Fantastic business with the Magic Canvas
Introduction
As a business owner, you want to be fantastic at doing business. Not good, fantastic.
How to do that?
Well, you have to maintain or increase your revenues.
Easy said, but this may not be easy to do it.
Well, how do you maintain your revenues?
You’ve got to maintain your current customer base, control your costs, and get new customers.
How do you achieve these 3 things?
Simple. You’ve got to understand better the relationship between your product/service and your customers.
To do this, i built a tool called the “Magic Canvas”.
The Magic Canvas is made of 4 questions and a magic chain.
It sounds simple, but it can be quite challenging because you are going to have to forget about your viewpoint and adopt the viewpoint of your customers.
Are you ready to maintain your current customer base, control your cost and get new customers?
Let’s go!
Question 1: What job is your product or service currently doing for your customers?
Write down the job that your product or service currently does for your customers. Another question that can help you to answer is": what does the customer hire you for?
Do not assume the job you do. Ask the customer if you are unsure. It's always best to hear it from the customer's mouth.
Let’s answer the question for our hair saloon example. The job my hair saloon business is doing for the customer is
Cutting hair
Improving the hairstyle
Giving advice on hairstyle
Note that some products or services may enable the customers to do multiple jobs. In this case, using one canvas per main job is best because the analysis will be easier. An example is baking soda. Your customers may use it for cleaning but also as an ingredient in cooking and baking.
Sometimes, you even realize that customers are using your product in a different way than it was intended to be used! It was meant for one job, and they used it for another job. One example is using your car as a meeting room to take calls because it is a comfortable and quiet environment. Another example is the one of the toothbrushes used for cleaning hard-to-reach places.
Question 2: What outcomes are your customers after?
Please take a moment to step back from thinking about what your product or service does. Focus on the finish line: what are your customers really trying to get from using it? What's the outcome(s) they are after?
Feel free to ask your customers directly. And when you do, take note of not just their words but also the feelings they share. Sometimes, a single word or emotion can tell you much about the outcome they seek.
Let’s answer the question for our hair saloon example:
Feeling good
Looking good
Feeling better (hair is less long)
Getting noticed and getting positive comments from People
Feeling better (through venting or having a good laugh)
You should feel free to add to my answers if you think i am missing an outcome. I don’t go to the hair saloon anymore!
As you collect answers from your customers, do not be surprised to modify your answers to question 1. For instance, imagine that some of the customers replied to question 2 that they are after a relaxing time at the hair saloon and especially a good chat. Haha! As we talked to customers we realized that we missed an important job that the hairdresser does for many clients: listening and chatting with the customer while cutting and styling the customer’s hair. Let me explain. Some customers said they enjoy their time at the hairdresser because they can chat and laugh. As you are cutting hair for some of the customers, you realize that most of them talk to you about their lives or may even share personal issues. From the customer’s perspective it is one outcome that you help them to reach even if you did not plan for it, even if your business is not about listening to People but about cutting and styling hair. Under question 1, we can add:
Listening and chatting with the customer
Understanding the outcome(s) the customers are after will help you to work on the job you are doing for them.
How can my product or service help the customer reach the expected outcome?
You may also see opportunities for new products or services.
Let’s move to question 3.
Question 3: What questions are your customers asking?
The customer is targeting an outcome. What questions are they asking while searching for ways to reach this outcome? Are they asking themselves questions about price, convenience, durability, and security? What are their thought process?
Most of the time, customers ask the question in their own head. They may not speak them out. Sometimes, the customer will speak out the question. It means that most of the time, you will have to do some digging. Imagine you are a salesman in a car showroom. You see a potential customer looking at one of the cars on display. Ask her if she is asking herself any questions about the car. The question may be usual but it is the best way to step in your customer’s shoes.
Write all these questions the customers are asking themselves and understand the key variables they consider when considering products and services to reach the outcome they are after.
Let’s answer the question for our example:
What color should i do my hair?
What style should i get?
Can the hairdresser come to my place?
…
What other questions are you asking yourself when you consider a hair saloon?
It may not sound natural to ask yourself this type of question, but it is fundamental if you want to improve your business.
Recurring answers are likely properties that your product or service should have. They are potential trends that your product or service should factor in.
They may also lead to you disrupting your own product or service because you realize there is a better way for the customer to reach the outcome.
Let’s move to question 4.
Question 4: What is your customers’ consideration set?
