In order to understand the ROI, it’s important to understand how social media is driving a business. In a traditional sales funnel – such as selling something online – a marketing manager can simply measure how many sales are being driven via a particular social media application.

But what about a business where sales aren’t as clear cut, where sales aren’t being driven by specific channels or funnels? It’s impossible to measure the value that social media is driving via incremental sales. Instead it’s about measuring the value of different types of digital marketing.

In that context, a company is asking how is social media driving the brand, or perhaps purchase intent. In many cases, search and online advertising can be measured by tracking incremental volume, so metrics such as “social conversations” to leads or how many opportunities were originated via a social media source come into play. Finally, the percentage of times your brand pops up in keyword searches across particular social sites.

While the end goal is to make money, I think the key is not to expect sales conversion rates to improve necessarily. The key is to start thinking about the intangible benefits that social media is bringing to the table, and the metrics that can measure the indirect impact they’re having on your business.

I think White House media director Macon Phillips summed it up best when describing the flexibility the White House has gained by turning to open source. “We want to improve the tools used by thousand of people who come to WhiteHouse.gov to engage with White House officials, and each other, in meaningful ways.”

As I recently stated a few weeks ago, for open source, it’s about the value associated with performance and flexibility at a great price – and not necessarily about the freedom from lock-in or the benefits of community support.

But how can social media play into gaining that access? I think by and large decision makers are more than happy to spend some time with a salesperson as long as it’s time well spent, and especially with those that share their same interests…interests that usually float around similar media circles.

When it comes down to it, if a salesperson has something valuable to offer and believes in building a relationship vs. simply building an account, I think we’ll see the concepts of social CRM start to go a long way towards ending the days of cold calling.

The idea is to create value from what businesses learn about customers at the social and emotional level, or to put another way, social CRM is in a prime position to measure the attitudinal data that CRM systems currently fail to gauge…and then applying that insight to the business. The concept of social media simply denotes a new way of doing it, and not simply looking at social CRM as a new medium by which to communicate with customers.

I’ve also heard a lot of talk about how this information should drive businesses to personalize the experience not necessarily on a one-by-one basis but rather to certain segments.

In the end, I think we still have a ways to go before the concept of sentiment or emotional analysis is ready for mass adoption, but we’re getting there. Sentiments and emotional measurements is the next frontier, but the technology still has a ways to go. Last but not least, and as is the case with CRM, it will come down to the people and processes before it will be about the technology.

When it comes to selling CRM, I think we encounter a problem that a lot of B2B businesses do: understanding the level of expertise a prospect has about your products/services and how they should be applied to solve their business needs. Let’s face it, selling CRM software to an SMB that doesn’t really understand the concepts of CRM presents a major hurdle. Nor is that the vendor’s fault or the customers, it’s simply a fact of life. Some customers know more than others. But being able to filter those prospects via lead nurturing into “buckets” for handoff to sales at the right time is a big part of the marketing/sales relationship in a B2B business model.

As part of this nurturing process, different buckets will be looking for different levels of personalized data that speak to the combination of business problems each prospect is looking to solve, and thus how they view your products; information a sales person needs to know. How a company provides that information can go a long way to closing a sale. It’s here where I could see social CRM playing a big part in facilitating the answers in a timely and relevant manner.

In a style very similar to a knowledgebase for customer self-service, why not leverage a social community as a knowledgebase where FAQs during the lead nurturing process are stored, along with their corresponding answers and other relevant content? I think it could provide a great tool for allowing prospects and leads to find the answer they’re looking for, and ideally (if the vendor is tracking these actions), a way to more accurately discern which “buckets” leads should fall into, thus speeding up the sales process and providing the background information to prospects that puts your company’s products and services into a more positive light.

But let’s be clear here. While the romantic open source narrative is failing, Open Source continues to get stronger. And it’s doing so because it is becoming an integral component of modern software businesses. Gartner has been predicting that by 2011, at least 80% of all commercial software solutions will include elements of open source. That prediction is based on our observation that nearly all software vendors are finding ways to weave Open Source Software within, and around, their core offerings. It’s becoming quite common to find open source software that is tightly bound to some proprietary component – either other software or vendor-specific service offerings.

Prentice raises some interesting points, and for the most part, I agree with him. As open source has reached mainstream adoption among enterprises and IT groups globally, the truth is that the marketing pitch from vendors like ourselves is less about vendor lock-in and more about value. Open source value is about performance and flexibility at a great price – and not necessarily about freedom from lock-in.

I hear less and less from customers about vendor lock-in and more about flexibility, such as to Prentice’s point, the ability to integrate proprietary applications with open source solutions for added functionality or flexibility. And just as open source has had this fallout on the world of on-premise and SaaS software, I think you’ll see similar results down the road as cloud computing reaches mainstream adoption as well.

Along those same lines, we’re seeing a trend develop here at SugarCRM: the use of 2^nd generation CRM solutions as a “Band-Aid” for older, outdated applications. In other words, using applications like SugarCRM as a desktop, metadata management solution that outdated ERP, order management, or older versions of legacy CRM applications feed into so end users get the benefit of a fresh interface and improved functionality.

It’s an interesting problem companies are facing. Tough economic times mean businesses can ill afford to spend the money and time ripping out and replacing entire systems altogether. So rather than replacing these dinosaurs outright, they’re turning to companies like ourselves to act as the desktop interface for the end users, with data being feed into them in real-time.

I see the open source model, standards-based APIs and Web services really starting to act as the catalyst by which businesses are starting to accomplish quick fixes such as these.

I think it raises an interesting question, is it simply too much for any B2B marketer to handle? The proliferation of social networks has been mimicking the vast amount of print content for the past decade. In many ways, we’re seeing a parallel of the print market in a digital form.

As these smaller networks pop up, some marketers might feel overwhelmed. But I also see it as an opportunity for marketers to better segment and target their energies and resources. Many of these mediums are easy slam dunks when it comes to reaching out to a large, captivating audience, others are more difficult. The key is not trying to nail all of them, but to stay ahead of the curve, as many of these quickly fade into the annals of Internet history.

Like always, it’s about doing your best as a marketer to judge what resources are best allocated to those mediums that promise the most return on investment. And that should always be driven by your customers. 

It raises an interesting paradigm for businesses to adjust to, and I think will be become one of the focal points of CRM initiatives moving forward. The problem is measuring expense vs. revenue, profit, and customer behavior is straightforward and easy. But common sense says measuring the ability of to generate indirect profit through word-of-mouth, new-customer referrals is much more difficult. The acquisition cost in this case is zero, and perhaps worse, not even measured because by the company

It’s important because when it comes to resource allocation, I believe many companies are beginning to fly blind when it comes to their Web 2.0 marketing and branding initiatives. Net Promoter Scores, which typically correlates a customers’ willingness to refer a company, are becoming a popular metric, but there’s a big difference between a willingness to refer and an actual referral.

Understanding the social customer’s true value adds disparities to these measurements, as many studies have found that a customer’s intent to refer and profitability aren’t strongly linked. I expect we’ll see a new generation of metrics, similar to Net Promoter, but those that reflect the social customer’s true value, values that place a greater emphasis on the real value of a customer – and not simply future purchasing behavior.

Larger organisations will continue to have an IT organization that manages and deploys IT resources internally. Some of these will be ‘private clouds’, but not all. IT departments will also take on IT service sourcing responsibility – determining when to leverage external providers, when to deploy internally, and when to leverage both for specific services.

The reality of the future IT organization will be something of a combination of service deployment types, as integration, control and flexibility will drive the use of private cloud computing when the business case calls for it. As Gartner states, IT services used in the public cloud are standard across businesses, they’re not differentiators. Simply put, many of the vendor-hosted options that currently exist don’t offer the level intimacy, flexibility and control required to make them a success for the majority of businesses looking to grow and expand over time.

But I think Gartner’s results also speak to the importance that open source, proprietary software and standards-based software will play in coming together via cloud computing across applications and platforms. At its core, cloud computing is about shifting the source of computing power to offer users portability, flexibility and offer platforms for development, if not interoperability for consumers, and I see private, public and/or hybrid deployment options as being the key to delivering those results.