Social CRM market to surpass $1 billion in revenue in 2012

The worldwide social customer relationship management
(CRM) market is forecast to reach over $1 billion in revenue by year-end 2012,
up from approximately $625 million in 2010, according to Gartner.

However, analysts said spending by buyers on social
software for marketing, customer service and sales increased by 40 percent in
2010, but social CRM remained less than 5 percent of the total CRM application
market. More than 100 vendors have social CRM offerings. Most are not
profitable and generate annual revenue of less than $1 million.

“Use by consumers accounts for over 90 percent of
spending on social CRM, but spending on business to business (B2B) use is
growing faster and will account for 30 percent of total social CRM spending by
2015,” said Adam Sarner, research director at Gartner.

Most vendors remain relatively small and unprofitable,
although many grew 50 to 100 percent in 2010. In order to thrive in the future,
analysts said that social CRM vendors will need to provide clear benefits for
companies and communities, demonstrating multiple use cases for sales,
marketing and customer service processes.

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.

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

Today’s vendors differentiate themselves on the basis of
functions, process workflow, analytics and ease of use or superior experience
delivered through professional services.

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.

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

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