As a technology services professional, you may already be aware of the value of customer advisory boards (CABs), and how they are ideal for validating corporate strategies, collecting input for product development, and deepening relationships with key customers. But what you might not know is the role CABs are playing in helping tech providers refine and expand their services offerings, grow adoption and consumption of services, and increase services revenue.
What Customer Advisory Boards Can Do For Your Business
For the uninitiated, a customer (or partner) advisory board is a panel of leaders from key customer (or partner) organizations who work with a host company’s senior leadership team to guide strategy and offerings, and, more importantly, address shared industry challenges. It’s important to note that advisory boards are not forums for providing sales pitches, investor presentations or detailed product demos. If you’ve ever attended a CAB meeting with these latter activities, you know how self-serving this is for the host vendor, and how boring this is for the members. Worse, if your own company is conducting these latter items, your CAB program is almost certainly not performing well, and may even be doing more harm than good.
To be successful, CABs must be established, resourced and managed properly to deliver high value to the host company. In turn, a well-managed CAB program can (and should) deliver even more value and benefits to the CAB members themselves, which include influencing their vendors’ product and services roadmaps, improving the service and support they receive, acquiring best practices from peers, and many others.
Here are three ways that well-run customer advisory boards can positively impact technology services initiatives:
Benefit #1: Improve and Expand Service Offerings
Customer advisory boards are ideal forums for understanding the business and operational challenges shared by your best customers, learning why they purchased your products and services, and uncovering how they actually use and benefit from them in practice. While most companies – especially those without active customer advisory boards – think they are well aware of these drivers, in our experience, all companies learn many new aspects about their own product and services they didn’t know before by engaging their customers via their CAB programs. By better understanding where their products and services fit and how they are used in conjunction with other technologies or services, companies invariably uncover opportunities to make service improvements, fill needed service gaps, provide higher-value service alternatives, and expand their services offerings to address previously unknown needs. In turn, CAB members also learn best practices from each other and make recommendations to the host company about increased or augmented services that can be offered directly, or perhaps through partnerships or acquisition targets. In looking at the big picture, host companies can discover large service opportunities it may never have considered without a well-managed CAB program.
Benefit #2: Increase Service Adoption and Consumption
An interesting dynamic of many customer advisory boards is that it’s common for members to not be fully aware of all the services offered by the host companies – or even ones they might have purchased and are not using. This phenomenon is easily explained by the multitude of service purchasers, users, and influencers who may not all be on the same page. Between the comings and goings and constantly changing roles of key personnel in both the customer and service provider companies, and just the sheer workload of today’s technology executives, who may simply be too buried or stressed by urgent matters to fully know and understand how services offered by your company might actually make their lives easier, this is understandable. However, this knowledge is not gained through a heavy sales pitch, but rather a well-designed dialogue between peers to learn how they have overcome shared challenges, and how services have played a role in rectifying obstacles or bottlenecks, and delivered vast improvements. Inevitably, through shared business challenges, best practices, and services success, companies who host well-run CABs regularly see increased adoption and even expansion of used services.
Benefit #3: Strengthen Services Revenue
In analyzing the ROI metrics of successful CAB programs gained through over 200 engagements, we have discovered that customer advisory board members add 9% of incremental revenue to host companies starting in year two of their participation in a CAB program above non-CAB participants. In addition, such companies benefit from a retention rate of 95% amongst program participants, and CAB members are far more likely to recommend their host companies. In fact, CAB member participation in reference programs, testimonials and thought leadership efforts is 57% higher than non-CAB members.
Such percentages are translating into hundreds of millions of incremental product and services dollars for host companies at times when such revenue growth can be difficult to come by. And, while technology services are sometimes “attached” to product implementations, they often garner more attention from high-level CAB executives, who are more focused on maximizing the use of their own teams towards their own core intellectual property, and thus more open to outsourcing non-core functions to vendors who can provide specialized or more efficient services, like those provided by your company.
Leading companies today are leveraging customer advisory boards to gather improvements to their services portfolios, increase services adoption, and expand services revenue. By creating a win-win environment for the members and themselves through a well-run customer advisory board program, companies are creating significant impacts to their services initiatives – and many other areas of their businesses as well.