A Recommended Path to Social CRM ROI
As businesses experiment, measure, refine and mature their social strategies, those strategies ultimately become more focused and precise. And in similar fashion, the 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 customer relationship management 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 application spending.
At nearly every level, this technology continues its unabated growth. The global market for social software licenses and subscriptions now exceeds $7B, a big jump up from $850M in 2011. Social customer management now represents about 10% of the overall CRM market as measured in revenues, according to Gartner.
Unfortunately, the level of social business 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 that has lingered for decades.
Social engagement 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 business scoping or positioning challenge on a near daily basis.
Don't be tempted to kick off a social media effort without first forecasting an ROI. Customer social engagement is a good idea but good ideas are a dime a dozen. Good ideas don't withstand budgets that get squeezed in future periods. No technology project is sustainable unless it can deliver a compelling ROI to the company.
The most common question that both stands in the way of social business adoption and creates the most frustration for business leaders trying to justify their 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 strategy using the highest priority/payback processes as stepping stones along a journey. More focused CRM processes lead to more manageable projects, quicker deployments and increased likelihood of predicted payback.
For most organizations, the social engagement or CRM use cases are near endless and adopting customer engagement projects need not invent a solution which lacks a business problem to solve. These projects will deliver the greatest payback when project scope is clear and the effort is applied to an existing problem or opportunity for which a social platform is aptly positioned to add value.
A key to success in planning social ROI is coming up with the right key performance indicators. Social transactions and channels deliver a flood of data but most of it is noise. Don't be tempted to configure a social listening tool that simply harvests volumes of loose data and delivers obfuscated or vanity metrics. Instead, hone in on a few key metrics that align with the company's growth priorities, such as increasing customer acquisitions, growing customer share and lowering customer churn. You will only achieve a social CRM ROI when your social engagement impacts customer actions that advance these type of objectives.