come back for a second and third meeting.

You want your members to come back.  Boards continuity builds trust.  The more trust you develop trust the better the ideas will be.

Rotate membership on your board.

The purpose of your advisory board is to make your business better.  If you have eight customers on your board you’ll want to change two for every meeting.  By rotating members of the board you bring people with fresh ideas to the table. 

Make sure you keep at least one curmudgeon on your board.  You’ll need to have someone start the conversation.  Just because the conversation was started at your last meeting doesn’t mean it’s going to be started at your next one.

Are you willing to be brave and start a board?  The result is worth the effort.  I promise.

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Topics: creating value, customer advisory boards, business development

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