During my interviews with advisory board experts and over two dozen B2B firms, I discovered nine strategies for designing an effective CAB. Many of them shared some impressive ROI from their program. These strategies will give you a foundation for success and will minimize time-wasting planning activities.
1. Define the purpose of your CAB. As stated earlier, do not confuse a CAB with a focus group, product user group, one time symposium, or client recognition event. According to Simon Angove, CEO of GMT Corporation, “Our advisory board has four key goals. First, we want to get our clients involved in early release programs so they can act as references when the product is released. Second, our board formally influences our products’ strategic direction. The result is a better quality product that is field-proven. Additionally, the board members act as ‘trusted advisors’ s on how GMT can act on key trends. Finally, the board provides a formal channel through which customers can share best practices and offer advice.” It’s no accident that GMT has boasted a 95 % client retention rate over the past five years.
2. Create a written profile of the ideal CAB member. Keep your executive team at bay, and do not invite anyone until the profile is documented. For example, do you want them to be influential industry pundits? Are they passionate about some aspect of your business, such as employee development and retention, marketing, or federal tax laws? If you strictly invite your biggest clients or industry celebrities, you may later be thrust in an uncomfortable position to fire that member.
3. Give yourself ample time to recruit members. Bob Arciniaga, founder of Advisory Board Architects, asserts that “most people don’t understand that building an advisory board is going to take 150 hours and 4-6 months to identify and recruit members.” Provide member candidates ample time to consider your invitation; with their busy schedules, they may need at least a month.
4. Establish clear expectations with potential new members. A minimum of five days’ effort per year is a common time requirement. Much like a board of directors, your CAB needs time to prepare for meetings, contribute to the agenda, and reach out to other members for input.
5. Keep the group small and intimate. Among the twenty-eight B2B companies I interviewed, those with longstanding, highly collaborative groups averaged six to fifteen members. When groups expand beyond that size, they are forced to divide the group into special interest areas, and managing discussions can become unwieldy.
6. Mix it up. Colin Gounden, President and Chief Marketing Officer of Integreon, hosts a board which comprises an equal number of existing clients, top-tier clients, and a few prospects. The group also includes one or two industry thought leaders and executive board members. He has found that a variety of backgrounds creates a draw.
7. Address the compensation issue early. At a minimum, plan on covering out-of-town members’ travel and living expenses. If they are locally based, provide a modest but memorable event at an upscale location. As a special bonus, consider donating fees to their favorite charity. Some firms deduct their advisory board fee (typically $500-$1,000) from a future engagement or product invoice.
8. Develop a written advisory board member agreement. This should include an indemnification clause that holds members harmless from any damages, losses, suits, and fines against your firm. The agreement should also stipulate time expectations and grounds for termination. I am not a lawyer, nor do I play one on TV. Consult your legal team to generate a simple, straightforward agreement.
9. Stay fluid. Since every CAB has a shelf life, be prepared to replace up to a third of your members every year. You will achieve milestones that your group helped you reach. As your company reaches the next level of growth, naturally seek out different talent. Ask your group to recommend new members. Their willingness to help is a clear sign that you have succeeded with your CAB.
Bob Arciniaga, founder of Advisory Board Architects, comments that “most B2B and professional services firms (e.g., legal, financial, engineering, staffing, architecture, etc.) can be helped by a CAB, as their businesses are highly competitive and commoditized with few differentiating factors between them. Having a group helps a firm understand how it can better market, price and service those clients to meet their exact needs while expanding its market penetration. In these challenging economic times, who couldn’t benefit from this type of business intelligence?”
I couldn’t agree more.
[Photo courtesy of freedigitalphotos.net]
Copyright 2011, Lisa Nirell. All rights reserved.
Lisa Nirell is the Chief Energy Officer of EnergizeGrowth®. She helps companies increase their wealth, improve their performance and
attract great clients. Since 1983, Lisa has worked with Trend Micro,
Zappos, BMC Software, Microsoft, IBM, and hundreds of entrepreneurs in
nine countries. Lisa is also an award-winning expert speaker, business
columnist and the author of “EnergizeGrowth® NOW: The Marketing Guide
to a Wealthy Company.” To download your five complimentary educational
bonuses and sample chapter, visit www.energizegrowth.com and register for EnergizeNews.