The world of social customer relationship management, or social CRM, has moved from its infancy to a full-fledged money-making industry in the past year. Technology research group Gartner predicts that the industry will be worth $2.1 billion in 2012, a 147 percent increase from the previous year ($850 million). In the overall CRM market, the social CRM component will account for 10 percent. A formidable amount of growth in social CRM will be attributed to business-to-business applications, according to the report. About 30 percent of social CRM spending by 2015 will be dedicated to B2B applications, which is a notable prediction given those same applications only accounted for five percent of the market in 2011.
The numbers are clear: The sales world is taking social CRM seriously.
Companies and sales people have integrated social CRM tools into their every day practices. They keep up with clients and customers via applications, such as Twitter and Facebook, that track client activity and communication. Sales representatives can also use them for lead generation and cross-selling and up-selling, and clients see the company’s brand through them. However, the success of the marriage between social CRM and sales can’t be measured by the number of retweets a company receives. The sales world still needs hard data and return on investment (ROI) for the marriage with social CRM to be considered a success.
ROI for Social CRM
The effectiveness of social CRM in terms of ROI is still under a microscope. Recent Gartner studies reveal that only half of Fortune 500 companies will see a return on their investment in social CRMs this year. The study doesn’t mean social CRMs are a failed venture by any means. Instead, it highlights the need for social CRMs to appropriately measure its ROI.
There has been some research on the ROI of social selling. The data does show that by leveraging social media, sales people and companies have been able to track revenue from using a social CRM.
“For the 50 percent of Fortune 1000 organizations not determining, or even measuring, ROI, ignorance will mean failed projects,” said Gartner research director Adam Sarner. “Among the companies who will not see a worthwhile return, only 20 percent will even have the data to evaluate where their social strategy is falling short. These organizations will be unable to justify future funding.”
Sarner and Gartner predict the future of social CRM will depend on the industry’s ability to begin to properly map how the approach is making a business money. Companies will move from relying on social CRM to boost their image and brand in the social media world to focusing on how it can also earn profit. Those in the social CRM industry quicker to figure out ways to track the correlation between profit and social media presence will be on the forefront of the trend.
“Social data, such as numbers of fan pages and weekly Tweets, is not enough to correlate with the contribution of top business objectives,” Sarner said. “ROI, measurable business value and budget justification for social projects are becoming unavoidable topics for many organizations.”
Finding Ways to Measure the Benefits
The need to measure social CRM’s ability to have positive ROI is so prevalent because the benefits of the trend are clear. For one, social CRM has at least been proven to increase the productivity of sales people. A Nucleus Research Report revealed that the productivity of sales people increased 26 percent when they had access to social CRM. Increased sales productivity always leads to increased sales, so the inability to properly measure ROI on social CRMs isn’t exactly gloom and doom.
Social CRM also helps sales people understand their customers and communicate with them more quickly and readily. Afterall, the success of a sales person is almost entirely built in their ability to relate to their customer. As author and sales trainer Bob Hooey once said, “If you are not taking care of your customer, your competitor will.” Social CRMs give sales people an extra feature to track their client’s activity and patterns, so they can better understand them. A better understanding of your clients will always lead to a better profit.
Clearly, the benefits of social CRM are apparent even if the applications to measure them by dollars and cents aren’t. In the next few years, the future of the social CRM industry will depend on its ability to develop those measurements effectively, or it will continue living as an industry understood to improve ROI, but with no clear way to prove it.