Worldwide spending on customer experience and customer relationship management (CRM) software grew 15.6% to reach $48.2 billion in 2018, according to research from Gartner.
CRM remains both the largest and the fastest growing enterprise application software category.
CRM became the largest software market in 2017 and will be the fastest growing software market in 2018
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A software-first world
Enterprise application software revenue totalled more than $193.6 billion in 2018, a 12.5% increase from 2017 revenue of $172.1 billion — CRM made up almost a quarter of that revenue.
Approximately 72.9% of customer relationship management spending was on Software-as-a-Service (SaaS) in 2018, which is expected to grow to 75% of total CRM software spending in 2019, with agility and flexibility being big drivers, along with the requirement for remote and mobile users.
“Cloud growth has dropped slightly in 2018 but remains strong at 20% and significantly above the overall growth rate of 15.6% for CRM,” said Julian Poulter, senior director analyst at Gartner. “As an early mover to the cloud, CRM software is probably seeing a gradual reduction in cloud growth rates due to high adoption.”
The top five customer relationship management software vendors accounted for more than 40% of the total market in 2018 (see Table 1). The top five vendors had very little change in ranking compared with 2017, although Microsoft climbed into fifth position, narrowly displacing Genesys.
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According to Gartner, all subsegments of the CRM market grew by more than 13.7%, with marketing emerging as the fastest growing segment, increasing by 18.8% and representing more than 25% of the entire customer relationship management market. Customer service and support retains its number 1 position, contributing 35.7% of CRM market revenue.
“To exploit the significant market opportunity, product managers in CRM application providers should double down on cloud deployments and consider adding functionality in the fast growing marketing segment,” said Poulter.
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