The maturation of social CRM: Does the SCRM market really exist?by
15th Aug 2011
Esteban Kolsky looks at the new Gartner Magic Quadrant for SCRM and asks whether it demonstrates that the market doesn't exist.
In September 2009, when the hype about social CRM was just starting to build, I wrote a post where I concluded that there was no social CRM market. In it, I delineated the minimum requirements for social CRM to be a market:
- Sufficient differentiating features to make it independent of other markets.
- The ability to operate independently of other applications (no do-or-die dependencies).
- An addressable, unique problem that cannot be solved with other applications.
- A revenue projection that will make it worth the time for vendors and providers.
- A business justification, tangible costs and benefits, and in some (OK most) cases an ROI.
- A story that is easy to understand by senior management, middle management, and users.
In June of 2010, Gartner was faced with the same question and decided to test an answer in the form of a Magic Quadrant. In this Magic Quadrant they included four different vendor categories, and tried to compare them to each other – resulting in a mess of sensible proportions: trying to contrast a community-vendor to a social-platform-vendor to an enterprise-feedback-management-vendor is almost comical. I thought there was something not quite there with this first try, and I said so in my post debunking the Gartner SCRM Magic Quadrant.
One of the conclusions in that report, and something that was also shared by others in the market, was that Gartner had at least validated the concept of social CRM – if not the market (the conclusion back then was that Social CRM was too immature to be a real market). I agreed the concept was validated and Gartner threw the gauntlet in the rush to make a market: they said it would reach one-billion dollars by 2012.
It was almost as if that gave license to every vendor (OK, most every vendor – I am sure that those reading this article will say they were not part of the mad-dash) to become a social CRM vendor. If the four categories Gartner had selected in their first MQ were confusing, try dozens of different solutions and vendors. Attempting to rename everything that was social as social CRM created a pseudo-gold-rush, where the prize was not a mother-lode, but one-billion dollars in revenue.
Fast forward about a year, and Gartner has released their second version of the MQ (link to a free download, courtesy of Lithium), and unfortunately they have not provided additional insight into what the social CRM market is, should be, or will be. Not only did it fail to describe what social CRM is, it also failed to provide guidance on what a social CRM vendor looks like continuing to compare different vendor types against a mythical definition. It had a great opportunity to paint a good picture of what social CRM is and is not at a time when the vendors and end-users needed that guidance – and failed to deliver on it.
Was it because they cannot define the market? Does this mean there is no social CRM market? As an analyst, there is only one way I can answer that question: it depends.
Three different ways to look at it:
1) By the market definition introduced above and introduced in September 2009. We are not going to go down point by point, but the majority of them are not yet fully met – so it is not a market.
2) By the offers from many different vendors, some of them (but not all) highlighted in the Gartner MQ. There could be a potential for a market, but we still have many different categories of vendors calling what they offer social CRM – so I am going to make a judgment call and say we don’t have yet a market.
3) By the demands from organisations and customers to have a solution called social CRM delivered. This is the most interesting of the three aspects. How can a vendor tell a prospect or client what to call what they want to buy? Sounds flippant, but in all seriousness – if a vendor offers a community solution (one of the sub-markets that Gartner identified, and one of the four components I think are essential to have a social CRM solution, see figure 1) and the client calls it social CRM – will they correct them?
Do we have a social CRM market – even though Gartner and the rest of us failed to properly define it – because the customer is calling it so?
Interesting question, and one that points to a single concept to answer that – as well as the main question of what is the market of Social CRM. That concept is maturity.
The social CRM market continues to mature, slowly, and it is not quite settled yet. Customers will call it a market, and what the vendors offer a solution, mostly because they really want to have a simple answer to what they don’t understand. Social CRM – nay, social media - is a complex topic. It is not about Twitter, Facebook, Communities and now Google+. It is not about "engagement" or even about ROI or metrics. It is a far more complex concept that requires a lot more than technology to solve the problems it brings with it: deepening the relationship with the customer to, ultimately, co-create value.
