Customer Analytics Market Share, Growth, Opportunities 2031

Report Description

Customer Analytics Market Outlook 2031

The global customer analytics market size was USD 11.40 Billion in 2022 and is likely to reach USD 51.97 Billion by 2031, expanding at a CAGR of 18.35% during 2023–2031. The market growth is attributed to the increasing need to understand customer buying behavior and rising prevalence of social media marketing.

Increasing prevalence of social media marketing is expected to boost the demand for customer analytics. Businesses use customer analytics for social media marketing to see how customers respond to their social media marketing campaign and help businesses understand various types of social media content to communicate with their audience. This helps them to build, adapt, and shape their social media marketing strategy accordingly.

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Customer analytics guides businesses by analyzing customer-related data, such as behavior, spending patterns, culture, and others. It also involves predictive analytics that helps businesses make better decisions on market segmentation and others. It is majorly adopted by banking, financial services, insurance (BFSI), retail and e-commerce, telecommunications and it, energy and utilities, manufacturing, transportation and logistics, and other industries.

Growing need to understand customer buying behavior is driving the market. Businesses are utilizing customer analytics to understand customer buying behavior to make better decisions about their products and services. Businesses adapt their offerings to suit the needs and wants of their target market by understanding customer buying behavior and spending patterns.

The COVID-19 pandemic impeded the demand for customer analytics. The abrupt rise in COVID-19 infection and government preventive measures such as lockdowns and social distancing, hampered the global market, which hindered the demand for customer analytics, as it is majorly adopted by marketers for marketing purposes.

Moreover, the disruption in the supply chain, due to the closure of international borders and suspension of trade barriers, affected the clothing industry, which restricted the market, as customer analytics are widely adopted in the clothing industry to enhance their sales by gaining insights about customers.

Impact of Artificial Intelligence on Customer Analytics

The integration of artificial intelligence in customer analytics creates opportunities in the market. AI-powered customer analytics software reduces customer churning by offering personalized customer experiences through analyzing a myriad of customer data points, including purchase history, browsing behaviour, and social media interactions.

Streaming platforms, such as Spotify, Amazon, Netflix, and others, are utilizing AI-enabled customer analytics software to recommend movies and TV shows based on the viewing history of users, keeping them engaged and boosting retention. Thus, AI in customer analytics is creating opportunities in the market.

Customer Analytics Market Dynamics

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Major Drivers

Growing apparel industry is anticipated to boost the demand for customer analytics. Businesses in the apparel industry adopt customer analytics to understand customer behavior to target marketing campaigns effectively. Customer analytics increases sales and improves customer retention of businesses in the apparel industry, which is projected to boost their demand in the apparel industry. For instance,

• As per a report, the apparel market was valued at USD 1.53 trillion in 2022 and is forecasted to reach USD 1.7 trillion by the end of 2023. 

Existing Restraints

Privacy concerns associated with customer analytics are expected to restrict the market. Businesses perform customer analytics by collecting a large amount of data, including personal information about their customers, which raises concerns about privacy and data security that lead to legal or regulatory issues. Moreover, complexity involved in customer analytics is impeding the market, as it requires collection and analysis of large amounts of data, which needs a certain level of expertise, encouraging small and mid-size enterprises to reduce their adoption.

Emerging Opportunities

Increasing marketing activities in several industries is creating opportunities in the market. Companies adopt customer analytics in their marketing activities to analyze and discover audiences for their products and solutions. Moreover, rising investment in R&D activities by key market players to develop and introduce customer analytics software or customer data platforms to collect and analyze customer buying behavior and spending patterns creates a lucrative opportunity in the market. For instance,

• On May 25, 2022, Amplitude Inc., a US-based public company that develops digital analytics software, launched Amplitude CDP, the first insights-driven customer data platform (CDP). It does not require any third-party analytics solutions for the collection and analysis of data. It helps customers become operationally efficient, enables better and faster decision-making, and increases customer engagement.

Scope of the Customer Analytics Market Report

The report on the market includes an assessment of the market, trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Market Segment Insights

Component Segment Analysis

Based on component, the customer analytics market is bifurcated into solutions and services. The services segment held a large share of the market in 2022, due to its ability to help businesses with customer acquisition. The customer analytics service offers valuable data to organizations and businesses about customers, which helps them in acquiring new customers.

Customer analytics service provides personalized marketing campaigns, which helps businesses to improve and increase conversions of customers.

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Deployment Mode Segment Analysis

In terms of deployment mode, the global market is segregated into cloud and on-premises. The cloud segment dominated the market in 2022 and is projected to continue its dominance through the projection period, owing to centralized management and cost-saving.

Cloud in customer analytics involves the deployment of scalable cloud computing with powerful analytic software to identify patterns in customer data and extract new insights about customers. This offers companies better use of physical resources, reducing operating expenses. This results in boosting the demand for cloud in customer analytics. The physical server is anticipated to grow at a quick pace over the projection period, due to high control and security.

On-premises customer analytics offer enhanced security and control to companies, as they are physically present on site and are managed directly. It offers continuous access to critical business information by reducing lags, as it does not share processors or other components over the cloud with other users, which encourages their adoption.

End-user Segment Analysis

Based on end-users, the customer analytics market is categorized into banking, financial services, and insurance (BFSI), retail and e-commerce, telecommunications and IT, energy and utilities, manufacturing, transportation and logistics, government and defense, healthcare and life sciences, media and entertainment, travel and hospitality and others.

The retail and e-commerce segment accounted for a major share of the market in 2022, due to the increasing trend of online shopping and rising disposable income. Retail and e-commerce sectors widely use customer analytics to push out relevant offers to each customer at every step of their purchase. Customer analytics in retail predict demand, guide managers to buy and allocate sufficient inventory to meet that demand, and help understand customer behaviors. This encourages retail businesses to adopt customer analytics into their business.

The banking, financial services, and insurance (BFSI) segment is anticipated to grow at a robust pace in the coming years, owing to rising industrialization and increasing consumer demand. The BFSI sector uses customer analytics to identify and rate individual customers who are at risk of committing fraud. Moreover, it provides customer understanding to streamline banking products and services, which increases their adoption in banking, financial services, and insurance.

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Regional Outlook

In terms of region, the customer market analytics market is divided into Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. North America held a large share of the market in 2022, due to the increasing demand for big data projects and the presence of established market players, such as Amplitude, Inc., Alphabet Inc., Microsoft, Oracle, and others.

Moreover, increasing demand for online shopping in the region is propelling the demand for customer analytics, as it is used in online shopping to understand customers and their habits, needs, behaviors, likes, and dislikes. For instance,

• As per a report, the number of users in the E-commerce market in the US was 268.2 million in 2022 and is projected to reach 289.91 million by 2027.

The market in Asia Pacific is anticipated to expand at a high CAGR during the forecast period, owing to rapid technological advancement and increasing per capita income. Moreover, the growing apparel industry in the region is boosting the demand for customer analytics, as apparel businesses use customer analytics to plan multiple lines and develop an optimum product mix to achieve maximum sales and reduce inventory waste. For instance,

• As per a report, the apparel market in Asia Pacific amounted to USD 672.70 billion in 2023 and is likely to expand at a CAGR of 3.49%.

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