Customer discovery
Customer advisory board: how to set up and run a B2B CAB
How to start a B2B customer advisory board: when you are ready, who to invite, how often to meet, what members get, and what a CAB cannot tell you.
A customer advisory board (CAB) is a small group of customers who meet with your leadership team on a regular schedule to advise on strategy, product direction and how their own businesses are changing. Members are usually senior people at customer companies, and they usually take part without pay. Done well, a CAB gives you a recurring, candid conversation with the customers you most want to keep and grow.
It is a different thing from a startup advisory board, which is a handful of individual advisors, often paid in equity, who help founders with gaps such as fundraising or a first sales hire. CAB members advise as customers, about the problem you solve for them. Startup advisors advise as experienced individuals, about running the company. A company can have both.
Two ways to run a CAB
There are two common models, and it helps to pick one on purpose.
The strategic CAB. Insight Partners, writing with CAB strategist Mike Gospe, describes a CAB as a program rather than a meeting, focused on strategic questions that will matter two to three years out (Insight Partners). It is not meant to be a product focus group, a customer appreciation event or a sales meeting, and your executives should spend about 80% of the time listening.
The early-stage CAB. Peter Kazanjy, interviewed by First Round Review, describes an early CAB as an extension of customer discovery: a group representative of the people you expect to sell to, including prospects, whom you can send quick surveys, mockups and prototypes and invite to occasional dinners. His second company's CAB included representatives from 80 companies.
| Strategic CAB | Early-stage CAB | |
|---|---|---|
| Members | Senior leaders at existing customers | Target buyers and users, including prospects |
| Size | Typically 10 to 15 customers, per Wikipedia; Insight suggests inviting 8 to 12 | Can be large; Kazanjy's had 80 companies |
| Contact | 1 to 2 meetings a year of half a day or more, or a few 90-minute virtual sessions | About once a month, under an hour, plus quarterly events |
| Topics | Strategy, how members' businesses are changing, roadmap direction | Whether the problem is real, features, pricing, naming |
| Signs you are ready | Insight's list includes having more than 50 paying customers and executives ready to act on what they hear | You have finished a round of discovery interviews and want to keep the best interviewees involved |
Who to invite
- People who can speak for their company's direction. Wikipedia's overview stresses picking both the right customer company and the right individual within it. For a strategic CAB, Insight suggests C-suite representatives.
- A balanced group of peers. Sierra Ventures recommends building membership around your ideal customer profile and balancing perspectives, but warns against a mix so wide, such as a Fortune 500 CEO alongside a small-business head of HR, that members no longer feel among peers (Sierra Ventures).
- A few critics. Wikipedia notes that membership can benefit from a few outspoken customers who have complained in the past. A board made only of your happiest accounts is likely to confirm what you already believe.
- For an early-stage CAB, the people who feel the problem most. Kazanjy recruited the interviewees who had confirmed the problem most strongly. He also warns that if people will not join, you may be aiming too senior: directors, managers and daily users often engage more than senior executives.
What members get
Most members take part voluntarily. Wikipedia lists the usual benefits as influence over the company's direction, prestige, networking with each other and with company officers, and a chance to share practices. Insight's example from BigPanda adds that the social side matters: members who have never met need icebreakers and social time before they open up.
Be careful with anything of value. Sierra Ventures cautions that many large customers prohibit their employees from taking compensation in any form, so check before you offer anything. Early-stage CABs that ask for real work handle it differently: Kazanjy says his company valued members' time at $100 an hour, paid in gift cards, for longer surveys and tests. Whatever you choose, apply it consistently.
Run meetings that lead to decisions
- Write a charter. Insight recommends an internal charter that aligns your executives and a customer-friendly version for members, covering objectives and expectations. It suggests at least three months between internal kickoff and the first meeting.
- Prepare a few big questions. Send background material beforehand, so members arrive ready to discuss rather than to hear a presentation.
- Let customers talk. Aim for the 80/20 split. In Insight's BigPanda example, virtual sessions worked best with 6 to 8 people; with more, two or three voices could dominate while half the group stayed silent. A neutral outside facilitator can stop one customer from taking over.
- Close the loop. At each meeting, show what you did with the last round of advice and explain what you decided not to do. Wikipedia notes that a CAB's credibility depends on following through on key recommendations, or giving a reason for not doing so. Kazanjy's updates to members cover what the company said it would do last time and whether it did.
Keep competitors' sensitive information out of the room
If members' companies compete with each other, steer discussion away from their prices, future plans and other sensitive business data. The FTC warns that exchanging price or other sensitive business data among competitors, including through an industry group, can raise antitrust concerns, and that information about future plans should be closely guarded (FTC). Discussing industry trends and your own product is normal. If members compete, ask your lawyer to review the charter. This is general information, not legal advice.
What a CAB cannot tell you
A CAB hears from customers who stayed, usually the most engaged and senior among them. Insight says a CAB is not the place to find out why customers are churning. Nor will it tell you why deals were lost or how buyers who never considered you see the market. Fill those gaps separately: interview customers who chose another product, interview customers who stopped using your product, and talk to people in the market who are not your customers. Voice of customer covers how these sources fit together.
A worked example
This example is hypothetical. A company with about 120 customers sells inventory software to hospital pharmacies. It needs to decide whether to build for health systems with ten or more hospitals, where it has few customers. It sets up a strategic CAB of ten:
- Six pharmacy directors at current customers, including two who complained about integrations last year.
- Two pharmacy leaders at multi-hospital systems that are current customers.
- Two hospital supply chain leaders who work with the pharmacy team.
It meets once a year in person for half a day, with two 90-minute virtual sessions in between. The first big question is: "How will decisions about pharmacy software be made in your organization over the next three years?" Because none of the CAB members can explain why large health systems chose a competitor, the product team separately interviews five systems that did.
Your next step
Write the two or three strategic questions you most need customers to answer in the next year. If you can name them and your executives will act on the answers, a strategic CAB may fit. If you are still testing whether the problem is real, start with the lighter early-stage model.
If you have never run a CAB, or you need perspectives from outside your customer base, a few calls can help. Instant Expert can find people who match a description such as "customer success leaders who have run a customer advisory board at a B2B software company" or "pharmacy directors at multi-hospital health systems." You review who it finds, it sends your invitations and you pay for each call that gets booked. The directory pages for chief customer officers and hospital supply chain experts are one place to start.