Maturity and the time dimension

Figure 16.3 shows cumulative ROI, to the end of the first, second and third years. A rising line indicates that ROI has increased, year on year. A flat line indicates that the effect of investment remains constant, while a descending one (as in the case of the computer supplier) suggests that there is some degree of diminishing return at work. The match between quartile and ROI pattern is not exact. However, the idea that emerges is that poor CMAT performers (quartile 3 or quartile 4) need high initial investment, which will be followed by slow initial gains and major gains after two to three years. Those already performing in this area will show quicker initial gains (the infrastructure to capitalize on gains is already in place), but, the level of investment will not change much year on year; so benefits tend to follow a steady rate, rather than leap up dramatically at any point in time. The major overall implication that we have identified across numerous forecasts is that it is likely to take time for the full effect of CM to be delivered (though this is not always the case).

Table 16.2 gives indicative estimated returns. Please treat it as a guide only as it is based on a small number of detailed tracking studies. We have not yet seen a top-quartile performer.

Note: when comparing this table with Figure 16.3 above, the figures quoted here are our estimates for ROI within an individual year, while the final column (average ROI over three years) corresponds to the final points on the graph. Table 16.2 illustrates much more starkly what we believe to be the differences in effect between CM investment applied to top and bottom-quartile companies. For instance, in Year 1, we expect bottom-quartile companies to show no or little return on investment. This closely matches our experience. Bottom-quartile companies have invested little in their customers, so the first year or two can be a very expensive catch-up phase, followed by quite exceptional ROI in year three and beyond. Here we quote an ROI figure of 7. Note that the end benefit (that is, average ROI) tends to converge for organizations starting at different levels of maturity. This is because companies in low quartiles are moving up the maturity ladder, so that spend in Years 2 and 3 is more akin to spend within a company that was already more mature.