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Is Social Networking the Next Big CRM Application?

Could social networking emerge as an extension of bread-and-butter CRM functionality?

• By Stephen Swoyer
• January 5, 2005

If it worked for Friendster, it might also be a good fit for the biggest CRM software maker on the planet, too. That’s the upshot of Siebel Systems Inc.’s alliance last month with little-known Spoke Software, a provider of enterprise relationship networking services for sales professionals.

“Friendster” is a free service that lets users build a network of (participating) friends and family members that’s accessible to other Friendster users. The idea is that Friendster users can meet, and perhaps even befriend, new people who are linked to them, however tenuously, through the networks of their friends and family members.

As a tool for social networking on a professional level, the Friendster approach makes a lot of sense. So it was only a matter of time before it attracted the attention of CRM software vendors such as Siebel.

As a matter of fact, says Ian Jacobs, a principal CRM analyst with consultancy Current Analysis, the professional social networking market is already well-stocked with players, although few have managed to make much money. “Some of those companies aimed to charge salespeople to use a system that would help them find entry points into prospective sales targets,” he writes. “[T]he salespeople, it was assumed, would either find the service valuable enough to shell out the monthly fee out of pocket or they would find a way to expense the subscription.” Still other vendors sought to market enterprise applications based on social-networking technologies, says Jacobs.

That being said, social networking makes more sense as an extension of CRM than as a discrete, standalone technology, according to Jacobs. “[I]n many ways, social networking more closely resembles a feature of a CRM system than it does a standalone application,” he writes. “The tools are not all that useful without a salesforce automation … or marketing automation system behind them.”

Not surprisingly, Siebel officials think so, too. "Siebel Systems' alliance with Spoke Software addresses the needs of SMB customers by providing innovative relationship networking capabilities that allow them to capture and leverage their relationship assets, and by enabling sales professionals to accelerate all stages of the sales cycle," said Siebel vice-president Catherine Cherubino in a statement. "Our joint clients will have a more complete view of their customer relationships and realize a competitive advantage by being able to identify and reach more prospects and influencers."

Even so, analysts caution, Siebel’s partnership with Spoke, which follows on the heels of a similar partnership with sales relationship management specialist Leverage Software, could ultimately be for naught. “The partnerships may not amount to much tangible in the long run, since both of these vendors already claimed that their users could integrate the intelligence derived from their services with SFA tools such as Siebel’s,” he points out. “The Siebel imprimatur gives both Spoke and Leverage some added cachet and marketing ammunition. More importantly, Siebel’s validation program will guarantee to prospective customers that the systems will interoperate as promised.”

One reason Jacobs takes such a dismal view of the success of both partnerships is that—outside of the fact that they enable Siebel to offer SMB customers a checklist feature that helps it to keep pace with competitor salesforce.com—the CRM giant doesn’t stand to benefit substantially from either alliance.

“[T]he benefits of social networking to businesses (of any size) have yet to be proven. Nor is it likely that Siebel will put a great deal of marketing muscle behind these partnerships because Spoke and Leverage are unlikely conduits for new sales for Siebel and Siebel is not looking for enterprise help from these players,” he writes. “Both Leverage and Spoke have an existing partnership with salesforce.com and that seems a more likely venue to display their value.”

So what’s the value-add for existing users who do choose to tap Siebel’s new social networking capabilities? On paper, Jacobs says, it’s a compelling one. “Customers will be able to use Spoke or Leverage to sift through the seemingly endless lists of contacts and prospects stored in Siebel to map connections and to discover new paths to prospects,” he explains.

“If ‘Joe Salesman’ wants to sell his company’s products into Bank of America, he can use Spoke or Leverage to see how his extended contact network could put him touch with the purchasing decision maker in the correct department at BoA. Although the mechanisms of the two services vary, both companies could help the salesperson find a way into the account without the need for cold calling.”

In addition, he says, it shouldn’t be difficult for Siebel to expose the services of either Spoke or Leverage to existing users. “Because both Spoke and Leverage offer their technology as a hosted service, they allow customers the flexibility to quickly ramp up usage without large upfront investment,” he writes, noting that “this delivery model will reinforce the strengths of Siebel’s own hosted product.”