The social customer relationship management (CRM) market is poised to touch over $1 billion (Rs 4,591.36 crore) mark globally by year-end 2012, which is up from about $625 million
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Analysts observe that while spending by buyers on social software for marketing, customer service and sales witnessed a 40% spurt in 2010; social CRM remained less than 5% of the total CRM application market. Interestingly, about 100 vendors have social CRM offerings. However, most social CRM vendors are not profitable and generate annual revenue of less than $1 million (Rs 4.59 crore).
According to Adam Sarner, research director at Gartner, the use by consumer segment accounts for over 90% of spending on social CRM, but spending on business to business (B2B) use is growing faster and would account for 30% of total social CRM spending by 2015. “The market will continue its rapid consolidation throughout 2011. Previously, social CRM vendors acquired each other. Now, business application vendors and outsourcers have started to add capabilities through acquisitions,” adds Sarner.
Despite witnessing a growth from 50% to 100% in 2010, most vendors, however, remain relatively small and unprofitable. Analysts point out that social CRM vendors would need to provide clear benefits for companies and communities, demonstrating multiple use cases for sales, marketing and customer service processes in order to sustain in future.
“Until recently, many companies have treated social CRM as a series of experiments and tactical purchases. Few have a social CRM strategy or established metrics to measure its effect on hard business results. Different departments, employees and managers implement different types of applications for different purposes,” Sarner says. “This lack of consistency among buyers keeps the market fragmented into at least three segments — sales, marketing and customer service — with many small vendors taking various approaches to address one area, approach or use case. The majority of vendors that survive and thrive in the mid-term will offer tools that can address multiple use cases in more than one department.”
Nowadays, social CRM vendors differentiate themselves on the basis of functions, process work flow, analytics and ease of use or superior experience delivered through professional services. The functions that social CRM vendors offer tend to reflect one of four typical starting points: Hosting and supporting a branded or private-label community, and providing the surrounding functions; monitoring, listening to, surveying and responding to private-label or independent social networks; facilitating the sharing of B2B or business to consumer (B2C) contacts through communities, establishing community product reviews largely to facilitate online sales.
“Vendors who can assemble a full set of social CRM functions, and make progress in two or more of these areas, will be best positioned for market success as the market matures,” Sarner says. “Over time, vendors will find it harder to gain an advantage by providing unique core functions for social CRM.”
Additionally, four other factors will also differentiate vendors: Seamless inter-operation between public social networks and internal collaborative communities, integration of processes with traditional, operational CRM applications, such as multichannel campaign management, a customer service knowledge-base or a sales lead application, application-specific analytics to help prove the RoI of the social CRM application; partnerships with global system integrators, or digital or interactive agencies and consultants, to promote and deploy the applications.
Gartner analysts say that R&D in social CRM will center on five areas: Deeper integration with traditional CRM processes, tools to measure RoI, deeper integration with social networking services — particularly facebook and twitter, increased use of analytics, and new use cases for social CRM.
“The need for integration will favor more-traditional CRM vendors that add social capabilities. Integration did not matter much when enterprises were just experimenting with social CRM,” Sarner says. “However, companies are asking for the integration of social data with other customer data within sales, marketing and customer service processes, which will require the integration of social CRM with applications such as a knowledge-base for customer service, multichannel campaign management, sales force automation or e-commerce, Web content and Web analytic applications, master data management, and even back-office applications.”