The opportunities for CRM software in Latin America

Steven Loeb · March 29, 2024 · Short URL:

Companies like HubSpot, Salesforce, and Microsoft have been making their way into the region

Small and medium sized businesses (SMBs) face a myriad of challenges, especially when it comes to the economy, the labor market, and managing supply chain issues related to the pandemic but also to the unprecedented government spending levels that have doubled prices, from gas to groceries to labor to mortgages. Out-of-control government spending is not a friend to the small businessman. 

It's no wonder small businesses are quickly adopting new technologies. In a recent survey, 75% of small businesses said they use AI tools, with nearly half of them surveyed saying they just adopted such tools in the last six months. This is quite a big demand uptake, given where small businesses have been, particularly with AI tools or technology in general designed to help small businesses market themselves and create a sales funnel. This software is referred to as CRM or customer relationship management. 

Currently, few SMBs in the U.S. actually use them: a survey from January found that only 25% of small to medium businesses currently use CRMs, with another 10% considering implementation. Customer relationship management (CRM) tools help SMBs understand their customers, including their buying habits and how they like to be communicated with, as a way to keep them loyal, which can be especially difficult when prices are going up. 

These tools are not exactly new (two of the biggest companies in the space, Salesforce and HubSpot, were founded in 1999 and 2005, respectively). While adoption isn't significant, of those who do use CRM, 61% reported improved retention, while 14% said their cost per conversion decreased when they implemented CRMs.

That means there's a big opportunity in the U.S. alone, as well as in Spanish speaking countries, particularly in Latin America (LATAM), where inflation was 8.2% in 2022, with labor productivity declining and real average wages stagnating. In that kind of economic environment CRM can be a lifesaver for small businesses. 

Revenue in the CRM market in South America is projected to reach $1.96 billion in 2024 and $2.93 billion by 2028. Compare that to North America, where revenue in the CRM market is projected to reach $48.05 billion in 2024 and $69.13 billion by 2028. That's just 4% of the North American market. 

The adoption rate is low, but that doesn't mean there hasn't been high awareness of CRM in LATAM for nearly a decade: as part of HubSpot’s global survey on the state of inbound marketing in 2015, the company surveyed 2,700 marketers in Latin America and found that 86% were familiar with inbound marketing, and 60% said they practiced. Companies in Latin America using inbound techniques spent 63% less to acquire new leads than those that didn't.

So what's standing in the way of adoption? And why is CRM adoption still lagging so far behind in the region? Partly for some of the same economic issues that America has faced, according to Statista.

"South America has experienced economic instability in recent years, with many countries facing high inflation and political uncertainty," analysts for Statista wrote in October, while also pointing out some of the conditions that may lend themselves to higher adoption going forward, including a growing middle class and a large population of young people, which presents opportunities for businesses that can effectively target these demographics.

"As businesses in South America become more focused on customer satisfaction and engagement, the demand for CRM software is likely to continue growing."

The analysts specifically pointed to Brazil as being the largest market for CRM software in South America, along with Argentina, Chile, and Colombia.

"One trend that is emerging is the integration of artificial intelligence (AI) and machine learning (ML) capabilities into CRM software. This allows businesses to automate certain processes and gain insights into customer behavior and preferences. Another trend is the adoption of mobile CRM solutions, which allow sales teams to access customer information and manage interactions on-the-go," they wrote. 

CRM effort in LATAM

A number of large CRM companies have been making strides in Latam in recent years.  Salesforce, for example, has locations in Argentina, Brazil, Colombia, and Mexico. 

HubSpot has been in Latin America since 2018, when it launched a new headquarters in Bogotá, Colombia, as its entryway into the region.

"Colombia is a country that has great talent and that is exactly what we are looking for,” Nataly Kelly, VP of international strategy and operations at HubSpot, said at the time. “It's also very strategically located in the middle of Latin America, which puts us in a great position to service the markets in the North and South."

In 2023, the company introduced “Bootstrap Latin America,” a program designed for startups in the region, providing founders with direct access to discounts on HubSpot’s technological tools for growth, sales management, customer administration, and website creation.

To access the program, startups must be B2B or B2C tech companies headquartered in Latin America, founded within the last five years, have fewer than 25 employees, and cannot currently be associated with any incubator or accelerator.

Upon joining, founders gain access to a free HubSpot account, as well as discounts if they upgrade to more advanced packages, including a 50% discount in the first year and a continuous 25% discount after that.

Microsoft too has been making inroads in LATAM: in 2014, the company expanded availability of its Dynamics CRM software in 54 new markets in Latin America, Europe and Asia Pacific, with "significant new capabilities and marketing, customer care and social listening" in 42 languages.

In Latin America the updated functionalities were made available in Chile, Colombia, Costa Rica, Brazil, Mexico, Peru, Puerto Rico and Trinidad and Tobago in Spanish, Portuguese and English.

"In Latin America (LATAM), Microsoft Dynamics 365 Finance previously supported out-of-box localizations for Brazil and Mexico. Then, in 2023 release wave 1, Microsoft delivered out-of-box localizations for more countries/regions in Latin America," the company wrote last year

In future release waves, we will continue to extend the scope of supported countries/regions in Latin America to address the needs of multiple global and local customers. Eventually, we will deliver out-of-box localizations for a total of 16 LATAM countries/regions." 

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