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September 29, 2011 – Spending on software as a service customer relationship management by small and midsized businesses will outpace on-premise CRM by nearly four to one, to experience double-digit year-over-year market growth in the next five years, says new research from AMI-Partners.

AMI-Partners, which specializes in market intelligence for small and midsized businesses, has found in their U.S. SMB Cloud Services Study that cloud services now allow SMBs to acquire CRM at less total cost of ownership than in the past. Besides affordability, cloud adoption momentum among SMBs is influenced by the growing presence of mobile devices, which have increased data access and collaboration.

According to AMI's research, customer engagement via social networking is driving SMBs to pay closer attention to their social communities. “Such market trends are creating the right conditions for the integration of social media with CRM applications for enhanced interactions with customers,” said Jacqueline Atkinson, Research Manager at AMI-Partners in an announcement about the report. Atkinson cited that U.S. SMB CRM users are one-third more likely to use social media for business than firms without CRM. 

Social CRM processes, as defined by AMI-Partners, allow companies to analyze customer-related data extracted from social networking sites. Social CRM can help businesses monitor online conversations and communicate with customers using social networks. 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.

"More and more SMBs are attempting to attract and retain customers over social media channels," said Atkinson. "Enterprise social CRM can translate what these companies readily perceive on their social communities into actionable insights for timely business planning.”

Atkinson points to SaaS CRM vendors that offer a social component as having an edge in capturing the growing market, such as Salesforce.com with its Radian6 platform or Sage's SalesLogix Cloud CRM application. She says these vendors will influence SMBs toward leveraging social CRM.

Valerie Valentine is senior editor for Information Management. You can follow her on Twitter at @va1va1entine or via email at valerie.valentine@sourcemedia.com.