The Financial State of Social CRM


Share on LinkedIn

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.

Republished with author's permission from original post.

Koka Sexton
Koka Sexton, Social Selling Evangelist and Sr. Social Marketing Manager at LinkedIn, is one of the most recognized social selling experts in the technology industry. A career in helping companies use social media for lead generation, creating new opportunities, and engaging customers. READ MORE at the LinkedIn Sales Solutions blog.


  1. Koka,

    I haven’t read the Gartner report you mentioned, but I did interview Gartner analyst Ed Thompson recently about “Social CRM” recently.

    Here’s an excerpt from the interview where Ed basically says most of the money is SCRM is being spent on marketing and PR, with social media monitoring and online community applications. Sorry, not on social selling which seems to be what your post is about.

    The reason these were most interesting was because we found 80% of the use of social was when we were looking outside the organization, was in marketing, sales and customer service. And, in fact, if you added it all up, you only got 4 or 5% were the sales side, and it’s only maybe 20% in the customer service. So, the big bulk of it is in marketing and particularly PR and comm. But the bottom line we said if that’s where it’s going, why create separate markets? It’s really where we expected it to emerge. Unfortunately, we got our timing wrong I think is the way I’d describe it. In other words, we thought this would shake out in two years.

    Most people think of sales when the term “CRM” is mentioned. And I think that’s the way you’re using it in your post.

    There are some very interesting applications for social selling, when I wrote about in 5 Opportunities to Profit from Social Selling. Social intelligence, which InsideView provides, is probably the biggest and most widely used thus far.

    Speaking at a conference recently, there was a lot of discussion about social media/applications. Everyone is interested and excited, but very unsure how to get value. Personally, I think innovative companies will need to take a “leap of faith” and try some forms of social software, and not wait for the ROI case studies to tell them what to do.


Please use comments to add value to the discussion. Maximum one link to an educational blog post or article. We will NOT PUBLISH brief comments like "good post," comments that mainly promote links, or comments with links to companies, products, or services.

Please enter your comment!
Please enter your name here