Social CRM Rush Projected For EnterprisesSocial CRM Rush Projected For Enterprises

Enterprises are embracing social customer relationship management (CRM) software, with four in 10 leading businesses expected to adopt this technology within five years as part of their ongoing efforts to improve customer service, according to Gartner.

Within the next 24 months, 30% of leading enterprises will incorporate social CRM, the research firm said in a report on Thursday.

"There is strong corporate awareness, including at corporate executive levels, of social networks and their potential impact on corporate brand management and customer service perception. We expect the high-profile nature of social networks and social CRM for customer service to rapidly advance adoption from early adopter to mainstream deployments, despite the volatile and rapid evolution of social networks in general," said Drew Kraus, research VP at Gartner, in a statement. "As awareness and use of social networks increases, customer service executives and planners are feeling increasing pressure from corporate executives to articulate a strategy for how this new communication channel will be harnessed so that they don't get left behind."

Although marketing departments initially began corporate deployments to oversee brand management via Twitter feeds and Facebook fan pages, more social media-aware businesses are recognizing that employees who interact with customers via these sites also can provide customer service functions, at times much faster than those working in traditional customer service capacities such as phone banks or email response centers, Gartner said.

Smaller companies also are adding social media into their marketing and customer support plans: A January report by SugarCRM found that 72% of the small and midsize businesses they surveyed planned to link data from social networks into their CRM software this year. However, only 26% had done so at the time of the study, the report found.

Users want -- and expect -- businesses to respond to their questions and complaints via social media, a May 2010 report by consulting firm Accenture said. The study of communications and high-tech vendors revealed that firms' efforts to improve their customer service failed to impress their business and residential customers about 60% of the time. But the study also discovered that 92% of business customers and 81% of consumers said they are more likely to continue doing business with vendors whose support they believe has improved.

"Companies are investing in customer service," said Joe Hughes, senior executive with Accenture's customer service and support business, told information when the report was released, "but at the same time customer expectations are rising -- in many cases faster than the investments. Some of the investment has been to reduce costs, which favorably impacted the way clients perceive customer service, but the path to more profitable, longer lasting customer relationships centers on improving the customer experience." While businesses and consumers view enhanced customer service as a competitive differentiator, there are hurdles to corporate adoption of social CRM, cautioned Gartner. Despite individual case studies, there is little wide-scale adoption, making it challenging for managers at mainstream IT adopters to create a business case, the research firm said. At many corporations, social CRM still is viewed as bleeding edge, Gartner said, making more conservative firms leery of investing in the technology.

In addition, organizations are struggling with how to handle business processes and policies related to social CRM for customer service, with contact centers in mainstream and late-adopter firms struggling for budget dollars for the software and its related support, Gartner said.

"Adding social CRM for customer service to their operations has the potential to add high-profile uncertainty, and many will hold off on bringing the new technology into their contact centers until optimized processes and policies have been vetted by earlier adopters. Instead, they will opt to allow their marketing departments -- which often have access to near-term budget for such investments -- to take the lead in handling all social CRM interactions in the interim," the report stated.

Some companies also cite the relative newness of social networks and vendors, as well as the network communication upgrades some contact centers would require to fully tap social media, said Gartner. This scene, however, is expected to change as consumers demand social media support channels, clear-cut ROI emerges, and corporate evangelists champion the technology internally. With its more than 500 million users, it also is difficult to imagine a company that could unseat Facebook in the near future, although the social media landscape is littered with once-successful giants such as MySpace, now a shell of its former self.

"In 2010, only 5% of organizations took advantage of social/collaborative customer action to improve service processes; however, customer demand and heightened business awareness is making this a top issue among customer service managers," Kraus said. "At current trajectories, within five years we expect that community peer-to-peer support projects will supplement or replace Tier 1 contact center support in more than 40% of top 1,000 companies with a contact center."

Within the world of CRM, long-established developers such as SAP have incorporated social media into their offerings, while newer vendors such as Salesforce and newcomer Nimble have built their businesses on the integration of social networks and CRM.

This year, 42% of respondents expected to increase their spending on CRM, compared with 2010 budgets, according to a separate Gartner study. CRM was, therefore, expected to see the largest increase in spending of all application software worldwide, with office suites and enterprise resource planning software ranking second and third, respectively, the researcher found.

Within CRM, software as a service (SaaS) could produce $4 billion in revenue by 2014, said Hai Hong Swinehart, a Gartner research analyst, which could account for about one-third of the total CRM market.