Worldwide customer experience & relationship management software market grew 15.6% in 2018: Gartner

Worldwide spending on customer experience and 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.

Worldwide enterprise application software revenue totaled 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 CRM 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 CRM software vendors accounted for more than 40% of the total market in 2018. The top five vendors had very little change in ranking compared with 2017, although Microsoft climbed into fifth position, narrowly displacing Genesys.

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 CRM market. Customer service and support retains its No. 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.