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Chuck Schaeffer Social CRM—A Recommended Path to Social CRM ROI

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The Clear Link Between Social CRM Scope and Social CRM Success

As businesses experiment, measure, refine and mature their social CRM strategies, those strategies ultimately become more focused and more precise. And in similar fashion, the social CRM software vendor community has both innovated and responded with progressively deeper and more specialized social apps.

In short order, we've witnessed a communication revolution that's traversed from social media to social CRM and now within the CRM industry, to social sales, social marketing and social service. Among the CRM pillars, Gartner predicts that B2B applications for sales will achieve the fastest growth and account for 30% of social CRM spending by 2015, up from 5% in 2011.

At nearly every level, social continues its unabated growth. The global market for social CRM software licenses and subscriptions will total $2.1B by the end of this year, a big jump up from $850M in 2011. Social CRM now represents about 10% of the overall CRM software market as measured in revenues, according to Gartner.

Unfortunately, the level of social CRM success isn't exactly keeping up with the growth of the market. Gartner reports that only 50% of Fortune 1000 companies realize a worthwhile ROI from their social CRM investments. The lack of success seems to be reflective of a lack of specific objectives according to the analyst firm. It's beginning to sound reminiscent of the troubled heritage and failed CRM implementation history we learned from not all that long ago.

Social CRM generates great intrigue, and the potential benefits are quickly recognizable, but nonetheless challenging or even elusive in terms of possibility and predictable ROI. From my interactions with CRMsearch community members I recognize a pervasive social CRM scoping or positioning challenge on a near daily basis.

The most common question that both stands in the way of social CRM adoption and creates the most frustration for business leaders trying to justify their social investment is "Where's the measurable ROI from social media?" It's an understandable question, but overly broad. I think a more precise answer can be more easily achieved using more precise questions. In fact, I think the desired answer can only be achieved by getting more specific and asking multiple questions related to existing business problems or opportunities such as:

  • What's the ROI if sales people have better information about their prospects?
  • What's the ROI of new leads discovered on social networks using social listening tools?
  • What's the ROI if marketers can track the reach and return of their content over social channels?
  • What's the ROI of knowing which influencers are sending measurable volumes of referrals to your company from social networks?
  • What's the ROI if customer service reps can engage customers across social channels in order to respond more quickly and leave customers more satisfied?
  • What's the ROI of every call deflected from the call center because the customer found their answer in an online knowledge-base or peer to peer community?
  • What's the ROI of customers telling you what future products they will or won’t purchase?

When breaking down the 'social media ROI' question into specific business use cases you get both a more measurable answer and a roadmap to create a social strategy using the highest priority/payback processes as stepping stones along a journey. More focused social CRM processes lead to more manageable projects, quicker deployments and increased likelihood of predicted payback.

For most organizations, the social media or social CRM use cases are near endless and adopting social CRM projects need not invent a solution which lacks a business problem to solve. Social CRM will deliver the greatest payback when project scope is clear and the project effort is applied to an existing problem or opportunity for which social is aptly positioned to add value. End

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Comments (5) — Comments for this page are closed —

Guest Winston Gray
  The tools to help track social media ROI are going to be integral to this goal, and were beginning to see some new software vendors enter this space. I just reviewed Adobe Social and it looks interesting. In addition to social monitoring, targeting ads and building apps for Facebook, its focus seems to be tracking social media campaigns ROI. Adobe has been making some big inroads in online marketing (primarily with acquisitions of Auditude, Omniture and Efficient Frontier) and is now entering the competitive fray with CRM vendors such as Salesforce.com (by way its acquisition of BuddyMedia) and Oracle (with its acquisitions of Vitrue and Involver). The tools are the missing link in calculating social ROI and I think we're about to see a new wave of tools hit the market.

Guest Craig Tulley
  I think this approach of eating an elephant one bite at a time is exactly right. Beginning with smaller projects permits you to better identify the highest value social channels where a particular customer segment hangs out, target your customers' conversation patterns, create more specific objectives, assign relevant resources, and then join the online conversations in a more appropriate way.

Guest BeckyGr8
  This is a great article as it answers a very common question (where's the ROI?) which prevents companies from getting started with social media and social CRM.

Guest Tracy Phillips
  Helpful article. If there's one other piece of advice I would share in a path to calculate social ROI, its coming up with the right metrics. Social media channels can deliver a flood of data but most of it is noise and worthless. Don't be tempted to configure a social monitoring tool to listen to too much, or try to over analyze volumes of loose data. Instead, hone in on a few key metrics, and do your best to limit your data analysis to data that actually support those metrics.

Guest SocialKnowKnow
  We didn't attempt to forecast an ROI before jumping in to social CRM. We would have liked to, but found the process nebulous and full of assumptions and also knew it was just one of those customer oriented things that had to be done. But 8 months later then when budgets became challenged, guess what project got the budget ax? Our social media and social CRM project. My lesson learned and advice to others is don't be tempted to skip the payback calculations when kicking off a project. In the end, only the projects which can justify payback will last for the long haul.
 

 

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Gartner reported that by the end of 2012 only 50% of Fortune 1000 companies will realize a worthwhile ROI from their social CRM investments. It's starting to sound reminiscent of the troubled heritage and failed CRM implementation history we learned from not all that long ago.

 

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