Social CRM is a sure way to lose money, for now

That's the takeaway from Gartner, which has released a forecast for Social CRM. While the market is expected to generate $1 billion in revenue next year, there are more than 100 vendors competing, the majority of which are unprofitable or take in less than $1 million. The market is growing, but it's too small for the number of participants. Social CRM accounts for just 5 percent of the total client-relationship management market.

The problem is customer adoption. "Until recently, many companies have treated social CRM as a series of experiments and tactical purchases", Adam Sarner, Gartner research director, says in a statement. "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.

"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".

Gartner identified five areas of predicted research and development:

1. Social features integrated into traditional CRM processes (including traditional software and cloud services).

2. New tools for measuring return on investment.

3. Increased integration with popular social networking services, notably Facebook and Twitter.

4. Greater adoption of analytics tools or services for measuring social interactions.

5. New social CRM usage scenarios, which Gartner didn't specifically identify.

"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 knowledgebase 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".

Greater integration could benefit companies with existing CRM products, such as Microsoft, Oracle and Salesforce.com, further driving a wedge between the plethora of smaller vendors and future profitability.

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