HOW TO RUN A CUSTOMER ADVISORY BOARD.

"It's shocking to see how many companies don't pay attention to what their customers are thinking," says Paul Lemberg, an executive coach who works with high-growth technology companies. "They don't want any interaction to develop and they don't trust customers to know anything about the company."

But if customer feedback is important to a company, Lemberg points out, setting up a "customer advisory board" can be a priceless investment. "In a lot of niches, customers are almost the only source of information about the market. In fact, the more focused the company's niche, the more important an advisory board becomes."

Advisory boards aren't cheap, Lemberg concedes. It's customary to pay travel expenses for members who attend meetings, plus occasional "dinner and theater or sports tickets, spouse travel, club memberships, small gifts, and product or service discounts." In return, however, a company gets "real world counsel on what you're doing right, what you're doing wrong, and--most important--how to stay competitive."

Lemberg recently shared a few guidelines for running a successful customer advisory board:

* Recruit "people with brains": "Unless you're raising venture capital, avoid figureheads picked for their visibility." says Lemberg. "They're likely to skip meetings, and when they show they'll have little to contribute." Instead, look for "people with brains" who stand out at user group meetings or have a good industry reputation. Good leads often come from a company's own sales reps, customer service people, and consultants, he adds. One of Lemberg's clients even hired a headhunter to help build an advisory board: "It was a brilliant strategy that got them some heavy hitters."

* Hold live meetings: E-mail and teleconferencing are handy communication tools, Lemberg points out, "but it's critical that a board should meet eyeball to eyeball at least once or twice a year." Live meetings let members and company managers explore complex issues and develop deeper relationships. "It's great if you can do at least one meeting a year in your offices, where the board can rub shoulders with employees and see what your cubicles are like."

* Keep members in the loop: Especially before meetings, it's helpful to send advisors background materials and a detailed agenda. "Prompt their thinking with questions for their consideration, and send them sample products, marketing materials, and white papers."

* Be honest about problems: "If all you're looking for is market research, you're probably better off doing surveys and focus groups," says Lemberg. "The purpose of an advisory board is to get advice from a representative group of customers. Ideally, they're your allies: If you share problems with them, they may even come up with some good ideas."

* Acknowledge their advice: Advisory board members lose interest when they feel their suggestions are being ignored, Lemberg points out. "Make sure you tell them when you've implemented a suggestion," he says. "But don't go too far in this direction--you're not asking your advisors to run your company, and it's probably not a role they want, either."

Paul Lemberg, managing principal, Lemberg & Co., Box 502612, San Diego, Calif. 92150; 760/741-1747. E-mail: paul@lemberg.com.

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