As with everything else we do, however, we would like to have a technical solution. If an iPad can control a TV with a remote-control application, why can’t a social CRM application bring the deepening of those relationships? Which one is harder to master – considering the myriad television brands, models, and remote controls that exist out there?
Incredibly enough, something as simple as retaining a Twitter ID and the rules and behaviors associated with that is far harder to master. It requires many layers of controls, checks-and-balances, rewriting policies, and decision-making at almost every step. It requires people trained to understand it and use it, and requires compliance with guidelines, laws, and regulations. It requires changes to operations charters as well as a deeper understanding of what is it that the client represents to the organisation, and what the organisation does for the client.
Mastering all these takes time, patience, and trial-and-error. Changing a channel using a remote requires to be bored watching a specific show.
That maturity level gained by trial and error – by doing things right and wrong is what social CRM is all about: learning more about the organisation, the client, partners and other participants and using that to deliver more and better value to all parties involved.
Not something that Oprah can do.
Esteban Kolsky is principal and founder of ThinkJar, an advisory and research think-tank focused on customer strategies. will present: A Social CRM Framework at the upcoming Social CRM Strategies for Business Seminar hosted by SAP in Palo Alto, California on Sept 13-14. Mr. Kolsky has over 22 years of experience in customer service and CRM consulting and research. Learn more and Register at www.bptpartners.com.
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Finaly a sober opinion! Esteban's piece is spot-on, so much that I had to tweet it 4 times (excessive perhaps, but I made comments after the link and I had 4 different thoughts while reading it, had to share them ; )
One very important corollary of the Hype Cycle is the Bandwagon Effect. Just as everyone was sticking '2.0' labels to whatever they do (sell), the 'everything social' hype wave swept the numeric release into oblivion (although sleepy retards are still using it here and there), and now everyone is slapping the 'social' sticker onto everything. Social shopping? Of course, we wrote the book! Social looting? London did it! Social body waste, anyone? (that was politically correct for $#!+)... In this line of logic, why not Social CRM?
This foolish game of hype labels seems pretty innocent, but it causes damage to every party: confuses users/buyers into investments they regret, exposes the (in)competence of analysts and the (dis)honesty of vendors. Some vendors abandon their true core strength in pursuit of 'their slice' of projected multibillion markets in something they don't really undersand. Past bandwagons have dropped dead passengers along the way...
Is there a way to prevent such irrational impulses, to stay closer to reality and to protect players from the hazards? (Easy question - just like finding a way to prevent bubbles in stock markets : ) Which brings us to the role of influencers. These are many and various, they include highly visible gurus and bloggers, the specialist (and general) media, the marketing and PR efforts of vendors, and not least - the industry analysts. The latter come in various sizes and flavours, but the heavyweights have more influence for obvious reasons. (Shall we call those reasons 'social'? : ) With influence comes responsibility: arbitrary creation of non-existent categories and 'markets' can have dire eocnomic (and.. social!) consequences when you are big, universally quoted and blindly believed.
Gartner cannot be declared entirely impartial to hype inflation or entirely innocent of bandwagon fuelling. I cannot comment on other classes of technology, but those of us in the 'customer' space (those old enough) may remember Gartner's role in creating the CRM category in the 90-s, and the bandwagon that it became. The confusion that resulted propelled to astronomic heights vendors who had little to do with Customer Centricity and everything to do with Corporate Interests, Products, and Sales, Sales, Sales. The confusion was such that, years later, there is still no consensus definition of CRM, everyone understands it 'their own way'. Little surprise that it's now happening to Social CRM...
Happening to what? What is Social CRM? The root cause of all above phenomena is the lack of clarity on the business discipline of SCRM. (And pretty much on CRM for that matter). Obsession with technology has led many to forget that any technology only exists in order to automate, accellerate, improve some business process, economic (or... social!) activity. If there isn't a process to be automated, there isn't a technology for that, period.
