2011: The year when 80% of Social CRM projects will #fail ...

... to meet expectations.

A year ago Harish Kotadia declared 2010 as the year of Social CRM. With 20/20 hindsight, he was almost right. 2010 was the year of much talking about Social CRM, but there was very little in the way of real business results to match the rhetoric of industry proponents.

Social CRM, however you choose to define it, involves the use of social media in business. Most agree that it also includes integration of social media to existing CRM systems.

We're all learning how to make the new social+CRM technology work. So it came as no surprise to find in my 2010 research that the majority of "social business" projects are in an experimentation phase. 2011 will be the year when we'll see if real projects are funded and successful.

On the positive side, with modern Social Business applications (generally hosted or SaaS-based), buyers get affordable, easy-to-implement and user-friendly solutions. At least by comparison to the not-so-good-old-days of CRM software a decade ago, when projects were more frequently stymied by clunky software.

And, that's certainly good news for the rapidly expanding industry of Social CRM technology providers and related analysts and consultants. "Social" has been a shot in the arm for what was a stagnating CRM industry until Oracle coined the term "Social CRM" in 2008.

But my research also uncovered some troubling issues. If we don’t learn from history we are doomed to repeat it. In 2011, I believe that 80% of Social CRM projects will fail for one simple reason: Expectations are way too high.

Seriously, my survey found that business managers expect Social CRM to increase customer loyalty, improve the customer experience, improve business agility, drive innovation and increase revenue. If I had put "stop global warming" on the survey, I'll bet 50% of respondents would have picked it as a Social CRM benefit!

Sorry, but I don't believe these lofty expectations will be realized in 2011, and probably never. In CRM 1.0, similar strategic benefits were expected but rarely realized based on numerous studies we've conducted. In the end, CRM delivered a healthy amount of tactical benefits (improving employee productivity, streamlining processes, reducing cost, etc.) but did not move the needle on customer loyalty and experience.

Other issues we uncovered that will contribute to the perception of Social CRM failure in 2011:

• Poorly defined business requirements and ROI: Social CRM can mean anything from social media monitoring to online communities to a culture change. Unless companies clearly define what Social CRM means within their own organizations and how it will deliver business benefits, how can it possibly succeed?
• Resistance to change: Social media proponents are sure that it will change the world and how their company works. Yet history has shown that companies are slow to change even when faced with serious problems. Using social media has upside but it also requires a shift to an open, transparent and more collaborative style of management.
• Lack of executive sponsorship: In social media, you can make a case for "skunk works" projects to prove out new ideas and gain support. But for widespread adoption that will drive the expected strategic benefits (loyalty, experience, etc.), top management must get on board and lead the effort. The "ROI" question must be answered.

I want to be clear that I don’t think that Social CRM is or will be a failure in an absolute sense. Our past research has found that about two-thirds of CRM projects delivered real value, based on tangible ROI. But the perception of CRM=failure lingers due to overheated expectations. Can we avoid that with Social CRM?

If you are leading Social Business efforts in your company and would like to avoid becoming part of the 80% failure statistic, these five steps may help:

1. Interview executives and key stakeholders to learn about their business goals. Ask questions to understand their objectives and frustrations. Don’t “sell” social media.
2. Develop specific business requirements and map to social business solutions. Consider whether you need a focused application or a multi-function platform.
3. Gain executive support by showing how social business will help them succeed. Show positive results from pilot projects. Avoid use of phrases like “paradigm shift.”
4. Define and integrate success metrics into your project execution. Give ongoing feedback to stakeholders that your social business project is working.
5. Don’t assume everyone will welcome the use of social media. Some will "get it," others will adopt if given good support, and some will resist. Change must be managed.

I believe Social Business is at an inflection point. Instead of following the hype, business leaders should focus on adding value to customers while driving results for stakeholders. Anything less is just not good business!