Want Real Business Insight? Ask Your Customers

The New York Times Blogs (You're the Boss)

May 29, 2014

A customer advisory board is a first cousin to a peer group; the difference is that the peers are all customers or clients of your company. The purpose of the board is to help you make your business better.

Like the peer groups I wrote about recently, customer advisory boards have rules that, if not followed, can significantly reduce the value of a group. My first experience with a customer advisory board came about by mistake. In the early days of my vending machine company, I hired a marketing firm to do a focus group on our food menu. We sat behind a one-way mirror watching our customers while a moderator ran the meeting.

During the discussion, I became more and more frustrated. I wanted to run out from behind the mirror and ask about the issues I wanted feedback on. The moderator kept asking terrible 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.

That experience was one of my first where I realized that experts aren't always experts. I ignored the advice and ran my own focus group—and it kept meeting. Later, I learned that, in effect, I had formed a customer advisory board.

Ever since, I've found that some of the best ideas—and certainly the best analyses of my business—come from customers. Here are my tips for keeping things running smoothly.

1. Make sure there is a curmudgeon in the group.

That marketer was right about a few things. With a customer advisory board, it's easy to have what I call a "nice bias." Many of us don't like to tell other people that they could do things better.

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

Finally, the outspoken member saved the meeting. When he started talking, it was like a floodgate opened. All of the sudden, everyone had ideas about what we could do better—and I got an earful about all of the things we were doing wrong.

It was difficult to listen to the criticism, but two positive results came out of the meeting: I had a list of things to fix that would make the company better, and those at the meeting felt a personal stake in the outcome. They became some of our biggest supporters, doing more business with the company and recommending its services to others.

2. Let board members speak from only their own point of view.

This lesson cost me a bit of money to learn.

At one meeting, several advisory board members were adamant that health food should be sold in our vending machines. They said it wasn't fair that we only sold junk food and suggested we would stand out from our rivals if we offered healthy alternatives.

This sounded like a reasonable idea to me. We bought a significant quantity of health food and loaded it in our machines—and then, as the expiration dates came due, we took it out of the machines and threw almost all of it away.

At our next meeting I asked our members if they had bought any of the health food. None had. The lesson I learned was that unless people say they will spend their own money on an idea, it's probably a lousy idea.

3. Make sure your members take home something of value.

When customers join your advisory board, they're doing you a big favor. I found that if I wanted their continued participation, I needed to make it worth their time.

Offering members the chance to talk with each other about their best practices is a compelling lure. At our vending advisory board meetings, we encouraged the participants to discuss their purchasing policies for services like ours.

It's also useful to send your advisory board reports about what you've done with their suggestions.

4. Rotate the membership.

The purpose of the board is to make your business better. If you have eight customers on the board, it's a good idea to swap out two at every meeting. By rotating members, you bring in people with fresh ideas. Just be sure to keep at least one curmudgeon around.

I recommend meeting with your board twice a year. If you meet more often, you may not have much that's new to discuss; if you meet less often, you may lose continuity.

Some of the best insights I've gained about my business have come from these groups. The synergy of multiple people in the discussion seems to provide me with better ideas than one-on-one conversations.

Josh Patrick is a founder and principal at Stage 2 Planning Partners, where he works with private business owners to create personal and business value.

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