Customer Relationship Management (CRM) Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

Customer Relationship Management Category Overview

“The customer relationship management category’s growth is driven by rising use of technology in the CRM system to enhance customer experience.”

The customer relationship management (CRM) category is expected to grow at a CAGR of 13.9% from 2023 to 2030. The North America region dominated the category with more than 40% in 2022. Trends such as voice and conversational UI, the use of AI and automation, and personalized customer service help businesses reduce costs, improve customer satisfaction, increase response time, and increase the adoption of customer relationship management (CRM) system are the major factors driving the category growth. In June 2023, CRM software giant Salesforce introduced AI Cloud that would deliver real-time, open, and trusted generative experience across workflows, and applications with the platform.

AI and machine learning have become increasingly important in CRM systems. They enable businesses to analyze large volumes of customer data to uncover patterns, predict customer behavior, and personalize interactions. AI-driven chatbots and virtual assistants also enhance customer support by providing quick and accurate responses. With the advancement of AI technology, there will be a reduced requirement for human supervision, leading to increased consumer-friendly CRM solutions. Companies will persist in infusing a human touch into their AI services, while the integration of AI within CRM systems will elevate almost every aspect of CRM processes. In April 2022, Salesforce, Inc. launched CRM analytics with AI-powered capabilities to help service teams, sales teams, and employees across consumer goods, financial services, and manufacturing industries.

The global customer relationship management category size was valued at USD 58.8 billion in 2022. CRM applications leverage cloud computing for data storage and processing purposes. This stands out as one of the most widely embraced forms of CRM, granting businesses the flexibility to access their complete dataset and engage with internal teams, partners, and clients, all without the necessity for on-site software or hardware installations. This approach ensures that the team can maintain their productivity from any corner of the globe, facilitating the delivery of exceptional customer experiences. The sole prerequisite is a reliable and secure internet connection.

This type of customer relationship management technology is alternatively recognized as Software as a Service (SaaS) or on-demand CRM technology. The data remains secure and promptly accessible, with the added advantage of rapid and hassle-free retrieval. Frequently, such technologies are accessible via a subscription model, signifying that users only incur charges for the resources they actively utilize.

A customer relationship management system offers the ability to recognize and incorporate new leads while precisely sorting them swiftly and effortlessly. By concentrating on the appropriate leads, sales teams can give precedence to opportunities with a higher likelihood of successful closure. Meanwhile, marketing departments can pinpoint leads requiring additional cultivation, preparing them to evolve into high-quality prospects.

Due to the increasing significance of comprehending customer behavior and their inclinations, companies are embracing customer relationship management approaches to achieve optimal real-time outcomes and maintain a competitive edge. Swift transformations in the realms of business intelligence and integrated analytics, along with the adoption of technologies like the Internet of Things (IoT) and artificial intelligence within customer relationship management solutions, are expected to stimulate product refinement and ingenuity among vendors specializing in customer relationship management.

Supplier Intelligence

“What is the nature of the customer relationship management category?”

The global customer relationship management category is consolidated with a few major players dominating the industry. The category has been characterized by a few well-established companies offering comprehensive CRM solutions for businesses of all sizes. These companies account for large market shares and provide a wide range of CRM functionalities, from basic contact management to more advanced features like sales automation, marketing automation, customer service management, and analytics.

The suppliers in the CRM category include technology providers, software developers, and data storage providers. There are numerous suppliers available, and CRM companies often have the ability to switch between them relatively easily, reducing the supplier's bargaining power. However, for certain specialized components or technologies, supplier power might be higher. For instance, if a CRM company relies heavily on a specific data analytics tool, the supplier of that tool could have more leverage.

Barriers to entry for new entrants can be moderate to high depending on the type of advanced technology, data management, and established customer relationship capabilities required. However, the cloud-based nature of modern CRM solutions can lower some barriers. Large companies already in the software or technology space may have the resources to enter, but building a competitive CRM solution requires substantial investment and expertise.

Key suppliers covered in the category:

• Salesforce, Inc.

• Pipedrive

• HubSpot, Inc.

• Zoho Corporation Pvt. Ltd.

• Nutshell

• Oracle

• Insightly, Inc.

• Monday.com

• Freshworks Inc.

• Nextiva

Pricing and Cost Intelligence

“What are some of the major cost components in the category? How are these components impacting the category?”

Labor cost, staff training cost, software implementation, technical support, licensing, maintenance, security and compliance, additional service charges, and others are the cost components involved in the development of customer relationship management software. Because projects can encompass a broad spectrum, their costs can also exhibit significant fluctuations. Primarily, it depends on the nature of the CRM to be built, features and add-ons to be included, the complexity of the project, the user count it targets, and additional costs. The typical cost of developing a CRM application can be as low as USD 15,000 or as high as USD 70,000. However, developing custom CRM software can range from USD 50,000 to USD 700,000.

Most CRM companies will require customers to buy a minimum quantity of CRM user licenses together with their software package. This range typically spans from 7 to 20 users, and an annual payment is requested for the license renewal. While a few CRM providers might stipulate a minimum three-year contract, this is not as widespread. Generally, if a company purchases a CRM with 10 user licenses, the expenditure will likely fall between USD 6,000 and USD 16,200. The actual cost depends on the chosen CRM and any extra features that may be needed.

The following chart indicates an approximate cost breakdown of developing CRM software.

Approximate CRM development cost breakdown

In most cases, the cost of cloud-based CRM systems depends on the user count and required features. This pricing approach is highly efficient in terms of initial investment and offers remarkable flexibility. It allows easy expansion and the addition of users as the business expands.

The report provides a detailed analysis of the cost structure of customer relationship management and the pricing models adopted by prominent suppliers in this category.

Sourcing Intelligence

“What are some of the best sourcing practices considered for customer relationship management?”

North America is the major region that dominated the category with more than 40% share in 2022. The rising adoption of CRM solutions by enterprises that rely on the use of advanced technologies is expected to drive the demand for the category across the region. In North America, the hourly rate of a frontend developer is between USD 70 to USD 90, a backend developer ranges from USD 75 to USD 95, a UI/UX designer is between USD 50 to USD 70, and an IOS developer rate is between USD 80 to USD 100.

The growth of the e-commerce sector in Asian nations, including India, is expected to fuel the need for CRM solutions. Additionally, the ongoing increase in the number of small and medium-sized businesses (SMBs) in countries like India underscores the importance of integrating customer relationship management solutions into their strategies to boost both local and global business endeavors.

IT Spending in India (USD Billion), 2022

Companies are subject to the EU-U.S. Privacy Shield Framework which requires the companies in the data privacy framework to comply with a number of data security and privacy principles to transfer information from the European Union to the U.S.

“The full services outsourcing model envisages the client outsourcing the complete operations/manufacturing to single or multiple companies.”

Developing CRM software and training employees to maintain friendly relationships with customers can be a hectic, and time-consuming task to perform within the team. Outsourcing software development can be the best customer relationship management sourcing intelligence strategy and offer advantages, as a proficient outsourcing partner would try his best to transform the business needs into concrete outcomes. Additionally, businesses could tap into the skills and resourcefulness of the service provider, further enhancing its capabilities. Additionally, outsourcing can improve efficiency, and quality of customer relations, reduce overall expenditure, and improve the management of customer information.

The report also provides details regarding day one, quick wins, portfolio analysis, key negotiation strategies of key suppliers, and low-cost/best-cost sourcing analysis. 

Customer Relationship Management Procurement Intelligence Report Scope