ROI lacking in social CRM

04 May 2012

LONDON: Large brand owners are struggling to measure the ROI of their social media customer relationship management (CRM) initiatives, according to a study by market research firm Gartner.

The new report showed that 50% of Fortune 1000 companies do not benchmark or measure the payback of their social CRM projects.

Moreover, the same proportion of firms will not receive a "worthwhile" return on these activities by the end of 2012. Around 80% of this group are also not collecting and compiling the data required to measure social success, Gartner said.

Despite this lack of systematic measurement, large advertisers are continuing to raise their investments in social media. Gartner's own figures suggest that spend on social CRM software will soar in 2012, rising from $850m last year to $2.1bn.

This would mean that social media software would account for 10% of the total global CRM market by the end of the year.

In its report, Gartner warned that failure to justify ROI would lead to many of the social media projects being drastically scaled back or even eliminated in future.

"During the next two years, the success of social CRM will depend on how well companies and social CRM technology providers can make social CRM projects more than just social objectives by tying them to clear and measurable business objectives," the report stated.

Adam Sarner, a research director at Gartner, added that use of free social media metrics would not be sufficient to develop worthwhile ROI measurements.

"Social data, such as numbers of fan pages and weekly Tweets, is not enough to correlate with the contribution of top business objectives," he said. "ROI, measurable business value and budget justification for social projects are becoming unavoidable topics for many organizations."

However, Gartner suggested that effectiveness measurement in the sector would improve markedly in future, and predicted that three in four new projects would have a plan for measuring the ROI of the initiatives by the end of this year.

Data sourced from Gartner; additional content by Warc staff