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Gartner Magic Quadrant reveals fragmented social CRM market

Rosemary Cafasso, Associate News and Site Editor

Companies seeking to move beyond the experimental phase of social CRM should align the next project with corporate goals and set it up as true social engagement instead of simply maintaining a social presence, according to the recently released Gartner 2011 Magic Quadrant for Social CRM.

That may not be easy, however. Many social media initiatives are still experiments or “tactical purchases” that lack strategy or any metrics to determine if they are showing real business results, according to the report.

The current social CRM market reflects this turmoil. Gartner characterizes this industry as fragmented and crowded, with dozens of niche players. There are more than 100 vendors in the social CRM space, many of which are generating less than $1 million in revenue this year and are not profitable, according to Adam Sarner, a Gartner research director and lead analyst on the report.

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In 2010, spending on social software for marketing, sales and customer service was up 40%, according to the report. However, social CRM applications account for less than  5 %  of the total CRM application market. Gartner estimates the social CRM market will reach $1 billion by the end of 2012, up from $625 million last year.

Companies looking to get more serious about social CRM need to first get in sync with the business goals, Sarner noted.

“If the whole company is about sales right now, don’t go off and do something on customer service,” Sarner said. “You don’t want to do social things that are not connected to the priorities of the company. You would think that is obvious, but it’s not.”

The other big challenge for companies is to grasp the difference between having a presence on social channels and actually engaging with customers, Sarner said. He frequently observes companies going too far in one direction on the other. They are either so conservative that they simply set up a Facebook page or Twitter account and wait for customers to come to them, or they spend too much time engaging in communities that have little business value.

“For every project you even think about, the heading should be, ‘What’s in it for them, what’s in it for us and is it balanced,’ ” Sarner said. “The [projects] that don’t work are when there is a complete lack of purpose or there is an imbalance and it is either too much about the company or too much about the community.”

The Gartner report noted that current social CRM products tend to reflect the experimental phase of buyers and are focused on such functions as building communities and monitoring social networks.

Going forward, companies will be searching for vendors that can help them create social CRM environments with integration into existing CRM applications and social networks, according to the research firm. Also, users will increasingly need tools to measure return on investment as well as analytics to assess the business value of their social initiatives.

As part of the Magic Quadrant, Gartner evaluates companies and indicates if they are market leaders, challengers, niche players or visionaries. This year, Gartner identified Salesforce.com (including recently acquired  Radian6), Lithium Technologies Inc. and Jive Software as market leaders. The niche player segment of the quadrant was packed with companies. Only two companies made it into the visionary quadrant. The social CRM visionaries are Attensity, a maker of customer analytics tools, and Telligent, which sells a social community platform.

 


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