By Ken Murphy
Recent research suggests the social CRM marketplace is growing at a rapid pace, but before many businesses stake their claim in this enterprise frontier, they’re waiting on two important markers: Defining exactly what value they hope to glean from the social data collected, and whether that benefit is worth the investment in social CRM.
So far, it appears that being able to measure a concrete ROI has yet to catch up with the burgeoning market. According to research from Gartner, just half of Fortune 1000 companies who have invested in social CRM systems will see a worthwhile ROI on their social CRM initiatives this year.
That’s not to say that businesses aren’t working on establishing parameters for their social CRM strategies. Gartner also predicts that by the end of the year 75 percent of new social CRM initiatives that are funded will have incorporated a measurable ROI in their business plan.
“Social data, such as numbers of fan pages and weekly Tweets, is not enough to correlate with the contribution of top business objectives,” says Gartner research director Adam Sarner. “ROI, measurable business value and budget justification for social projects are becoming unavoidable topics for many organizations.”
Hence the rapid market growth. Consider that by year-end, total revenue from social CRM software licenses and subscriptions are expected to yield a more than a 100 percent increase from even just a year ago, according to Gartner research. And that with this impressive uptick in sales, social CRM is expected to account for 8 percent of the total C
RM market, also up 100 percent from a year ago. This is according to data Gartner released concurrent with its CRM Magic Quadrant for Social CRM 2012.
If this trend continues, it will be interesting to see how much emphasis companies place on social CRM vs. traditional CRM systems. Perhaps some companies are late to the social CRM game not because they haven’t determined how to measure ROI, but because they are still trying to squeeze more out of their traditional CRM systems. According to a recent Charles Schwab poll of more than 1,600 registered investment advisors, just 6 percent said that their companies were using CRM to its maximum potential. Asked the primary use of their existing CRM system, 98 percent identified the storage of customer information. The next highest identified use was preparing and sending client communication – listed by just 61 percent of respondents.
So, what’s the next big trend in social CRM? Where is this all heading? Gartner researchers say that the next two years will be crucial in the social CRM growth path. How well companies and providers tie CRM projects to measurable business objectives will be one of the biggest factors in social CRM’s eventual place in the market.
Of course, the very nature of social CRM suggests that customers, not businesses, will play a large role in determining what those objectives might be.