Adapted from an article originally published by the author in Inc. Magazine.
The customer council is one of the best kept secrets of product management and company strategy. Unlike an advisory board, with specialists who often have a closer relationship with the company or even a personal relationship to the CEO, a customer council consists of ordinary users who can give their unvarnished feedback on the product directly to the company. Many startups fail to take advantage of this powerful tool because of a simple lack of familiarity, so here is an overview of what a customer council is and why to suggest your portfolio companies consider using them. Next up in this mini-series: how to operate a customer council and some tips for the unwary.
What is a Customer Council?
An Advisory Board of Customers
The alternate name for a customer council, a “customer advisory board,” is a bit more descriptive. Customer councils can be thought of as a type of market research conducted by bringing a small group of customers together on a regular basis to gather thoughts on the product, the market, user trends and feedback and help set company priorities. But they can also be so much more.
Who Should Come?
Councils should be big enough to represent a good cross-section of customers, and if customers are larger organizations, the portfolio company should make sure that the representatives to the council actually speak for the priorities of the customer organization – the more senior the representative the better. But they should take care to have a diverse group. Pitfalls include inviting only early-adopters or only members of one narrow vertical – different kinds of customers will stimulate each other in terms of how to best use the product.
How Many Members?
The management team at the company will need to be able to facilitate a good meeting that strikes a balance between a diversity of voices and everyone being heard. Depending on the situation, they probably do not want fewer than six members and probably don’t want to go much beyond 10-12 members. Use fixed one or two year terms to rotate members out and keep it fresh.
Why Set Up a Customer Council?
The team is obviously going to get strong feedback on the product – does it work the way they think it does and provide the value intended? It can also provide very helpful input on the product roadmap - building a roadmap is really just a game of assumptions, and a council is a very valuable way to test those assumptions before committing resources.
Company & Operations Feedback
The team can also gain insights on what it is like to interact with the company. How well does the sales process work? How responsive are the feedback mechanisms? If the company provides services, how well are they executed? And does customer support meet the needs of users?
Marketing and Sales Feedback and Ideas
Customer councils can provide a good idea of which marketing messages and channels are working, and help with your marketing planning going forward. And these conversations can yield valuable sales leads and referrals if the team is paying enough attention. Customer councils are not sales meetings, so care should be taken to keep it low key. It can also be an opportunity to make customers more aware of less well-known strengths and use cases of the product, which can lead to increased use or even more product spend. Finally, a good customer council discussion may lead to an opportunity to do a joint press release or a white paper or case study with an important customer.
Industry, Market & Competitor Intelligence
Councils can also provide a much broader view of the industry, if the right questions are asked. Customers can alert the team to emerging trends in the market, including moves and offerings from competitors. They can share how they see their needs evolving and provide important insights about where the state of the art will be heading in the near and mid-term and what new markets may lie adjacent to the core market.
Now that you have a handle on the what and why of customer councils, stay tuned to this series for a discussion of how to operate them and some traps for the unwary.