The Social CRM Arms Race Heats Up

Whoever said the summer's supposed to be a slow time for news had better be on vacation this week. While the financial markets keep a keen eye on $FB's fluctuation, my colleagues and I are busy analyzing the flurry of M&A around the social technology vendors. Simply put, it's a busy time in the social media world. 

Just over a week ago, Oracle purchased Vitrue to add social media management to its bigger technology offerings. Yesterday, Salesforce.com countered the announcement with the acquisition of Buddy Media. But not to be outdone, today Oracle announced it will acquire Collective Intellect, a social intelligence company. The announcement comes a year after Salesforce.com purchased Radian6 and now gives both CRM giants the components they need to piece together something powerful. With social CRM in sight, this social technology arms race is the start of something very big to come.

Let's answer some quick questions about this rush of activity:

Why now?
Because Salesforce.com and Oracle know what we at Forrester have been saying all along: We've entered the age of the customer, in which companies must obsess over — and meet the dynamically changing needs of — their customers. In the age of the customer, successful businesses must be ready to connect with consumers in any channels they desire. Social is the hottest today and any customer relationship focused technology must meet those requirements. 

Why the acquisition streak?
Because social startups hold the innovation that big tech companies need. As the thousands of social startups can attest, building social tools can be easy, but building successful social technologies is very, very difficult. As my colleague Melissa Parrish pointed out in her Salesforce.com/Buddy Media post yesterday, "These acquisitions are not about adding immediate significant revenue. They’re about adding technology offerings." As always, Melissa is absolutely right. None of these acquisitions pick up wildly profitable companies; they pick up unique technologies that will help the tech giants meet future market demands.

How will these technologies come together?
Social customer relationship management is hard. It requires access to social data, technology to filter, process, and analyze content, and tools to manage and apply insights. Although CRM companies had tools to help manage data, few were ready to capture, process, or apply social media. Through these acquisitions — monitoring and intelligence tools to capture and analyze social data and management and publishing tools to help apply social media — Oracle and Salesforce.com get a lot closer to social CRM. They're now tasked with building the connectors between disparate platforms, but they at least have the pieces they need.

Why Collective Intellect?
Collective Intellect was a smart purchase because it offers a unique technology focus. Among the 100+ social monitoring, analytics, and listening platforms out there, I've covered Collective Intellect extensively in my prior research because of its ability to integrate social and customer data and its experience exporting data into third-party technology systems. These are cornerstones of driving intelligence from social media and — as stated above — are a core component of social CRM. Although many listening platforms offer the ability to capture and analyze social media, successful business strategies require more integrated functionality

What's next?
For Oracle and Salesforce.com, the race is on to productize their social CRM offerings. Buying the pieces is certainly easier than building them, but creating a social stack on top of their existing business technology won't be an easy road. For the rest of the market? It's time to catch up. Expect more acquisitions and partnership announcements from CRM competitors, but also from BI, ERP, and any other business technology acronym out there, because these acquisitions are a turning point for social media.

Through these acquisitions — and the eye-opening price tags behind them — Oracle and Salesforce.com show that the business world is getting ready for social media. It's no longer considered a fad, definitely not just hype, and not going away any time soon. Businesses must care about social media because it's clear that consumers already do. 

Comments

Another Perspective on Recent Acquisitions

Hi Zach,

Interesting read! These two acquisitions are yet more proof points on the importance and value of social media to a brand’s customer lifecycle. There is definitely a growing need for socially-enabled customer service contact centers in this mobile/social age. The work horse behind customer support/service is the scalable and high-performing contact center. Armed with the tools it needs to truly engage with customers across Facebook, Twitter, and other social/mobile channels, the contact center can help build loyalty and round out the customer lifecycle initiated by the Salesforce Marketing Cloud. Marty Beard, the CEO of LiveOps, would love to discuss how we are an expert at what these companies are only now starting to offer, as we have been in the customer service trenches for more than a decade. We know this industry shift isn’t about Social CRM alone, but a “New Era of CRM” that incorporates more than just social channels.

Best,
Rory Mohon
LiveOps

What is a role of VOC in this context?

Zach,

What is your opinion about a role of VoC in the context of Social CRM? Most companies are involved into some form or shape program for collecting customer feedback and measure satisfaction. However very few actually use the collected data for any specific business process improvement, to the best of my knowledge. I also never encountered these activities systematically, or organizationally connected to CRM. Seem odd to me. What is your take?

Data collection vs Data usage

Excellent point here - the under-utilization of data is far from limited to social sources. This is systemic problem true for nearly all businesses. We spend time, money, and effort collecting data, but then do nothing to make it valuable.

My hope is that this problem will actually bridge disparate worlds - like CRM and VoC - together through the common interest of customer relationships. CRM strategies require customer feedback, customer feedback requires access to CRM information - all of this requires data from social channels. Perhaps the age of the customer will allow us to dive much deeper into using data we have from all sources, not just social and not just VoC.

Automation

The other factor here is automation. How will these CRMs marry with marketing automation and in term social media? Could CRM actions trigger social media responses (posts to certain circles, DMs to certain people).

That's the future.

Building for the customer first

Great overview and insights, Zach. It's been interesting to watch the "power players" make their moves as far as acquisitions go.

What I'll be interested to see is how they make their next move with the technology. It's all well and good acquiring, but if the mindset isn't there to begin with with the customer in mind from the start, it's simply layering a technology over a "crack".

One of the things we've been mindful of from the very beginning at Jugnoo is, "what next for the customer?". Technology is cool and innovations are great - but if you're not thinking of "what next for the customer" from the start, then you're not really building a solution for them.

We'd like to think we're building real solutions that answer real SCRM questions - time will tell! :)

Cheers again for a thoughtful piece.

Danny Brown
VP, Partner Strategy
Jugnoo, Inc.

Engagedots CRM

The demand for CRM software is increasing gradually. As social CRM is the big platform it can boost up the business sales.