Customer Advisory Boards: Why and How to Create a CAB

What is a Customer Advisory Board?

As organizations grow, it is critical to have trusted advisors across their customer base to partner on strategy. This is known as a Customer Advisory Board (CAB). Today especially, a company’s customer journey, experience and loyalty can drastically change a company’s success trajectory. Thus, it is highly important to understand your customer behavior (why they chose you and what they want in the future) based on the market.

Another benefit of having a CAB is balancing a founder’s ideas. For example, the board can assist a founder’s decision-making on whether to build “cool” new features or. enhance one’s customer experience. In many organizations, after some success in the market around an innovative product, they may lose focus on what their customer base desires. Suddenly, these organizations encounter a decrease in revenue because they didn’t balance the customer experience and the voice of their customers vs. ongoing innovation.

Customer Advisory Board Tips

The good news is that organizations can quickly combat a leaky bucket around renewal bookings by spinning up a CAB. A CAB can provide a close partnership with your most critical customers (i.e. highest spending, most growth opportunity and most innovative customers) that helps guide how to stop the leak and even add more to the expansion bookings bucket.

Here are a few CAB best practices:

• CAB customers should be selected based on a variety of customers and geographies but mainly involve your sponsors (C level / VP level) across your largest spending, highest potential growth and most innovative customers. (Remember, this is not a user group. You want the most influential visionary contacts in your accounts and less of the end users of your product.)
• CAB membership should only be good for one year. Each year, rotate your CAB members. Allow the CAB members who participated and were collaborative to renew their membership.
• Typically, a CAB meets three times a year. We would recommend in-person and include a day or two event with dinner and a fun outing to boost collaboration and understanding. If your board is meeting remotely, then keep it to two hours or less per session.
• CABs are meant to be interactive. This is not about the founder talking to the CAB. Perhaps you share your company’s vision, strategy and roadmap, but these topics need to be less than 25% of the overall meeting. The rest should be facilitating interactive workshops, break out groups, collecting feedback, doing surveys and brainstorming sessions or even having the CAB members presenting on topics in order to address your customer’s needs. (For example, you may share recent market research results your company collected. This is a great start, but the purpose of the session is having CAB members provide their input on the research and recommendations for your organization based on the results of market trends.)
• Be sure and include your full Executive team on the CAB calls. It is important all execs hear the feedback from customers, especially product and engineering. Make sure different leaders lead different sections, no one role should facilitate all the sections. Provide clear rules of engagements up front so CAB members know your expectations. This includes but is not limited to the level of in-depth conversations, what is or is not acceptable to speak about, etc.

Helpful Grab-and-go CAB Format

Mission

To bring together top customers to solicit feedback and guidance on our products and services to better meet your needs and co-define the future roadmap to engineer a more productive tomorrow for our customers.

Scope

Provide a senior-level forum of Executives, Directors, MDs and VPs to share information and gain consensus on company’s software. Company’s Advisory Board will help you deliver greater value to customers, improve our differentiation and serve as a sounding board on subjects including Company’s business strategy, new and potential products and services, partner/channel strategy and marketing strategies.

Objectives

1. Identify customer business challenges, needs and priorities
2. Determine products, services and features that may need to be changed and/or improved
3. Inform and drive company’s roadmap and strategic initiatives
4. Build and expand relationships with company’s leadership and other industry leaders

Member Details

Meeting Frequency and Length of Membership

The Company’s Advisory Board will meet quarterly. Customer participants will be asked to commit to a one-year membership. At the end of the initial membership term, the future makeup of the board will be determined by participants’ interest in continuing, weighing against any change in company’s goals for the board.

Member Benefits and Participation Member Benefits will cover a variety of categories, including the following:

Access and Influence

• Influence company’s product roadmap and strategic direction
• Influence company’s tech alliance and channel development strategy
• Interact with and establish relationships with company’s senior leadership team
• Gain advance notice of upcoming product releases
• Guide the direction of your industry and its available tools
• Get early access to Beta software releases as applicable

Networking and Education

• Share challenges and solutions with similar business leaders
• Discover best practices to take back to your organization
• Network with industry peers
• Contribute to solving business issues impacting everyone on the board
• Be one of the first to know about major industry news and happenings
• Learn and discuss significant market trends impacting your business

Member Responsibilities

For each board meeting, we ask that customer participants be responsible for the following:

1. Actively participate during virtual and in-person meetings
2. Present a use-case story that is applicable (without sharing any confidential information)
3. Provide feedback on current products, services and features and associated value-add
4. Provide feedback on future product, service and feature roadmap and associated value-add
5. Complete surveys to provide agenda topic suggestions and/or post-meeting feedback

Next Steps

Get out there and start talking to those wonderful customers that will ensure your success for years to come.

Author: Pejman Pourmousa, Operating Partner at Sumeru Equity Partners.