Top 10 Ways to Measure the ROI of Your Customer Advisory Board Program
Earlier this year, we participated in a webinar with Pragmatic Marketing about addressing the challenges in establishing and managing a successful customer advisory board (CAB) program. During the webinar, we uncovered the top 8 CAB Management Challenges, and, subsequently, provided some advice for overcoming these. The top challenge, affecting more than 1 out of every 3 CAB program managers? Measuring CAB return on investment (ROI).
Measuring the impact of a CAB program is not always an easy, straightforward task. This is no doubt due to the inevitable dynamic that, like many aspects of marketing, CAB ROI may be a mix of “hard” and “soft” dollar amounts to explain and justify to your senior management team. But while measuring CAB success can be less than an exact science, doing so doesn’t have to be rocket science either.
Here are the top 10 metrics to track in order to measure CAB program ROI:
1. Member Revenue: Your CAB members are almost certainly some of your company’s best, largest customers. If you’re not already, begin monitoring the revenue generated by them, ideally starting before they participated in your CAB, and since joining your program. If you’re like most companies, you will see a trend of increased spending. In fact, our research shows that companies with effective customer advisory boards enjoy a 9% increase in new business among members starting in year two of advisory programs above non-advisory customers. While such increases may not entirely be due to your CAB initiative, your customers’ involvement in your CAB is almost certainly a contributing factor to their increased commitment to your company and your solutions.
2. Average Customer Spend: Through better understanding your customers’ unmet product and service needs via input from your CAB program, you can make a goal of increasing overall average customer spend (or average selling price) to your customer base as a whole. We’ve seen companies shoot for between 10 and 15 percent increases here, and achieve these thanks to input attributed directly via their CAB program.
3. Loyalty: Customers don’t just leave because they’re unhappy with your products; they sometimes do if they simply feel they aren’t hearing from you, or, more specifically, don’t feel they’re being heard by you (or maybe both). Sometimes they are simply wooed by a competitor. Similar to above, begin tracking member attrition if you’re not already. You should see that CAB members leave on a much lower rate compared to other, non-CAB customers because of the inside track they enjoy with your leadership team, as well as product and service roadmaps that they help shape. Our analysis shows that companies benefit from a retention rate of 95% among advisory program participants. If customer attrition is an issue at your company, your CAB program can help uncover why it’s happening within your customer base as a whole.
4. Referrals: Your customer advisory board can uncover challenges relative to a particular new market vertical or industry your company is targeting. With this understanding, your company will be better equipped to meet such market demands. Meanwhile, your CAB members may know many of their colleagues at such target companies, and may be able to refer you to them. You could make a goal of your CAB to gather referrals from your members. Talk about ROI – one sale here may pay for your entire CAB program for a year or longer!
5. New Markets: Through strategic discussions, your customer advisory program may identify net new customers or markets that may benefit from your offerings or services. If your company is in the process of entering a new market segment (or considering doing so), a goal for your CAB could be to increase overall prospects in your database by, say, 10% by identifying new target prospects via your CAB program.
6. Product Feedback and Direction: One of the top benefits of any advisory board program will be valuable input for your existing products – how they’re implemented and used and the sometimes surprising benefits they provide. Your members will also provide critical feedback on your product roadmap – new features and capabilities they’d like to see, and maybe those that are a lower priority or not even necessary. While such prized information can focus or save untold amounts of product development cycles, such benefits can be difficult to specifically quantify. We recommend CAB managers create product goals tied directly to their CAB programs – e.g., uncover one (or more) new product feature(s) that are added to the roadmap. You could even take this a step further by making a goal of uncovering an entirely new product concept that addresses your CAB’s largest unmet need. One of your customer advisory council members could volunteer to be a beta tester of this new product. You could then track the sale of these features or products, and attribute this revenue directly to your CAB program.
7. Testimonials: In this age of social media and pervasive product and vendor reviews, product or service recommendations by colleagues or peers carry more weight than ever. Consisting of your best, most dedicated customers, your CAB members represent firms that are not only successfully using your products, but may be doing so in innovative ways that add incremental value to the rest of your customers, and to your company’s P&L. Make a goal of procuring one to three testimonials from your CAB program, either by a written blurb on your website or, even better, a video testimonial that you can share in many places. Furthermore, as your CAB members are typically high-level executives, you stand the best chance of getting their company’s approval on these and any other marketing activities.
8. Speaking Slots: We’ve seen CAB members come back to present their successful or novel use of a product at subsequent CAB meetings, industry events and/or the host company’s user conference. Attendees at such events will respond much more positively to “one of their own” as compared to (yet another) vendor presentation. In addition, such customer speakers can be equally impactful at internal meetings, such as annual sales kickoffs. Here, the customer can not only describe their successful use of your product, but why he or she selected it over a competitor, and how the company will be growing with it in the future, uncovering valuable intelligence for your account teams. Set a goal for your customer advisory board program to identify one to three members who would be terrific spokespersons for your product or service. Go the extra step to integrate them into your marketing program, and then track their speaking engagements as well as the audience in the sessions in which they present.
9. Press Releases/Case Studies/Webinars: Similar to the solo or co-presentations with your customers, use (but not abuse!) your best CAB members to issue press releases on their successful use of your products – such as a key milestone achieved or as a beta purchaser. Case studies can provide richer details around their situation, actions and results of using your solution, and serve as valuable sales tools to your prospects. Perhaps your customer would be willing to participate on a webinar in which they communicate their trials, failures and ultimate triumphs with your solution. Create a goal to include a CAB member in one (or all) of these marketing initiatives. Be sure to track press release impressions or clicks, case study downloads and webinar attendees. Your customer advisory board program ROI will zoom if one or more of these prospects turn into paying customers!
10. Thought Leadership: Many boards we manage end up creating impressive collateral that reflect the collective results of the board’s work streams. Such thought leadership might be guidance on an industry challenge that effects many companies (beyond merely customers), suppliers and vendors alike. Best of all, such thought leadership can garner industry-wide attention from press, analysts or bloggers, and positions the host company as a sought-after expert resource on a particular issue.
When facing budget scrutiny, any CAB manager who is unprepared to share concrete successes may risk losing their CAB program, even if their program is actually quite successful. The key is to establish tangible goals from the onset, and track those goals as the program evolves.