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CRM marketplace could undergo new competition

While the CRM market has long been dominated by a small cohort of established providers, new niche players could shake up the landscape.

When most people think about the key players in the CRM marketplace, the conversation usually centers on the usual suspects.

For those who aren't aware of these principal CRM players, they are Salesforce, Oracle-Siebel, SAP-hybris and Microsoft Dynamics. A couple of recent acquisitions have brought attention to new market entrants and the potential for the CRM market to become even more competitive.

To date, Salesforce, Oracle and Microsoft have dominated the market, with Salesforce in a clear lead. But other, more niche entrants are taking swipes at the establishment.

Gartner Inc. estimates the worldwide CRM market in 2014 equaled $23.2 billion and the top 10 CRM vendors accounted for more than 60% of the market share, or $14 billion. Salesforce is the worldwide market leader with 18.4% market share, followed by SAP with 12.1% and Oracle with 9.1% market share.

CRM vendors

Although these companies dominate the CRM marketplace, they haven't precluded other companies from seeking a share of the growing segment. In fact, there are many existing CRM offerings embedded in other business services, which have the potential to become bigger players in the CRM market.

CRM marketplace shakeups on horizon

Two recent acquisitions are aimed at pursuing this opportunity. The first is Zeta Interactive's purchase of the CRM division of eBay Enterprise for an estimated $80 million to $90 million in cash and stock.

Zeta Interactive is a multichannel marketing services company that uses data management to help clients track, manage and monetize customer relationships. The company already offers its own rudimentary CRM technology, which will be enhanced by eBay's ability to send automated email marketing campaigns and perform other important customer engagement functions via the cloud.

Rather than try to dislodge Salesforce, SAP is suggesting that businesses need more than a CRM application alone to succeed.

The second recent CRM acquisition was by Endurance International Group, which announced its intent to purchase Constant Contact for approximately $1.1 billion. Endurance provides Web hosting, e-commerce, e-marketing and mobile business services and tools worldwide. Constant Contact is primarily an email marketing platform provider that has built CRM capabilities into its service to enable its users to better manage their customer relationships. Both companies are focused on small businesses that want to improve their marketing, sales and service capabilities.

Zeta Interactive is a brand management company. Endurance International Group is a hosting services company. Neither is attempting to dislodge Salesforce, SAP, Oracle or Microsoft as CRM market leaders. However, they are stealing a page from the CRM leaders' playbooks.

Salesforce, SAP, Oracle and Microsoft are seeking to become one-stop shops for their customers' software needs by providing a broader portfolio of inter-related applications. Zeta and Endurance are making their own moves to bolster their core capabilities by adding more CRM functionality to their service suites so they can satisfy their customers' desire to work with a strategic source that can address their widening requirements.

While the top CRM players command 60% of the market, the remaining 40% still represents a tremendous opportunity, given the double-digit growth major research firms have predicted.

Many companies have niche CRM capabilities; others may try to gain a footing in the market via acquisition by following Zeta Interactive and Endurance International's examples. The recent acquisitions clearly illustrate that there is still plenty of room in the market to provide CRM technologies to meet specific business needs.

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