Few companies 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, according to the Gartner 2011 Magic Quadrant for Social CRM.
According to the report, a lack of consistency among buyers keeps the market fragmented into at least three segments – sales, marketing and customer service. The majority of vendors that "survive and thrive" will need to offer tools that can address multiple use cases in more than one department (i.e., customer service and marketing).
In 2010, spending on social software for marketing, customer service and sales increased by 40 percent, but social CRM remains less than 5 percent of the total CRM application market. Gartner expects the social CRM market to reach over $1 billion in revenue by year-end 2012, up from approximately $625 million in 2010.
Gartner estimates that more than 100 vendors have social CRM offerings. Most are not profitable and generate annual revenue of less than $1 million.
Social CRM Challengers and Niche Players
In addition to providing an overview of the current and future state of the social CRM market in the 2011 Social CRM Magic Quadrant, Gartner also evaluates companies and grades them on being market leaders, challengers, niche players or visionaries.
This year several new vendors made the list, having met at least the minimum criteria for inclusion, including Alterian, PowerReviews, Cymfony, Converseon, Attensity, OpenText and Vision Critical.
The Challengers in the 2011 Social CRM Magic Quadrant are the vendors Gartner sees as "poised" to move into a leadership position, but have not yet done so. Bazaarvoice was noted as a Challenger in the social CRM Magic Quadrant for its strong revenue and ability to harness the community for social CRM, product reviews, marketing and selling.
Converseon entered the Magic Quadrant as a Niche Vendor, as did PowerReviews, OpenText, Globalpark and Cymfony – one of the most commonly used social media monitoring applications.
Social CRM Leaders
On the 2011 Social CRM Magic Quadrant leaderboard is Jive, Lithium and Salesforce.com (NYSE: CRM).
Jive continues to gain enterprise-scale customers, acquire substantial market visibility, broaden its technology vision and maintain revenue growth, according to the report. Lithium is also a Leader in the Social CRM Magic Quadrant for 2011, providing a hosted community and associated applications primarily to host private-label social communities.
Salesforce.com, the third-largest CRM vendor, with $1.65 billion in annual revenue, also entered the Leaders quadrant by raising execution through the acquisition of Radian6, as well as aggressive promotion and pervasive distribution of Chatter.
Social media monitoring represents approximately 75 percent of the social CRM market. According to the report, Salesforce.com has now become the largest social CRM vendor, even though its market share is small.
Social CRM vendors will increasingly have to show examples of where social data was used in core business processes, not just provide an application programming interface (API). Traditional CRM vendors have had to show evidence of ROI.
According to the 2011 Social CRM Magic Quadrant report, successful social CRM vendors will need to show quantified business cases and repeatable social CRM processes that are not yet broadly available.