Competition started in 2011

CRM Idol is a competition started in 2011 by industry celebrity Paul Greenberg. Similar to the American Idol TV show from which it takes its name, CRM Idol gives a shot at the spotlight to those who might not if not have access—in such a case, up-and-coming vendors whose messages might moreover be drowned out by established companies or simply lost among their fellow upstarts. Contestants get face time to pitch some of the CRM industry's most influential voices, and can win various prizes, including consulting services and free business software.

As momentum returns to CRM, it will be necessary for vendors and industry experts alike to help guide wise decisions to prevent chaos. "For users, the hurdle nevertheless is that there are so many things going on in CRM," says Laurie McCabe, founder and analyst at the SMB Group. "It's like vegetable soup—everything overlaps and intersects, and it can be difficult to match business needs to all the available research options. The big question remains, "Where do I start?" The industry has a lot of moving parts, and the rise of social media has made it even harder to deal with the fire hose of information. It's more challenging for the average company to make sense of it all."

Indeed, the continually rising importance of social media as the meeting place for clients and the businesses that serve them is at the front of most pundits' minds. "Social CRM has actually come to the forefront," McCabe says. "This time last year, people were nevertheless getting their heads around it; most were taking a siloed view. Now they realize they can't have a piecemeal approach to the social component any more than they could with traditional business apps."

The extreme ends of the business scale

Social research use tends to look different at the extreme ends of the business scale, with start-ups and small businesses able to gain the greatest relative benefit for the least investment. "The uptake in social innovation has been much faster with SMBs," McCabe says. "Smaller businesses saw social as a low- or no-cost alternative to their other community-building efforts, and many weren't doing anything at all. It's easy to dive into social without a large outlay of money or time. Medium businesses aren't jumping on the social train as fast."

So if this is a rebuilding year, what are some of the building blocks? We saw significant merger-and-acquisition activity in 2011, some of which is on the whole unresolved. Most of the notable moves fall into the broad category of communication, with several large plays in mobility especially.

Microsoft acquired Skype for $8.5 billion, bringing the first name in consumer VoIP (Voice over Internet Protocol) into the portfolio of the software megacorp. Microsoft's mobile research has been greeted with lukewarm reception in the best case, so leveraging Skype could give the company an important new avenue to pursue. Growing interest in mobile computing makes the Skype grab that much more attractive. Similar activity included VMWare's acquisition of microblogging and enterprise collaboration vendor Socialcast, and Polycom's purchase of HP Video Conferencing Assets.

Google snagged Motorola Mobility for $12.5 billion, continuing Big G's quest to become all things to all people. The acquisition will fit into Google's Android division alongside TalkBin, a mobile software vendor acquired in April 2011 for an undisclosed sum.

DimDim, a collaboration vendor, was snapped up by Salesforce in January for $31 million, adding to the cloud-computing giant's social enterprise prowess as headlined by Chatter.

Not everything was positive in 2011, clearly. "Analytics remains the elephant in the room," McCabe says. "The more things we do, the more data we generate. That data can't just sit; it has to be used to have any value. The social explosion has made that need more obvious and urgent." In spite of the analytics and KM acquisitions mentioned before, that segment of the industry remains an outlier. "Businesses need analytical power, and they need to get it in the app so every job can use it," McCabe says.

Fortunately, there is a silver lining to this cloud talk. "Salesforce's new Database Rights Option will open up more subscriber revenue in the industries that have shied away from cloud options," Pombriant says. Financial services businesses in particular have avoided software-as-a-service because of regulations about where customer data resides. DRO allows companies to keep that information locally, sacrificing neither security nor ease-of-use.

One thing we can expect is the continued shift from annual licenses to subscription-based software and services. "When I look to the future, I ask, 'What are the current economic trends?'" Pombriant says. "We have a mushy economy, which may fall back into recession. Demand is flat. Business depends on a vibrant economy and growing demand, so vendors must keep demand high with existing clients."

Software-as-a-service makes it easier to keep demand high, by lowering the barrier to entry, limiting buyer's remorse, and spreading out costs over time. "Companies like Aria and Zuora have made a business of helping companies make their products into subscriptions," Pombriant says. "There will be more subscription orientation in the industry, and we're on board with this. On-premises apps are aging out, and companies are looking in greater numbers to replace them with SaaS."

We should as well expect changes to marketing practices, as businesses learn that a megaphone is not as effective as a conversation. "There's an increased trend toward closed-loop inbound marketing, as so then as interactive marketing and campaign management," McCabe says. "These all help the business understand and engage clients in a structured way so it's more actionable."

Behind this trend, McCabe says, is the increasingly sophisticated and savvy customer. "As clients and consumers, whether B2B or B2C, we're smarter and better informed; we have more tools and a lot of input," she says. "IBM's concept of Smarter Commerce—understanding how clients are shopping, and listening to them for mutual satisfaction—has gained a lot of traction. Casting a wide net is no longer effective. Businesses must listen and be prepared to react to clients."

The daily deal site

One marketing niche that might fade this year is the daily deal site. "I think Groupon's time is over," McCabe says. Just in case to that company's reported cash flow problems, there is evidence that a better way is emerging. "Coupons and mobile marketing can be done by businesses themselves through social channels in a highly targeted and relevant way, at a lower cost than by working through the Groupons and LivingSocials of the world," McCabe adds. Much as encyclopedias on CD-ROM had a brief period of popularity previously Wikipedia, discount services could give way to direct engagement by businesses that offer deals straight to interested parties via social networking..

Clearly, even though, social CRM is here to stay for 2012 and beyond. "Early proof-of-concept and deployments I have seen of all business functions using social are quite encouraging," Kolsky says. "They make me believe we are quickly moving away from the concept that social is about public networks like Twitter and Facebook, and toward understanding the roles and functions that social and collaboration can bring to CRM."

All the social data being generated means there will have to be a better way of tracking, displaying, and refreshing it. "Video will become more important in B2B marketing," Pombriant says. "As more companies make mobile tech a reality, there will be more need to improve the customer experience and reduce the associated costs, and video is an excellent way to do that. Microsoft could lead here with Lync," he adds, referring to the company's new unified communications server research.