We are doing a series of articles on what's in store for customer service in 2011, and since the topics of customer service and social media are so linked, at least in the minds of the pundits, we thought we'd do a similar series on social media. We'll cross post to both blogs for both series.

#1: Twitter Staggers, Trips, and Can Barely Get Up

2011 is the year that the darling of venture capitalists, Twitter, hits the skids. Faced with an inability to develop and implement a revenue generation model that actually works, and another year with limited return on investment, venture capitalists who have invested and own chunks of Twitter become angry and threaten to close the never-ending flow of fool's money.

This isn't helped by continued contraction in North America which shows that account growth is over, although some solace can be found in numbers growth outside the USA. However, observers will finally wise up to the reality of the Twitter situation, which is this:

The number of actual PEOPLE using Twitter is a small fraction of the number of accounts created. We've known that for years, but it's being ignored. Accounts don't spend money, people do, and that's why it will be hard for Twitter to monetize.

People don't REALLY use Twitter to base purchases on, and that will become apparent when ROI on sold ads is clearly not good, although large corporations may not notice or rationalize it as "branding" rather than sales generation.

Most tweets (at recent count from research), about 92% receive NO acknowledgement, reply, or create any measurable or observable response. There is really nobody home. Even among retweets, many people don't read the material linked to (that's an undiscussed phenomenon right now).

It will be recognized that Twitter involves marketers and sales people trying to sell to other marketers and sales people, and that doesn't work.

The lack of useful features that have some relevance to real, live people causes huge problems, particularly if niche type competitors emerge that build in a better feature set without making things complex. Twitter does one thing well, and nothing else. The novelty wears off, and participation drops even further.

Despite all the noise about customer service and Twitter, companies will not put much effort or resources into this in 2011, apart from creating token presences. It doesn't pay. Some recent numbers indicate that only about 1% of users use Twitter for customer service. While it's impossible to tell whether that's accurate, even if it's off by 500% it's still tiny.

But...

...it's always possible Twitter will introduce new features, or something dramatic will happen in 2011. Very doubtful though. So what does the future foretell?

In 2011 Twitter powers-that-be will realize they need to sell the company, lock, stock and tweets, to a company that will either kill it, or run it as is for a few years. The analogy is the various search engines that used to exist and were acquired, left to wither, and then, ultimately closed. If Twitter waits until 2012 or beyond, its value will be much lower, because it will then have a track record of financial failure. Low revenues. Low profits.

How about an IPO? Nowhere are there more fools than in venture capital and stock speculation, and since share prices are based on perception and not actual value/revenue, at least in part, it's always possible.

Off The Wall Twitter Prediction for 2011-2012

Twitter is bought by a Chinese or Indian business entity.

(more social media predictions coming soon. Stay tuned.