Enabling technologies start with understanding of what they are supposed to automate. And understanding starts with a definition. Where is the universally agreed definition of SCRM? It is complex, Esteban is right. It's a little more complex than a 3-page sentence in the XYth edition of a book by some guru (an edition where only hype words are replaced or added). It's also more complex than "if it walks and sounds like a duck..." - defining by example, like pointing in the direction of something/someone and saying 'This is it!'. ("Lithium is SCRM" - then everything that walks and quacks like Lithium must also be SCRM, right?)... A definition doesn't have to be a 'sentence' (or paragraph), it can be a list of attributes, like Esteban's bullet points of what defines a market. But it is important that the business discipline of SCRM is clearly defined in a widely recognised way.
I am not prepared to share my own definition - this will place me in the (long) line of self-proclaimed gurus who love inventing hot water (or sliced bread, if you prefer) and claiming intellectual property or at least 'thought leadership' over the topic. But I will gladly accept a well-thought, rational definition. Where is it?
Good article Esteban, and a very worthwhile comment from Vladmir - I agree with you both.
Looking at this from the business management perspective, the issue is that social media is seen as another set of 'bolt on' customer communication channels to fulful strategies that are still economically mass marketing with a customer twist. What are business managers calling 'Social CRM'? Digital Marketing !!! Where digital = electronic, and marketing is still too often marketing communication.
What both digital marketing and social CRM are trying to do is support the idea of 'customer engagement' (ongoing listen converse, engage). However, customer engagement is not just two way marketing communications, it is a very distinct business philisophy, rooted in different economics to mass marketing. Mass marketing, suited the economies of the twentieth century which was looking for welfare growth, to avoid the 1930's depression, and use the production capacity of the second world war machine. But, economic needs are changing (just incase no-one had noticed) and we are now moving to an era where 'scaling up the values of the local store', is more suitable to economic and social times. Technology does have a very big part to play in this, but it cannot play it until the business philisophy is understood, and the strategy and tactics employed.
I also agree with Esteban, that the business philisophy needed in these new economic times is about co-creating value: but, I will go further and say it is also about understanding that you are offering services to customers (even if you sell products, those produces provide a service) and it is the economics of those services that is the rethink required. Companies need to offer a proposition to be of service to customers 'tribes' and act as a platform for that service delivery - some of the delivery will come from the company, some will come from other customers. The company must understand itself to be the centre of a network (relationship network), and its competitive advantage lies in the skilled capabilites (of which technology is one), its influence, its customer relationships and strength of network.
Business economics have changed, and businesses are still struggling with how. The only real emergent support to this is the one that has started to link itself with relationship marekting (or CRM) and is called by the very un-sexy name of service dominant logic S-DL. The issue with S-DL, is that, for now, it is still too academic and not linked to the world of socialCRM/digital marketing. But, if taken and made useful, then it offers the philisophic hook on which tactical digital marketing (together with more personal forms), can link with social CRM (the technology).
Thanks for a great comment. I must say I agree with you - you make some great points throughout. I like this statement very much "Obsession with technology has led many to forget that any technology only exists in order to automate, accellerate, improve some business process, economic (or... social!) activity".
Yes, it is about understanding what, and how, to automate. In that sense, and to answer your final question, to me social CRM is no more than managing the social channels for an existing CRM implementation - but it brings nuances with it. Data in social channels is slightly diff (in type and volume) than existing transactional data, the signal-to-noise ratio and filtering bring an added wrinkle to dealing with the data, and then there are privacy and transparency issues to battle... plus more. As long as SCRM solutions can take that data and those transactions and structure them for use in traditional CRM solutions - as well as handle the interaction via social channels - we are there. Of course, we are far from there yet.
There is a lot more to discuss and understand, I certainly hate definition wars (we battled starting in 2008 - I hope we are done). There is a lot more value to be derived.
My bottom line: SCRM is not about what it does, rather what it enables - what it enables is collaboration.
But, that is the topic for the next session.
Thanks for the read and the comment.
