But measuring thesuccess of your CAB program is not always an easy, straightforward task. This is no doubt due to the inevitable dynamic that, like many aspects of marketing, customer advisory board return on investment (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.
In Part 1 of this blog topic, we’ll look at how you can measure the success of your CAB program, with a focus on top-line sales opportunities that you can tie to your program:
- 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 Ignite clients, 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.
- Incremental revenue: 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 programs.
- 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 inside track they enjoy with leadership team, as well as product and service roadmaps that they help shape. Ignite’s 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.
- 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!
- 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.
While increasing revenue, loyalty and potential new customers can be a key goal of your CAB program, such goals are best kept “close to the vest” by your company. After all, sales and revenue is only one of the many benefits your company can achieve through a well-run CAB program. You don’t, however, want to communicate this goal to your client members, who will be turned off if they sense that your program is more about your sales than their own benefit. As such, you’ll want to tread lightly on these topics in front of the members. The good news is we often see such topics and suggestions arise organically by the members themselves through well-run face-to-face meetings and other engagements. When such ideas come from your CAB members, they will only be happy to help you reach your desired objectives here.
But revenue, loyalty and new customers are just the tip of the iceberg when it comes to measuring the ROI of your CAB initiative. In part 2 of this blog topic, I’ll review some of the marketing measurements you can apply to your CAB program, which may offer just as much value as these.
Ignite Advisory Group is the leading global authority on Customer Advisory Boards and Customer-Led Boards. Ignite’s proven methodology for managing and evolving Customer Advisory Boards includes a 4-stage process, encompassing 48 deliverables and measured by 20 metrics to deliver a clear ROI. To learn more about Ignite, visit our website, read our blogs, and follow us on LinkedIn. To find out how your company can benefit from Ignite’s CAB methodology and process, contact us today.