Small suppliers dominate social CRM market

Spending on social software for marketing, customer service and sales increased by 40% in 2010, but social CRM remained less than 5% of the total CRM application market, according to analyst Gartner.

"Until recently, many companies have treated social CRM as a series of experiments and tactical purchases. Few 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," said Adam Sarner, research director at Gartner.

"This lack of consistency among buyers keeps the market fragmented into at least three segments - sales, marketing and customer service - with many small suppliers taking various approaches to address one area, approach or use case. The majority of suppliers that survive and thrive in the mid-term will offer tools that can address multiple use cases in more than one department," he added.

According to Gartner, the biggest area of spending on social CRM is for targeting consumers, representing 90% of social CRM spending. But business (B2B) use is growing faster and will account for 30% of total social CRM spending by 2015, Sarner said.

The market for social CRM is still relatively immature. Gartner said most suppliers remain relatively small and unprofitable, although many grew by between 50% and 100% in 2010.