MSC Software announced yesterday that it had formed a customer advisory board of eighteen leading companies across the automotive, aerospace, and marine industries to “to discuss, debate, and have open dialogue on industry trends, business & technology drivers, key customer issues, and market opportunities.” Customer panels are a great idea — and I’ve facilitated many both at Computervision and as a consultant — but are fraught with potential pitfalls. I’ve been meaning to blog about this for a while, and this is the perfect opportunity.

FIrst, they are NOT an opportunity for the vendor to market to powerful customers. Too many meetings have fallen apart as customers, primed to be asked their opinions, are instead sold at. Any selling that does happen has to be very subtle and made in the guise of offering information to seek comment.

Next, the whole point of such a council is for the vendor to listen. Record what the customers say, perhaps by audio recording but absolutely by note-taking. Every vendor employee present should be writing down what the customers say and the main points should be repeated back to the customers in a closing session. Then, at the next meeting, describe in detail how each point was acted upon.

Tied to this is openness: the point of the meetings should be an honest assessment of the vendor’s current offering and future vision. If someone will react defensively, it’s best not to have that individual present for the sessions covering that product. It’s hard to have one’s work criticized but it’s best to react neutrally to try to get to the root of the dissatisfaction than react

Vendors have to understand why they customers have agreed to participate: To get an early look at coming technology, with the potential for influencing its development? To learn from other users? To discuss market dynamics (both customer industry and vendor)? An all-expense-paid trip to an interesting locale? Vendors also need to understand the dynamics within the customer group. Are all participants at the same general level of seniority within their organizations? Are they technical, technical management or management? Do any directly compete with one another? Finally, what does the vendor expect of the participants: attendance and on-site thinking; homework and preparation; presentations? All of these will affect the interaction between the customers and with the vendor team. In general, it’s best to avoid direct competitors, seek people of a similar background and level within their organizations but still representing a diverse industrial, geographic and business background.

Advisory boards want to hear broad direction, a two- to five-year plan and general strategy, with a deeper dive into one or two topics per meeting. The members generally have to take back to their organizations a sense that their vendor will be a long-term partner, attentive to their needs and able to react to market changes. That confidence can’t be generated if all items are short-term, next-rev deliverables — which, in any case, the advisory board meeting can’t influence since they are too close to completion. If a specific request raised at a board meeting in July can be answered with an addition to a release in October — great. But that shouldn’t be the emphasis of the meeting.

One of the worst advisory panel situations I’ve ever been in (a very long time ago) resulted from one customer feeling that his needs were not heard, that the vendor favored another customer — who happened to be a competitor.

So what works? The best advisory board meetings I’ve attended have

• had outside facilitators (no, not always me) who built
• a clear agenda that was distributed in advance (so that board members can seek input from their colleagues about the topics discussed at the meeting)
• included vendor management attendees with excellent listening skills
• limited the vendor attendees — almost 1 vendor to 1 customer
• fostered close relationships between vendor management and individual board members (going so far as to pair a member of management with a customer board member to stay follow up between meetings)
• a clear focus for each meeting, that varied from meeting to meeting (services, geographic expansion, a specific product set, etc.)
• barred laptops during the meeting (except at designated breaks) and asked that cellphone contact be limited to true crises
• allowed downtime in relaxing group activities (wine tasting, a little bit of tourism, etc.) to allow private discussions — these individuals represent their companies and may be reluctant to say something controversial in a public setting
• had several hours per day to enable people to connect to their offices
• concluded with a wrap-up that summarized key findings, laid out the basics for the next meeting and thanked the panel members for their contributions.

There’s, of course, more. Hosting a customer advisory panel is a great idea — if the vendor is willing to listen to and act upon the advice.