The strategy canvas is an essential tool to help you focus on establishing a differentiation based competitive advantage. It goes by different names - W. Chan Kim and Renee Mauborgne call the Strategy Canvas in Blue Ocean Strategy, Cliff Bowman calls the Customer Matrix, I call a Customer Value Attribute Map and others call it a Customer Value Matrix.
It doesn’t really matter what you call it as long as you use the basic concept to get crystal clear about what customer segments or niches want and what you and your closest competitors offers.
What is The Strategy Canvas Or Customer Matrix?
The strategy canvas or customer matrix is a graphical representation of the key elements of customer value which determine purchase choice and continued use for a product or service.
It allows a visual comparison of two or more brands to show the relative strengths and weaknesses.
The Strategy Canvas For Luxury Cars – An Example
Below is a sample strategy canvas for two expensive, luxury cars – Rolls-Royce and Mercedes.Value comparison for Rolls Royce and Mercedes luxury cars
I don’t want to get caught up on models so let’s leave this as general as I talk through the example of the strategy canvas.
I’ve listed four key customer value attributes for an imaginary luxury car buyer – prestige, comfort, appearance and handling – and I’ve also included price.
People have different views on whether price should be included or whether it should be left for the customer value map and in the strategy canvas / customer matrix you should just focus on the factors of customer value. I’ve included it for simplicity.
In my assessment, I have rated prestige and comfort as better in a Rolls Royce but appearance and handling better in a Mercedes. I’ve also said that the price is more of a problem for a Rolls-Royce because it is more expensive. While for the other attributes, more is better, for price then less is better.
The strategy canvas makes the key differentiation factors very clear and the relative importance of these would influence the final purchase decision.
For example if I was being chauffeured around then handling would be much less important than if I was doing the driving myself and took pleasure from it.
Other luxury cars could be added onto the strategy canvas if other marques were seen as serious competitors.
How To Prepare A Strategy Canvas or Customer Matrix
I’ll quickly take you through the process to prepare your first strategy canvas.
- Decide on your customer segment – get specific because different types of customers will be interested in different things. It can be helpful to think through your customers and allocate particular customers to typify particular customer segments.
- Determine the key customer value attributes – what matters most to the customer and user in the initial purchase decision and their continued use of the product?
- Determine the relative importance of the customer value attributes. The creators of both the strategy canvas and customer matrix recommend that you list the attributes in order of importance with the most important coming first.
- Determine the customer’s perception of your customer value rating for your product or service and plot it on the strategy canvas.
- Determine the customer’s perception of your key competitors’ ratings for each of the attributes and plot those on the strategy canvas as well.
You will now have a visual chart of the competitive strengths and weaknesses of your product which can be used as the basis for current marketing and for future product development.
The Advantages Of A Strategy Canvas or Customer Matrix
Strategy and differentiation can feel like vague “good to have” topics but preparing a strategy canvas or customer value attribute map brings the differentiation factors which matter to customers into sharp focus.
The Customer Matrix / Strategy Canvas Provides Clarity
The exercise brings great clarity but also highlights what a potential muddle existed before the work was done.
You’re forced to think when preparing a strategy canvas about the important criteria that really matter to particular groups of customers.
If you do the exercise with your management team ask them to go through the process on their own first and then compare and contrast. I think you’ll be amazed at the different perceptions of what is important and the relative importance, even when you start with a tightly defined customer group.
Those differences are what have caused muddled strategy, marketing and sales conversions.
Discuss the differences. It might be that two customer groups have been combined when they have distinct needs and wants. It might be that a few managers have funny ideas about what is important to the customers.
Usually the management team become aware that they haven’t done enough research with customers – through surveys, customer groups and purposeful informal discussions – so there is pressure to close this gap and to capture the voice of the customer.
Clear Customer Value Differences Highlight Different Market Segments
The second advantage of the strategy canvas is that it vividly demonstrates the differences between different customer segments so you can see why a one size fits all policy doesn’t work well.
By preparing difference customer value attribute maps and understanding the main attributes of value and the different weightings, the reasons why your marketing success in one compared to another become clear.
Some market segments you fit like a glove – what I call bullseye marketing – and others you have a mismatch between what you offer and what customers want.
It Brings Out Your USP
The third big advantage of the customer matrix is that it helps to focus your marketing on the few things that really do matter and it helps you to emphasise your unique selling point. The assessment of value that matters in the buying decision is the customer’s perceived value and this depends on the underlying performance value and how well it is signalled in marketing.
The Customer Matrix Links Into Internal Processes
The fourth advantage is that it provides a link from the reasons why customers buy to what you need to do internally to consistently deliver on your marketing promise. If customers want quick delivery then your business needs to be designed to produce short lead times and that ripples through into your operations strategies including purchasing, stock control and distribution.
It Demonstrates Commoditisation Or The Move Towards Commoditisation
The fifth advantage is that it focuses attention on the extent to which you and your competitors have allowed the product to be commoditised. The customer value matrix will highlight vertical differentiation where performance is better on the same attributes or horizontal differentiation where different competitors bring in unique attributes to make their case for customer preference.
In a market that’s been commoditised, the attributes offered by the leading competitors are the same and the relative performance offered by each is very similar.
The strategy canvas as explained by W. Chan Kim and Renee Mauborgne in Blue Ocean Strategy is very much a tool for looking for innovative ways to create differentiation by looking across different solutions to particular customer wants and needs.
How To Find Out More About The Strategy Canvas and Customer Matrix
I want to recommend three books in particular
Competitive & Corporate Strategy by Cliff Bowman and David Faulkner – this was the book that first introduced me to this crystal clear way of focusing on the factors of differentiation. It’s hard to find but it’s a great book which takes the ideas of the customer matrix and looks at how you can build it into the strategy of your business.
Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne – I must review this book on this blog but this is the book to read to understand how the strategy canvas can be used to create innovative product offerings by deliberately choosing to break the common assumptions of a successful product.
Managing Customer Value by Bradley Gale – while the book doesn’t feature the customer matrix or strategy canvas, it was the first book to go deeply into the ideas of customer value and presents the process for bringing the management team together to determine customer value attributes and weightings.
Have You Used The Strategy Canvas, Customer Matrix, Customer Value Attribute Map?
I’m sorry if the different names for the same strategy tool has confused you.
If you’ve used it, I’d love to hear whether you found the process invaluable for:
- Setting the strategy debate
- Planning out what changes you intend to make in your competitive strategy as you look to strengthen your competitive advantage.
- Implementing the strategic plan.
Please leave a comment.
Paul Simister is the business strategy coach who helps business owners to differentiate their businesses and develop winning strategies. Get your free copy of the ebook The Six Steps Profit Formula.
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