More investment and analysis needed
Only half of Fortune 1000 companies are likely to see a return on investment (ROI) when it comes to their social customer relationship management (CRM) initiatives by the end of this year, Gartner has said.
The analyst company has said that despite heavy adoption of social applications by sales, marketing and customer service departments, which have caused this sector to grow, many companies won’t see positive results because they are not measuring the growth correctly.
The worldwide market for social CRM software licences and subscriptions are predicted to come to $2.1 billion in 2012, up from $850 million in 2011. Social CRM revenue is also expected to represent 10 percent of the overall CRM market.
Although social CRM was primarily a concern of marketing, Gartner said it now affects every business aspect from marketing and sales to customer service and support.
It added that this part of the business was “important to lead generation and cross-selling and up-selling capabilities”.
However, Gartner has warned that that many companies will fail to harness its full potential.
Adam Sarner, research director at Gartner, said this was because many companies would not measure their ROI and this could lead to failed projects. He said that among the companies who would not see a worthwhile return, only 20 percent would have the data to evaluate where their social strategy was falling short.
And the next two years could be critical to the success of social CRM, with Gartner claiming that companies and social CRM technology providers making sure they ensured that social CRM projects were more than just social objectives.
It added that by the end of 2012 three-quarters of new social CRM initiatives that receive funding will have a business case incorporating measurable ROI.
However, although many organisations have established a form of social presence, Gartner said that many also lack a clear business performance objective for social CRM, being at early stage in their measurement of its business outcomes.
Mr. Sarner said: “Social data, such as numbers of fan pages and weekly Tweets, is not enough to correlate with the contribution of top business objectives.
“ROI, measurable business value and budget justification for social projects are becoming unavoidable topics for many organisations.”
There was a warning, too, for social CRM vendors, which have so far been able to keep afloat through offering a range of services. However, as time went on and more companies began to offer this service, Gartner claimed that they need to show quantified business cases and be able to deliver repeatable social CRM processes that were not yet broadly available.