Recently, we took a first look at Gartner’s Magic Quadrant for Social CRM, and in particular those vendors who made it into the Leaders quadrant. We also noted that by far the most populated quadrant was the Niche player’s quadrant, making it unique among Gartner’s MQs. Today we will look at who those Niche players are, what they are selling to qualify as Niche players, and what is likely to happen to them.
The Social CRM market is still developing, and according to Gartner's Social CRM report, the space is likely to see a lot of consolidation through acquisitions over the course of the coming months.
Social CRM Niche Players
In other software areas, it has generally been the case that when large vendors perceive a gap in their own portfolios, they tend to buy the technology rather than develop it themselves. And it is generally Niche players, who produce a single product or set of technologies, who end up in the acquisition firing line. There is no reason to think that in the Social CRM space, things are going to be any different.
To recap on what qualifies a vendor for inclusion in the Quadrant in the first place, the vendor must:
- Cover at least two of the three main areas of CRM -- sales, marketing, customer support
- Have references from at least five clients who actively used the product in 2011
- Have shown at least a 20 percent revenue growth in 2011
- Include functionality for marketing, sales or customer service departments -- such as tools for social monitoring, managing customer communities, fostering customer interaction and managing integration with traditional CRM applications.
On top of that, Niche players provide “useful, focused, technology," Gartner says. They understand the way the market is changing and develop their products to suit.
However, compared to the Leaders they are limited by narrow functionality, lack of a dynamic growth strategy, limited road maps, and limited potential for growth.
While Niche players are successful in their own space and in relation to their size, they need to develop their differentiators before their competitive edge disappears -- something that is likely to happen by the end of the year.
Social CRM Acquisitions
Taking all these different elements into consideration, as well as the fact that major vendors like Oracle and Salesforce have been snapping up companies in the Social and CXM space, it would not be out of the question to see a number of these companies acquired in the coming months.
Marc Benioff has made no bones about the fact that Oracle is on the prowl for new acquisitions and despite Larry Ellison’s insistence that Oracle won’t be buying anything anytime soon, he has said this before, and then gone out a bought whatever he needed to plug portfolio holes.
Here, it is pertinent to remember that Oracle has only made it into the Challengers Quadrant in this MQ, while Salesforce is cited as a Leader. How long Oracle will tolerate this is anyone’s guess, but probably not for very long. So who made it into the Niche quadrant? In alphabetical order they are:
Strong growth over the past year as well as evidence of the benefits of Artesian technologies to sales teams have projected it into the Niche quadrant this year.
- Strengths: Strong growth over the year has led Gartner to estimate revenues of US$ 10 million, with sufficient capital funds for future growth. Gartner also estimates that 85 percent of its use cases are in sales, with the rest in customer service and marketing. As a result, Artesian has a good understanding of B2B Social CRM with proven use in lead management, social augmentation and social analytics. It has also spent time building industry-specific taxonomies, which should attract considerable interest.
- Cautions: Artesian lacks Social CRM breadth and has not really focused on delivering support for user cases like peer-to-peer external communities. It also has limited presence outside of Europe and is only available in English so far. Gartner says there is a likelihood of acquisition during the next two years.
This year, Demand Media returns as a Niche player specifically in the marketing, e-Commerce and customer service use cases.
- Strengths: Places a lot of emphasis on the branding and creation components of its community -- more so than any other vendor -- with its products sold mainly to digital marketing, branding and e-Commerce professionals. Its Pluck product has 14 distinct community applications with packages to meet client needs around specific use cases. Its applications and other features are placed on existing web pages as widgets and work on mobile devices and in social networks like Facebook. The differentiator is its ability to introduce social elements to existing pages.
- Cautions: Demand Media has made the strategic decision not to offer out-of-the-box integrations with legacy CRM vendors. It also doesn't offer a social media monitoring solution. Finally, Gartner says that it is not a solution for organizations looking to use internal employee collaboration to orchestrate externally-facing community activity.
Get Satisfaction (GS) enters the MQ this year with a history in the small or midsize business (SMB) space, but it has also entered the enterprise space, too.
- Strengths: It is well known in the peer-to-peer community world, with a focus on simplicity that is reflected in an easy-to-use and clean interface. It has tiered pricing structures that accommodate all users from micro to enterprise. It also comes with the ability to embed widgets for community, comments, review and Q&As.
- Cautions: Gartner estimates Get Satisfaction's revenue to be significantly smaller in relation to top community competitors like Lithium, Jive and Telligent. It will need to experience significant growth to operate independently. It has proved itself in the US and the UK, but will need to expand into developing markets to be successful.
Kana remains in the Niche quadrant even following its recent acquisition of Sword Ciboodle, which is serving its traditional customer service audience. Kana is owned by a technology-focused private equity firm.
- Strengths: Its focus on customer service extends beyond Social CRM, making its solution the broadest suite in the space. Gartner estimates that it will hit revenues of between US$ 130 to US$ 150 million this year following acquisitions of Overtone, Trinicom and Sword Ciboodle. It has a wide existing user base to which it can market its Social CRM product.
- Cautions: It has a limited CRM breadth with only a select set of marketing use cases. Kana's focus is on its customer service solution and only plans to develop its social experience in this context. Kana will have issues integrating the three acquired products into its solution (Overtone (which we noted last year), Trinicom and Sword Ciboodle) -- and how this will happen is not clear. It has yet to develop the momentum of the rest of the Social CRM space, which could make it difficult to pick up customers.
QuestBack is a rapidly growing European company with a vision focused on enabling personalized social engagement.
- Strengths: QuestBack provides a number of features that cover the areas of social media monitoring and community monitoring geared towards social engagement and communication. It has a number of use cases and has numerous offices across Europe and a growing direct presence in America. QuestBack generated more than US$ 48 million in 2011 and is predicting 20 percent growth this year. It also provides out-of-the-box integration with several large CRM vendors.
- Cautions: Questback has yet to develop social sales/e-Commerce and lacks core customer functionality. It has acquired a number of complementary vendors, and in the coming years the investors behind it are going to be looking to recoup that money. It currently lacks advanced social analytics capabilities.
Visible Technologies reappears this year with products that offer response and analytics capabilities for marketing and customer service departments.
- Strengths: Visible is able to present social network analysis, employee efficient metrics and outside system analysis in a visual and consumable dashboard that offers users who are not experienced the ability to extract data. It has also built its interface to resemble free engagement tools, making it easy to learn. The recent acquisition of Cymfony has doubled its size.
- Cautions: Gartner says clients have told it that Visible is expensive compared with competitors in the same space, and it lacks breadth in the Social CRM space around sales and e-Commerce. It had built integration for Oracle Siebel but it has not yet deployed the functionality, and there are no other integrations planned for now.
And that’s the Niche quadrant. All that remains are the Challengers -- Oracle and Bazaarvoice -- and the Visionaries -- Attensity and Telligent.
How any of the above companies do over the year is anyone’s guess, but it is likely that when we take a look at it next year, the landscape will have changed quite a lot.