If you thought LinkedIn was yet another social networking tool, albeit for professionals, you have never been so mistaken.

LinkedIn makes it possible to stay in touch with current and past clients, search forums to understand what people talk about and what answers they seek, and seek recommendations from clients as endorsements. It also allows you to create a company page, to disseminate information about the company’s products and services, and make updates to them. So what, you may wonder?

All these constitute the perfect add-ons for LinkedIn’s new “Contacts,” the fallout of LinkedIn’s 2011 acquisition of Connected. Connected was a CRM and LinkedIn’s Contacts does all the work of a CRM.

At its core, a CRM suite allows businesses to manage business relationships and the data that comes along with such relationships. It aggregates all information and records related to a client, making it easy to retrieve and analyze it as required. High end CRMs makes it easy to collaborate between teams and customers, send custom emails, gather insights from social media, and get a holistic picture of the health of the business, all in real time.

In this sense, LinkedIn fits the bill of being a CRM. It offers a “Relationship” button that allows you to fill in specific fields, such as “notes” and “reminders”, and keep it private. With LinkedIn’s social media features powering LinkedIn Connect, it even becomes possible to research other company’s pages to see what competitors are up to, and also advertise the company page directly. This makes LinkedIn a viable, and some would argue better, alternative to a pure blood CRM.

Sales executives have a love-hate relationship with CRMs. While they are game for the insights and possibilities it offers, they remain wary of spending time on it, when they would rather be actually selling things to customers. A CRM, no matter how automated or sophisticated it claims to be, is only as good as the information that is fed into it in the first place. Feeding the CRM engine with information takes both time and effort, and in many cases major structural changes to redo the status-quos. Lagging behind in report-filing during times of high sales, making mistakes when entering information the first time, and inability to sync due to network problems are all common issues with CRMs. LinkedIn, by aggregating all information from various sources, and still better, updating it in real time, offers a solution to this vexing issue.

However, while these new features make LinkedIn a viable player in the CRM space, it is not that the folks at salesforce.com have been resting on their laurels! A spate of salesforce.com’s recent acquisitions, starting from the $4 billion purchase of Assistly for customer support (now Desk.com), and extending to Radian 6 for social media listening, Buddy Media for social media marketing, and Exact Target for marketing automation, means that whatever LinkedIn can conjure up, Salesforce.com can do better. And added to these are Salesforce’s legacy and unmatched flexibility, which LinkedIn cannot match.

To cut a long story short, while LinkedIn has earned a niche for itself in the CRM space, Salesforce is still the big daddy in this space. What do you think?

Image Credit: JTony on Flickr