The name, "The Magic Matrix" was first brought to my attention by Peter Thomson.
It is a great way to identify and exploit opportunities for extra sales and profits from your existing customers. This is known as "back end marketing".
Some Of The Saddest Words In Business
Two of the saddest words in a person's life are "if only" said with yearning for a lost opportunity.
"If only I'd taken that job opportunity..."
"If only I'd asked that girl out..."
"If only I'd had the courage to start my own business..."
Some of the saddest and most frustrating words in your business life also relate to missed opportunities.
These are "I'd have bought from you but I didn't know you did that..."
The Magic Matrix is designed to make sure that you stop hearing those words.
What Is The Magic Matrix?
The idea is simple.
It is a table with your products as the column headings and the names of your customers in the rows. To prepare your basic matrix, all you do is mark off who is buying what product.
By showing clearly on a table who buys what you also get the opportunity to see what they don't buy.
Since you have a relationship with the buyer and you have proven yourself, you can now see the opportunities to promote and sell additional products.
I have used this basic concept for many years but Peter Thomson has added a few twists that I hadn't thought of. However now that I have been exposed to Peter's thinking I have found extra ways to enhance the idea.
I had thought that he created the name but now I'm not so sure.
Academics Benson P. Shapiro and Jonathan Byrnes talk about the magic matrix in this article The Bottom Line: Bridge the Gap Between Strategy and Tactics
The Importance Of Looking With Fresh Eyes
The Magic Matrix is one example of how important it is to find new ways to analyse your business.
Every time you look at it in a different way, from a new angle you are likely to gain new insights and see new opportunities.
One example I have used in the past is the product/customer/competitor matrix.
The purpose is for you to identify the share of your customers wallet in the products you sell and help you to identify new competitive strategies targeted at particular competitors.
If you sell various main product groups to customers who also buy from competitors then try this thought-provoking exercise.
- Pick one of your product groups
- Take a piece of paper and list your customers in rows and competitors in the columns but leave two columns blank at the start.
- The title of the first column is "Total Purchases" - this is the value the customer buys from you and your competitors.
- The second column is "Our Business" so record how much you sell to this customer.
- Identify who else the customer buys from.
- Estimate how much they buy from each.
You now have the competitive map for your customers so add to it the major non-customers to make it a comprehensive competitive opportunity map (is that my new name for this matrix?)
You have identified which customers give you the greatest opportunities to increase sales value by increasing the share of their wallet and by considering your competitive strengths against your competitors you can target the weaker players.
This isn't the place to talk about all the different strategies that you can use but the important thing is that you now have new competitive insights because you see your market in a different way.