News Analysis: Lithium’s Acquisition of Scout Labs Ups The Ante in Social CRM

Published on May 11, 2010 by R "Ray" Wang

Social Media Monitoring Addition Adds Social Customer Insight To Lithium’s Community and Social CRM Offerings

Lithium, a social CRM (SCRM) and community platform vendor announced today it had acquired Scout Labs, a social media monitoring (SMM) provider.  According to a variety of sources, the estimated purchase price for the deal ranged between 20 and 25 million.  Conversations with Emeryville, CA, based Lithium over the past week highlight the importance of two themes:

  • Actionable insight as a foundation for SCRM. As Scout Labs CEO, Jennifer Zesut, mentioned in her blog post, this acquisition is about having the right level of data for organizations to make decisions.  Social media monitoring enables Lithium to engage customers beyond the community platform and into other conversations happening in social communities.  A community platform and Social CRM offering brings life and relevance to Scout Labs’ technologies.

    Point of View (POV):
    Scout Labs adds both a strong analytical platform and easy to use visualization tools to Lithium’s extensive SCRM offerings.  Lithium now has the capability to tie SMM to its customer community apps and SCRM suite which enables the foundation of social CRM —  social customer insights or F1. Should the post-merger integration be successful, Lithium’s customers can integrate Scout Labs SMM tools to monitor, map, and measure online channels to bring social conversations and interactions back into the community platform.
  • Acquisition synergies beyond technology fit. Lithium intends to not only integrate Scout Labs into the platform, but also leave ScoutLabs as a stand-alone solution.  With over 500 customers in the mix, Lithium brings organizations such as AT&T, Barnes and Noble, Best Buy, Lenovo, PayPal, RIM, Sony, and Univision to the mix. Scout Labs brings CocaCola, Disney, McDonald’s and Motorola.  Both vendors delivered SaaS based solutions.

    The acquisition provides both a technology and a significant customer acquisition play.  Lithium now has the opportunity to cross-sell its solutions into the Scout Labs customer base.  However, the more likely scenario will be up-selling Scout Labs back into the Lithium base.  Features such as BuzzTracking, Conversation Digest, Persistent Searches, and Rants and Rave often top the list of favorites among customers and prospects.  More importantly, the Scout Labs sales force and sales management will add a relationship based approach to the sales culture.

The Bottom Line For Buyers – Lithium’s Investing In SCRM

Lithium’s acquisition shows its seriousness to compete in the SCRM space.  The market now expects all SCRM solutions to provide deep social analytics.  In fact, success in SCRM requires organization to start with the 5M’s (i.e. monitoring, mapping, management, middleware, and measurement).  As customers expand into other SCRM use cases, expect Lithium to continue to make investments to support emerging requirements whether they include technology, geographic, and vertical specific.  As with all mergers and acquisitions, customers should stay vigilant about retaining key service and support staff, providing input into product direction, and maintaining favorable software licensing and contract terms.  Lithium customers should take the time to compare SMM solutions and place Scout Labs on the short list.  Conversely, Scout Labs customers looking at community platforms and SCRM solutions, should take the time to place Lithium on their short lists.

The Bottom Line For Vendors – Expect More M&A Activity In The Race To A SCRM Suite

Expect SCRM acquisitions to accelerate as SCRM vendors compete for key assets such as social media monitoring platforms, natural language processing and sentiment analysis engines, community platforms, and business process platforms.  Attensity’s recent acquisition of Biz360, Jive’s acquisition of FiltrBox, and RightNow’s acquisition of HiveLive, show how the market convergence to SCRM suites has already begun.  Social media monitoring forms the foundation of all SCRM initiatives.  Through this social customer insight, successful Social CRM and CRM solutions can then deliver tighter integration with existing CRM processes and systems and also provide a strong analytical and master data management foundation.   This social media metadata forms the heart of all future activities.

Anticipate that vendors such as Alterian, BuzzGain, Cymfony, Radian6, Viralheat, Visible Technologies, and others will continue to form key partnerships or be acquired by other providers in the SCRM ecosystem in the next 12 to 18 months.  Accuracy of the natural language processing (NLP) and sentiment engines will prove to be the lynch pin for success in the next 24 months with vendors such as Clarabridge playing a critical role.  Don’t be surprised if the community platform vendors get acquired by traditional CRM vendors and other related entities looking to jump in!

