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Cloud-based
business applications are garnering considerable attention from U.S. small to midsize
businesses, according to AMI-Partners’ latest U.S. SMB Cloud Services Study.
The software-as-a-service customer relationship management market—already
representing 570,000 U.S. SMB firms—is set to undergo double-digit
year-over-year growth in the next five years, the report projected. During this
period, spending on SaaS CRM will outpace on-premises CRM by a margin of nearly
4 to 1.

The
report noted that the advent of cloud services has changed the U.S. SMB
landscape tremendously and has allowed SMBs to acquire enterprise-class
solutions such as CRM at significantly less total cost of ownership. “In the
past, customer management has been a prime business concern for these
SMBs—especially in light of the recent effects of the slow economy,” the report
said. 

Customer
retention and acquisition have been a prioritized investment area for many SMBs
who are still enduring business setbacks. According to AMI’s research, a
majority of U.S. SMB decision-makers are giving careful consideration to how
they approach the marketplace and engage both existing and potential customers.

“Customer
engagement on social networking sites is driving SMBs to pay closer attention
to their social communities. But it is the influence of the cloud that affects
their decision to adopt more advanced customer solutions,” said Jacqueline
Atkinson, research manager at AMI-Partners. “Such market trends are creating
the right conditions for the integration of social media with CRM applications
for enhanced interactions with customers. In fact, U.S. SMB CRM users are a
third more likely to engage in social media activities for business than firms
who do not use CRM.”

Like
“traditional” CRM applications, social CRM solutions are back-end processes
that allow companies to efficiently analyze customer-related data extracted
from social networking sites, Atkinson noted. Many social CRM solutions provide
user-friendly tools to help businesses “listen” to online conversations and
communicate more effectively with customers over social media. The aim of
social CRM is to better understand in what ways virtual communities engage with
brands and how companies should interact over various social channels, she
said.

“More
and more SMBs are attempting to attract and retain customers over social media
channels,” Atkinson explained. “Enterprise social CRM can translate what these
companies readily perceive on their social communities into actionable insights
for timely business planning. SaaS CRM vendors offering a social component,
such as Salesforce.com with its Radian6 platform or Sage’s SalesLogix Cloud CRM
application, will be influential in moving SMBs toward leveraging social CRM.
These vendors consequently are poised to capture more of this growing SaaS CRM
market.”