In the midst of an exceedingly hot and volatile environment, Gartner has updated its Social CRM Magic Quadrant, naming three vendors that have managed to keep their heads above water.

The Social CRM Market

Because most of us are still trying to find a comfortable place in the social movement, Gartner says social CRM is still mainly treated as a series of experiments and tactical purchases. Today, very few have a stable social CRM strategy or established metrics to measure its effect on hard business results. 

The research company says this lack of consistency keeps the market fragmented into at least three segments:

  • Sales
  • Marketing
  • Customer Service

Accordingly, many smaller vendors are building their applications around one area or use case, but Gartner says if you want to be a vendor that survices, addressing multiple use cases in more than one department is crucial.

From a numerical POV, spending on social software for marketing, customer service and sales increased by 40% in 2010, but social CRM remains less than 5% of the total CRM application market. Considering this rate and other factors, Gartner expects the social CRM market to reach over US$ 1 billion in revenue by year-end 2012

Community: The Key Trend

Because benefiting the customer is one of the top new priorities, Social CRM applications are naturally built to be far more customer-centric than their more traditional predecessors. Tools and processes incorporate a range of engagement levels and the focus shifts from direct customer management to relationship management. For example, engaging customers, partners or prospects in the following processes:

  • Codeveloping new products or services
  • Generating brand awareness
  • Aiding information gathering and evaluations
  • Offering price comparisons
  • Assisting the selling process

These benefits encourage users to willingly participate in communities, which in turn drive success. 

In addition to exhibiting an eye for community, Gartner's top social CRM providers met the following minimum inclusion requirements:

  • The primary use and marketing of the application must be toward sales, marketing and customer service support users and/or customers, prospects and partners of the organization.
  • The vendor's social CRM product must have revenue above a minimum of $10 million
  • The vendor must have had a 30% revenue growth rate or higher in 2010
  • The vendor must have at least five client references from 2010 that Gartner can talk with that are in live production use of the product

And so without further ado, the leaders: 

Jive

Founded in 2001, Jive (news, site) has had a ton of fast success in recent times, and currently holds the most public profile of Gartner's featured social CRM vendors. 

  • Strengths: Jive has gone beyond internal and external social collaboration and stepped into connectors territory to integrate Facebook, LinkedIn and other public social sites. The company has also recently stepped up its partnerships game to include Accenture, CSC, Deloitte, Infosys and Logica. Even further, Jive's numerous acquisitions -- Proximal Labs, Filtrbox and OffiSync -- indicate a strongly buttressed vision. 
  • Cautions: Jive is a fairly young and small company by the standards of enterprise software. It has struggled for some time now in its attempt to expand European presence, and could be impacted more than smaller "point solution" vendors if a major infrastructure software or hardware vendor enters the market.

Salesforce.com

Salesforce.com (news, site) is recognized for raising execution through the acquisition of Radian6, as well as aggressive promotion and pervasive distribution of Chatter.

Strengths: As the third-largest CRM vendor, Salesforce.com's US$ 1.6 billion in annual revenue is fairly impressive. Chatter, its highly promoted and internal social business and collaboration solution, will soon be available for external collaboration, which is expected to increase the company's user base significantly. Meanwhile, the recent purchase of Radian6 adds a slice of social media monitoring (which is 75% of the social CRM market), making Salesforce.com the largest social CRM vendor, even though its market share is small. 

Cautions: Gartner claims Salesforce.com's buying of companies isn't being matched by a road map, making the company's vision for social CRM a bit lacking. For example, salesforce.com does not yet show strong commitment to supporting B2C marketing requirements. The platform also lacks a platform for managing communities, and could use more advanced social analytics. 

Lithium 

Lithium (news, site) is recognized for providing a hosted community and associated applications for hosting private-label social communities that target telecom, retail, hospitality and gaming.

Strengths: Lithium's tools for reputation/moderation functionality and social media monitoring for external social networks are fairly advanced, and partnerships with Ipsos, Omniture and Eloqua serve to add significant use cases in marketing research. The company has integrated with customer-service-focused solutions such as Clarabridge, Vovici and Parature, as well as salesforce.com. Its road map for 2011 includes bringing reputation, influencer identification analytics and different engagement approaches to Facebook via a Facebook application suite.

Cautions: In addition to product reviews that could stand to be improved, Lithium's use case vision outside of Facebook could use a bit of oomph. Further, Lithium's analytics need to be able to  suggest prescriptive actions to take when things change. 

The actual report has much more to say about these leaders. Check it here