Considering the outcome, what brands, products, and services the customer is actively considering before making a choice? This is what we call their consideration set.
Note that the customer may want to engage in further research before narrowing down to a set of products, services, or brands.
Let’s answer the question for our hair saloon example:
Hairdresser (you can even name specific shops)
My friend
Myself (cutting my hair by myself)
…
Understand why these brands, products, and services are in the customer's consideration set. Ask the question directly to the customer if needed: Why would you consider asking your friend to cut your hair? "Well, it's way cheaper and my friend is learning to be a hairdresser."
Once you have answered the 4 questions
As you have answered these 4 questions, you will likely start seeing your business from a new perspective. It’s not natural to look at your business from the eyes of the customer, yet, it is the most relevant viewpoint you can adopt to start creating value for your customers.
You will likely:
Realize that the customer is after the outcome(s), not the job. It may be hard to accept because, as business owners, we tend to love our products and services. It’s especially true if you are building your own business. It takes some gut to change your viewpoint but it’s necessary if you want to be fantastic at doing business. Remember, the customer is the only reason why you are in business. You rather understand the outcome(s) they are after.
Using our hair saloon example, you may style my hair, but i may not reach the outcome i am after if my hair looks bad. It means that, from the business owner’s viewpoint, you may think that you have done your job, but from the customer’s perspective, the outcome may not have been reached. As a customer, i may be disappointed to pay 70 euros for not reaching the outcome i am after.
Realize that all that your product or service does is a job that helps customers reach an outcome. It means that you need to be awesome at helping customers reach outcome(s) because it’s what matters to them. They pay you for that.
You cut my hair so that i feel better.
You style my hair so that i feel good and i can get compliments from other People.
Realize that customers compare the outcome to the value they pay for your product or service.
You perceive that the client pays you for a haircut, but, in reality, they are paying you for looking good, feeling good, feeling better, and being praised by their friends.
Realize that you should consider advertising the outcome rather than the job because the outcome resonates with the customer.
Realize that you have competitors you did not even think about.
Have you ever thought that your customer’s friends could be a competitor of your business? What can you do about that?
Realize that your customers are asking questions you never thought about. Realize that you will not know about these questions if you do not try to capture them. Realize that these questions your customers ask themselves could be opportunities to create new products and services.
Can you offer haircuts at People’s places one day a week?
Can you recommend to your customers an app that lets them select and try (through filters) a hairstyle?
The results of the 4 questions can help you to identify actions that will help you to keep your existing customers, control your cost, and get new customers.
Let’s look at the responses for our hair saloon business to achieve this:
Question number 3. Some of the customers mentioned to us that they ask themselves: could i get my haircut at home?
Based on this information, could we put in place a service, one day a week, that cut and style People’s hair at their place?
If you put this in place, you increase the value you create for your existing customer base. Potentially, you could charge more as the customer may be ready to pay more. As a customer, if you come to my place, i save time, money, and effort. I may also feel way more comfortable at my place. How much more would i be ready to pay for this new service?
It’s also a way to attract new customers. Imagine that you have implemented this new service, and customers are happy with it. What do you think they will do? They will likely repeat but also they will mention it to their network when they talk about hair cut. What does it mean for your new service? It means that you are likely to get demand from new customers.
Question number 4. Some of our customers mentioned to us that their friends are in the consideration set.
Based on this information, what do you think happens when your customer decide to get their hair cut by their friends? You are missing revenues. What could you do? First, you must understand why your customers would go with their friends. If the answer concerns cost, you may want to find a solution for your customer.
Here are ideas:
Loyalty program where you get a free haircut or a discount every 5 haircuts.
Can you offer a service where customers get their hair cut by People learning to cut hair? The price would be lower because you would not pay the staff the same price as you currently do. You could validate that there is a demand for this service and open a branch only for this. You could potentially team up with another hair saloon to implement this service.
These actions help you to keep your existing customer base and get new customers. If you offer haircuts at a reduced price, you are entering a new market segment.
Question number 4. Some of our customers mentioned that they would consider themselves for cutting their hair.
What is the impact on your business? Loss of customers and consequently lower revenues.
What can we do about it?
Here is an idea. Why don’t we put in place a course once a week that teaches customers to cut their hair? We need to be careful about this strategy as the point is not to eat our own business! If we identify a separate market of People cutting their hair for diverse reasons (price could be the main reason, and this is an assumption), then it’s a market we may want to address. Setting-up classes where customers can learn to cut their hair could bring a whole new customer base. We may even have different class levels. Some of our customers may be good enough at it to be part of our staff. It’s a way to identify talents.
