Customer relationship management (CRM) platforms for small and medium enterprises (SMEs) form a sub-segment of the larger CRM market and cater to smaller companies (less than 500 employees). These SME-focused CRM platforms (offered mostly by relatively small vendors) are differentiated by their more affordable pricing and many free features, focus on essentials, basic customization, and simplicity. Some SME CRM vendors also provide social media integration, automation, and extensive customer support.
Considerable market opportunity remains for SME CRM providers because SMEs account for more than 99.9% of all businesses, 44% of economic activity, 47% of the labor force in the US, and have a comparatively lower market penetration. SME CRM penetration for SMEs stands at around 44% versus around 91% for regular CRMs for all enterprises with more than 10 employees.
Majority of the incumbents focus on the collaborative segment and have entered the SME CRM space through in-house development. While most of the disruptors are pure plays, there are a few that operate in multiple segments, such as Pipedrive and Insightly. Overall, the majority of the players are involved in the operational and collaborative segments, as these are areas in which SMEs would require the most help.
The incumbents consist of leading enterprise customer relationship management (CRM) players Salesforce Essentials, Microsoft Dynamics, Oracle, and Zoho. The incumbent list also includes Hubspot, one of the leading and oldest SME CRM system providers, which had a user base of more than 194,000 as of November 2023.
Although user data from the incumbent operators is not readily available, it appears that Microsoft Dynamics is considered the leader within the SME CRM market, given its integration with popular business applications.
One of the leading enterprise players, SAP, entered the SME space in 2018 by launching the SAP Sales Cloud platform, which was formed by combining three acquisitions made by SAP since 2013—Hybris in 2013, Gigya in 2017, and CallidusCloud in 2018. However, in September 2020, two years after launch, SAP announced it would be exiting the CRM space, conceding its 5.3% market share to existing leader Salesforce. Salesforce has since expanded its presence in the SME CRM space with the launch of Salesforce Easy, which provides a range of solutions across sales, email outreach, and customer service functions as well as access to an app ecosystem.