Great article and some excellent points - thanks for posting Esteban.
This is a huge area - it is mostly what "social" was invented for - and for all its lack of clarity - this topic is going to be on the agenda for at least as long as CRM.
Completely agree that Gartner seems very confused about the whole social software sector and their quadrants are not helpful. Agree also that Social CRM is always going to be hard to pinpoint since CRM itself proved very fluid in the first place.
Is it too simplistic to say : Social CRM is about implementing CRM incorporating social platforms (see Andrew McAfee for channels vs platforms). The right combination and integration will vary by customer and objective but the breadth of purpose remains the same. The nuances are going to be big - "social" adds people-power which is a conceptual step-change.
Our experience with clients in many industry sectors concurs with yours. This is ultimately all about collaboration and co-creation of value - lots of it !
Thanks for the comments, great points you make.
First, I agree with you that Marketing is the wrong place to put social - well anything. even in a 2.0 world, they are still too concerned with message and brand to get into engagement properly. this is one of my main concerns (i wrote about it last year, saying that CS is the most likely place to go - now i correct that to say that IT is also a likely place to land, if done properly - more about that in another post though), and i am starting to see that change, with both IT and CS picking up the pace and the ownership. that makes me quite happy, as we are getting back to engagement - either from a technology-infrastructure perspective, or from having a relationship with the customer that goes two ways perspective.
I really like your comment about the company becoming part of the social network, something entirely needed and that is missing today. it is not about being the recipient/emanator of the message in a conversation, it is about holding those conversations, which takes more than talking and listening. this the missing point for most organizations out there - it is not about listening, it is about doing something with what you heard. only way you can do this, stop collecting data and start living inside of it, become a part of the network as one more equal peer.
Third, i won't even go into SDL, I agree it is too academic right now - and that is sounds good. hope it takes off, but we are probably 3+ years from seeing it in any sort of critical mass.
Thanks for the read and comments, long time no see - hope all is well.
Thanks for the read and comment - but more so for concuring with me on my view. I don't see where this goes if it is just to "engage" and "listen". action is what will drive the value, and action in this case has to come from collaboration. no other way about it.
Anytime you want to make me happy, just agree with me.
Thanks for the read!
Great article Esteban and really interesting discussion.
I was wondering to know what you guys think about the role of Crowdsourcing
and the involvement of customers in the CRM processes in the Social CRM big
We at CrowdEngineering (www.crowdengineering.com) have been considering
the role of the customer changed in the Social CRM era. In other words we
see SCRM not just as extension of CRM with social channels and engagement
of customers through social media techniques, but as a real change in the roles
in the daily business processes.
Customers can be part of the processes, can be the first level of contact for
other customers needing support or advise, can help in the brainstorm about
new products and services to launch, and much more.
Do you see this as part of the Social CRM too?
Yes, indeed, Francesca - that is what we mean by co-creating value. Social CRM is a concept that has a different business philisophy, to the concept of mass marketing (and direct marketing).
Mass marketing/direct marketing/transactional selling was about the philisophy and economics of delivering value. Produce, sell, service.
Social CRM is about the philisophy and economcis of co-creating value. Here is a platform for a specific purpose, let's use it to build profitable networks eg Amazon.
CRM should have been a forerunner to Social CRM philisophy, but in practice was as an adjunct to mass marketing/transactional selling philisophy- that is why all the disappointment set in in early 2001. With the advent of social media, we are watching the same story. Social media can be:
1. a bolt on channel for mass marketing/transactional sales business philisophy
2. used with other CRM technology for supporting the 'co-creating of value' (this is where service dominant logic comes in)
Gartner's SCRM MQ encourages type 1 thinking (eg "vendors will have to show how social data is used in core business processes) rather than type 2 thinking. Although, to be fair to them, they do note what SCRM is about recriprocol benefits, and customer managed relationships. There are, for example, some technology vendors whom I consider support the the philisophy of social CRM very well, but they are not on Gartner's SCRM MQ.