Maximizing the ROI of Your Advisory Board
One of the questions we’re constantly asked is “Why do I need an advisory board?”, followed by “How can I measure its success?”. In today’s ROI-driven world, it’s only natural to scrutinize the value of such an initiative. Beyond the financial commitment, a well-run advisory board demands a significant investment of time and effort. However, when approached strategically, the rewards—both financial and strategic—can far outweigh the costs. Let’s delve into how these returns manifest and why advisory boards might be the strategic tools your organization needs.
Understanding the Two Types of Advisory Boards
Advisory boards are not one-size-fits-all. Customer Advisory Boards (CABs) and Strategic Advisory Boards (SABs) serve distinct purposes and deliver different types of ROI.
Customer Advisory Boards (CABs)
CABs focus on deepening relationships with key customers, co-creating solutions, and driving customer-centric innovation. The ROI of a CAB is often tied to:
Customer Retention: Stronger relationships lead to improved customer loyalty and reduced churn.
Product Development: Direct feedback from end users ensures that product enhancements align with customer needs.
Brand Advocacy: Engaged CAB members often become brand champions, amplifying your reach and credibility.
Strategic Advisory Boards (SABs)
SABs, on the other hand, are designed to provide high-level guidance on market trends, competitive positioning, and strategic growth. Their ROI typically includes:
Market Expansion: Expert advice can facilitate successful entries into new markets.
Revenue Growth: Strategic guidance often translates into improved financial performance.
Network Building: SAB members’ connections can open doors to investors, partners, and new opportunities.
The Tangible and Intangible Benefits of Advisory Boards
Whether it’s a CAB or SAB, advisory boards generate both direct financial returns and broader strategic advantages. According to research cited in a Boardstream white paper, companies with active advisory boards report measurable outcomes such as:
Revenue Growth: A 24% increase in annual sales.
Improved Productivity: An 18% boost in efficiency.
Enhanced Financial Performance: A 15% improvement in financial results.
These benefits stem from an advisory board’s ability to align executive teams, provide actionable insights, and anticipate market shifts.
Examples of CAB ROI:
Microsoft CAB: Actively engages users to co-create solutions, leading to transformative product innovations and deeper customer loyalty.
Totango CAB: Played a pivotal role in redefining customer success metrics, improving satisfaction, and strengthening loyalty.
Examples of SAB ROI:
An AI Startup: A strategic advisory board helped refine its go-to-market strategy, resulting in a 200% increase in market share within two years.
Tech Expansion: A SAB guided a technology company in expanding internationally, driving a 35% revenue increase and successful entry into three new markets.
Measuring the ROI of Advisory Boards
To fully realize the potential of an advisory board, you need to track its performance against clear goals. Here are key metrics to consider:
For CABs:
Customer Retention Rates: Measure loyalty improvements and reduced churn.
NPS Scores: Track how advisory board engagement affects customer satisfaction.
Product Success Rates: Monitor the adoption and performance of CAB-driven innovations.
For SABs:
Revenue Impact: Evaluate increases in sales or market share directly tied to the board’s guidance.
Market Penetration: Assess success in entering new markets or industries.
Strategic Alignment: Track how effectively the board’s input influences high-level decisions.
Real-Life Case Studies
BackBox: Turning Customer Feedback into Growth
BackBox, a leader in network automation, credits its CAB for driving meaningful product improvements and fostering customer advocacy. Without the candid feedback from their advisory board, BlackBox might have struggled to align its strategies with real-world customer needs, limiting growth potential.
Totango: Evolving Customer Success
When a Totango CAB member suggested “killing the health score,” it sparked innovative discussions that redefined how the company measures customer success. This bold move, guided by the CAB, resulted in transformative changes and improved client outcomes.
An AI Startup: Scaling Market Presence
An AI-focused startup’s SAB helped refine its product development and go-to-market strategies, resulting in a 200% increase in market share within two years. This highlights how targeted input from industry experts can yield exponential growth.
Tips for Enhancing Your Advisory Board’s Effectiveness
For CABs:
Engage Regularly: Host structured meetings and informal touchpoints to maintain momentum.
Focus on Co-Creation: Involve customers in product roadmaps and beta testing.
For SABs:
Leverage Expertise: Use advisors’ knowledge to address specific strategic challenges.
Adapt Composition: Regularly evaluate and update the board’s membership based on evolving needs.
General Tips:
Set Clear Objectives: Define the board’s role and align its activities with your business goals.
Choose the Right Members: Select advisors with diverse expertise who can challenge conventional thinking.
Invest in Relationships: Build trust and rapport with advisors through regular updates and recognition.
Leverage Technology: Streamline operations with tools like Boardstream.ai to simplify recruitment, meeting management, and performance tracking.
Track and Adapt: Use performance metrics to evaluate the board’s impact and ensure continuous alignment with business goals.
How Boardstream Can Help
At Boardstream, we specialize in maximizing the ROI of both customer and strategic advisory boards. Our proprietary processes and AI-driven technology simplify everything from member recruitment to impact assessment. Whether you’re starting from scratch or optimizing an existing board, we provide tailored solutions to meet your needs.
Visit Boardstream.ai to learn more about how we can help you unlock the full potential of your advisory board.
