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Social CRM Software Spending Expected to Hit a Milestone

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Spending on social software to support sales, marketing, and customer service will exceed $1 billion worldwide by 2013, according to a study by Gartner.

The prediction is part of Gartner’s forecast of more than $12 billion for overall spending on CRM software in 2012, making social CRM encompass about 8 percent of all CRM spending that year. That would constitute a 4 percent increase from 2010.

“This market will be growing fast for a long time,” predicts Ed Thompson, vice president at Gartner and lead researcher on the study. “Really, the surprise for us was how many small and tiny vendors there were and how much they added up to. Each technology vendor has found a way in and a niche to go after. There is also a lot of innovation going on.”

Thompson jokes he may have been “chickening out” with only a three-year prediction. “Analysts tend to draw straight lines of growth,” he says. “We see the huge potential, which gets us excited, so we draw these steep curves, and it’s going to be a pretty steep curve for the next few years. The real interesting bit is in the longer term, how big of an impact will this actually have?”

Looking ahead, Thompson thinks the big question relates to the dot-com boom of the 1990s. “If this is bigger than the dot-com boom, then that’s a radical shift in how companies have to work and how consumers will behave,” he predicts. “I think that is what’s exciting people.”

National interest will keep the trend going, and future growth might exceed double digits, according to Thompson. “It hasn’t spread into B2B yet, and there is a whole lot of potential, which means it will be on a steep growth curve for quite a few years,” he says.

Depending on the type of vendor, the results of the study carry very different ramifications. For small vendors, Thompson believes the market will “shake out,” leaving behind a limited window for growth in the next two to three years.

Thompson also says Gartner has received several calls from large organizations asking about standardizing the plethora of similar tools currently on the market. “We’re still in the experimental growth phase, but we will hit a point at some time when people will start to rationalize,” he says.

For now, Gartner recommends a three-step approach for developing a social CRM strategy this year:

•    Determine if there are any social CRM projects under way, looking in the marketing or customer service departments first.
•    Calculate the likelihood that you will be forced to start something in 2011. Your industry and culture are the best predictors.
•    Find case studies specific to your industry that can provide examples of what is possible and then share them with other decision makers in your organization.

Critical questions to ask before developing a social media strategy

 Social media has thrown a few sharp-breaking curveballs at businesses during the past several years. Carol Rozwell, a vice president and analyst at Gartner, identified two common mistakes companies make. One is thinking they can stop people from using it, and the other is drafting a policy that was clearly written by lawyers.

Organizations tend to focus on the risks and downsides of social media, rather than the benefits, according to Rozwell. “They miss an opportunity to take advantage of these engaged relationships with customers and business partners,” she says.

Gartner has identified seven critical questions that designers of social media policy must ask:

• What is our organization’s strategy for social media?
• Who will write and revise the policy?
• How will we vet the policy?
• How will we inform employees about their responsibilities?
• Who will be responsible for monitoring employees’ activities?
• How will we train managers to coach employees on social media use?
• How will we use missteps to refine our policy and training?


Associate/Web Editor Brittany Farb can be reached at bfarb@destinationcrm.com.


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