Your POV.

Are you a Scout Labs customer?  How do you feel about the acquisition?  As a Lithium customer does this acquisition encourage you to expand your footprint with Scout Labs?  Will you still by Scout Labs as an independent solution?  Are you in the market for social CRM solutions and have a question?  You can post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity or better yet, join the community!

Please let us know if you need help with your Social CRM efforts.  Here’s how we can help:

  • Assessing social CRM readiness
  • Developing your social CRM  strategy
  • Vendor selection
  • Implementation partner selection
  • Connecting with other pioneers
  • Sharing best practices

Related resources and links


Although we work closely with many SCRM vendors, we want you to trust us more.  Lithium is currently a client of Altimeter Group. Scout Labs is not a client of Altimeter Group or Insider Associates, LLC.  For the disclosure policy please refer here.

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

  • Hugh – great points. i’m also seeing a need for better accuracy in the algorithms and the ability for users to modify the ‘black box’ behind some of the algorithms. Are you seeing that as well? – Ray

  • Ray –

    Thanks for an excellent analysis. It is much appreciated.

    My company is an agency client of ScoutLabs. I’m delighted with the news for several reasons, most of which you laid out above. I’d like to add a few additional observations and I’d love to hear your feedback if you have a chance:

    1. Twitter. The Board relationship with Twitter that Lithium brings to the equation (according to Louis Gray at is significant. Having an insider’s seat at the Twitter strategy could prove to be a competitive advantage for Lithium ScoutLabs *assuming* of course that Twitter is able to become more mainstream (which I believe it will) under the leadership of Dick Costolo.

    2. Social Network Analysis. Dr Michael Wu and his team at Lithium know this as well as any company in the industry in my view. SNA expertise is especially important for companies looking to identify and monitor key influencers online.

    3. Topic-centric monitoring vs. Influencer-centric monitoring. Up till this point, most of the monitoring platforms (with the notable exception of have gone in the direction of topic-centric monitoring. I expect the Lithium/SL merger to result in increased synergies in these two areas especially as sales executives demand more granularity and CRM becomes more social.

    I would look for a company like (social CRM provider) to continue to be on the industry’s radar.

  • […] Webcast: Your Customers Are Everywhere. Are You? Posted on May 12th, 2010 By Peter Kim I’m hosting a webcast next week with the newly merged Scout Labs and Lithium Technologies. The deal is a great step forward to create a strong Social CRM offering – you can read more from Scout Labs CEO Jennifer Zeszut and Lithium CEO Lyle Fong. Ray Wang of Altimeter Group has also published a solid analysis of the deal. […]

  • Phil – thanks for the comment. sorry to miss the event as I’m in India this week. We’ll want to get down to the NLP and algorithms at some point. Cheers and have a good time at LINC. – Ray

  • Hi Ray,

    Great overview! Obviously, we’re really excited about the acquisition over here, and our customers will be letting us know about it on the community and at our conference.

    I think you hit the nail right on the head as far as the strategic importance.

    The boundaries between what Brent Leary calls “web presence” and “presence on the web” are breaking down. Companies need branded communities for a host of reasons, but they no longer need them to create conversations. Those conversations are happening everywhere, and it’s up to companies to help manage the flow of information and brand advocates across the social web. So that connection will be bi-directional — or multi-directional.

    Data is also really important. There’s an almost unlimited hunger for “connecting the dots” on social customer data, to know who the most influential people are, how that influence propagates, and so on.

    Our chief scientist is licking his chops right now on that stuff.

    Phil Soffer
    VP of Product Marketing
    Lithium Technologies

  • Brian – thanks. appreciate the feedback. let us know what you hear on the customer front! – Ray

  • […] Lithium, a community platform, has announced their acquisition of social media measurement company Scoutlabs.  This combination paves the way for social point ware software to evolve into a greater suite of enterprise social software which can evolve to Social CRM.  Expect more of these acquisitions and partnerships to occur over the coming year.  Ray Wang, my business partner, maps out what the Lithium and Scoutlabs acquisition means. […]

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts