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ROI on social CRM becoming crucial

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 Although the adoption of social applications by sales, marketing and customer service departments continues to grow rapidly, Gartner says that, by the end of 2012, only 50% of Fortune 1000 companies will receive a worthwhile ROI (return on investment) from their social CRM initiatives.

“For the 50% of Fortune 1000 organisations not determining, or even measuring, ROI, ignorance will mean failed projects,” says Adam Sarner, research director at Gartner. “Among the companies who will not see a worthwhile return, only 20% will even have the data to evaluate where their social strategy is falling short. These organisations will be unable to justify future funding.”

During the next two years, the success of social CRM will depend on how well companies and social CRM technology providers can make social CRM projects more than just social objectives by tying them to clear and measurable business objectives. Gartner predicts that by the end of 2012 three-quarters of new social CRM initiatives that receive funding will have a business case incorporating measurable ROI.

Many organisations have established a form of social presence. However, many also lack a clear business performance objective for social CRM, being at an early stage in their measurement of its business outcomes.

“Social data, such as numbers of fan pages and weekly Tweets, is not enough to correlate with the contribution of top business objectives,” says Sarner. “ROI, measurable business value and budget justification for social projects are becoming unavoidable topics for many organisations.”

Gartner analysts say they expect the worldwide market for social CRM software licences and subscriptions to total $2.1-billion in 2012, up from $850-million in 2011, and that social CRM revenue will represent 10% of the overall CRM market.

Initially, social CRM was mostly a concern of marketing, but it now affects every discipline, from marketing and sales to customer service and support. Social CRM is increasingly important to lead generation and cross-selling and up-selling capabilities, and to other functions that are key to successful sales organisations. Gartner says that business-to-business applications for sales use will have the fastest growth and will account for 30% of social CRM spending by 2015, up from 5% in 2011.

Today, social CRM vendors differentiate themselves on the basis of functions, analytics, ease of use and superior experience delivered through professional services. Over time, however, they will find it harder to gain an advantage by providing unique core functions. They will need to show quantified business cases and, more importantly, deliver repeatable social CRM processes that are not yet broadly available.

“Vendors that can assemble a full set of social CRM functions and make progress in two or more areas, such as marketing and customer service or sales and marketing, will be best-positioned for success,” says Sarner.