48. Customers Are Your Best Advisors

Creating a Customer Advisory Board can help you achieve several customer objectives. These types of forums are most often used by companies to gather customer insight, but depending upon how, where, and who is asked to participate, they are also a rewarding experience for your most valuable customers.

Many companies, large and small, hold customer advisory meetings quarterly or twice a year to gain a deeper understanding of customer needs and how to improve products, services, and relationships with customers. An advisory group consisting of top customers and thought leaders across several industry groups fosters an interactive discussion for everyone to learn from each other. When thought leaders are chosen from different industry segments, there is less concern about sharing sensitive competitive information; therefore, ideas and suggestions can flow freely.

A key benefit for companies that implement an advisory board is the ability for business leaders to hear, first-hand valuable information about key trends shaping an industry. This can be an important competitive advantage. Additionally, a unique setting and interactive discussion gives customers the opportunity to co-create innovative new solutions, creating a win/win situation for both companies. It benefits the customer’s business and potentially adds to the revenue stream for the sponsor company if the solution is commercialized. As customers play a key role in driving innovation and product development, it will help businesses make important decisions about priorities, investments, technology, marketing, and sales strategies.

Hewlett-Packard (HP) is a great example of a company that began implementing a customer advisory program that has surpassed their expectations about the strategic value it has created over time. DreamWorks, the innovative film company founded by Stephen Spielberg, Jeffrey Katzenberg, and David Geffen, is a good customer of HP. During a customer advisory meeting, HP asked how they could improve the workstation that DreamWorks used to create animated films. The animators commented that they didn’t like the USB ports on the back of the computer because it was not convenient to plug in other devices to the workstation. They didn’t want to hassle with plugging equipment into the ports on the back of the computer; they wanted the ports to be on the front of the computer. The customers viewed this as a disruption to their work flow and asked HP if they could fix it.

HP wanted to please one of their most valuable customers, and in the scheme of things, the design issue was a fairly easy fix for HP. The fact that HP not only listened to the advice from DreamWorks, but acted on it, demonstrated to DreamWorks that they were more than just a customer to HP: They were a partner. In fact, they were so pleased that they suggested inviting some of their competitors to join the advisory group, some of whom used HP products and some who didn’t. The advisory group grew to include all of the major Hollywood studios, including Pixar, whose Chairman and CEO was Apple’s Steve Jobs. The CTO of Pixar participated in the advisory councils, putting aside the competitive nature of HP and Apple, and saw the value his company received as a member of the customer advisory group comprised of top industry thought leaders.

Perhaps the biggest outcome of the advisory group was that it created a customer-focused culture within the organization. HP has a typical organizational structure for companies its size. There is a “front-end/back-end” structure, where the product development is handled by one organization and the marketing and selling of the product is handled by a different organization. Getting customer input into R&D is difficult in this type of structure, and it is easy for product development to become internally focused on what they design, not necessarily what the customer wants and needs.

The advisory councils put the customers and their needs right in the face of the product designers. As a result, HP is very focused on designing customer needs-based products, and they are taking market share from competitors who design only cost-focused workstations.