The action will potentially bring in new customers and help us retain existing customers who are considering cutting their hair by themselves.
These are a few examples of actions to keep existing customers, control costs, and get new customers. Goiung through the example with me, you may have thought of strategies i have not seen.
Next, the Magic Chain
The next step is to build the magic chain. I am already so glad you have reached this point. It means that you are serious about being fantastic at doing business. It means that you understand or start to understand the importance of understanding your customer.
The magic chain is not an easy exercise, but it is here that you will create even more optimizations in your business.
Let’s go.
The magic chain
The magic chain details the activities the customer is asked to go through to reach the outcome they are after.
Let’s use a visual example. Each box is an activity, and there is an arrow between the boxes to capture the order of these activities.
Let's use the hair saloon example. At a high level, let's map the activities the customer goes through to consume the service.
Doing this gives you a brand-new perspective on what your customers have to go through to reach the outcome they are after.
Next, you want to understand better where value is created for the customer and where value is taken away or eroded from them.
We will simply use a color code: green for value creation, red for value taken away, and orange for value erosion.
Using the color code, you can easily visualize if an activity the customer has to go through creates, charges, or erodes value.
Going to the hairdresser erodes value for me as it takes me time, energy, and potentially money if i need to use private or public transportation.
You may have noticed that i did not use any color for "Get a haircut" yet. The reason is that i hesitated between value creation and value erosion.
What do you think? When you go to the hairdresser, do you perceive the time you spend getting a haircut as value creation or value erosion? If you need to wait your turn, it may be a value erosion activity, but sitting comfortably and chatting with the hairdresser while getting your hair cut may be a value-creation activity. Why don't we detail the magic chain to find out?
Below is a more granular view of the activities customers must go through to reach the outcome(s) they seek.
The color code is the same. Green for an activity that creates value. Red for an activity that takes value away. Orange for an activity that erodes value. I added a blue color for the outcome(s) the customer is after. I invite you to include outcomes inside the magic chain so that you understand when the customer starts experiencing the outcome.
You can see that there are now multiple rows. It helps to capture different paths. For instance, some of the customers may need to wait for their turn, but some of them may not need to.
How do i keep my existing customers, control my costs, and get new customers with this information?
Realize that the customer may have to go through multiple value erosion activities to reach the outcome they are after. Many business owners know their business very well yet do not realize it. Use some empathy for your customers. Realize the pain your customers may have to endure to reach the outcomes they are after. Can you…
Remove activities that erode value. An activity may actually not be required for the customer to reach the outcome they are after. It could be an opportunity to reduce your costs.
Help your customer with a value-eroding activity. Imagine you run a hair saloon and realize that your customers have to go through a value-eroding activity to go to the hair saloon. What can you do?
Can you offer a new activity that will remove the value-eroding activity?
For example, offering customers to go to their place to cut hair.
It could be an opportunity to keep your existing customers and get new customers.
Can you create a new activity that will counterbalance the value-eroding activity?
For example, providing free wifi or offering drinks, cakes or advice on hairstyle while they are waiting for their turn.
It could be an opportunity to keep your existing customers.
Optimize the value charging activity.
Value charging is not a fun part. It’s where you take money from your customers. Can you:
Find the best time for your customer to pay.
Create a subscription mechanism to reduce the value-erosion activity.
Adjust payment methods.
Offer a discount for paying cash—a cheaper price for the customer and no credit card fee for you.
It is an opportunity to keep your existing customers by increasing convenience and value creation.
Ask yourself if there is a better way to get the customers to reach the outcome.
Sometimes, we are so stuck in our business that we don’t take the time to step back and realize that we could help customers to reach the same outcome in a much simpler manner. All along, it was right in front of us yet we missed it because we were so focused on our products/services and not on the outcome we help the customers to reach.
It’s an opportunity to keep your existing customers, reduce costs, and get new customers.
Business changes
All right. You have done the activities above. Congrats!
You may have identified actions to take. I would advise you to focus on the actions (changes) requiring the least effort versus the business improvement they should trigger. Why? Because it is here that you will get the highest impact for the least resources being used.
Thanks!
Thanks for going through this content and willing to improve your business. I am trying to improve this page to make it easier to understand. I would love to hear your feedback if you have any. Did this page help you? If yes, how? Did you wish that the information be presented in another manner? Feel free to let me know.