The Complete History of CRM

There is a misconception that "customer relationship management" or CRM is something new that originated towards the end of the twentieth century. The term may be new, but the practice is as old as trade and even older than money. The first recorded example of trade dates back 20,000 years, during this time obsidian knives were  traded in what is now Papua New Guinea, between islands that had valuable obsidian deposits and those that did not. Obsidian was prized globally in those early times for its suitability for knives and other cutting implements and was traded in early Europe and Asia as well as the Americas.

Take into consideration what was required to be a successful trader and maintain a sustainable business then and now, and you realize that very little has changed over the centuries. Here are 3 things you need to know-

  • Your buyers and sellers in the supply chain
  • their location
  • what they wanted to buy or sell.

Even in Palaeolithic times, there must have been an understanding that it is easier to sell to an existing customer than find a new one, and that it was advantageous to nurture the relationship. We are not sure how this information was stored, whether it was simply committed to memory (where competitors could not access it), or whether some early customer list was maintained. When you consider the risks involved in travelling across the Gobi Desert with camels or taking to the seas in small ships, it makes sense that these early traders were experts in marketing and sales, with excellent customer knowledge.

Where there is Trade, there must be Accounting

Maintaining a recording of who owned what, and who owed what to whom required some form of notation and permanent record, and some form of accounting that has been practiced for thousands of years. Naturally names and locations were part of the accounting records and were the earliest form of a customer database. There would have been some early form of segmentation applied too, probably based on personal wealth and ability to pay. So, when we discuss when the concept of CRM was introduced, we need to be less myopic; CRM started a long, long time ago, that's how successful businesses, governments, and countries arose.

Moving to the Twentieth Century

Fast forward through  the various forms of record-keeping, accounting methods, and devices and jump to the first commercial computers. Automation was eagerly adopted by anyone with record keep concerns and lots of money to spend, starting in the late 1950s and early 1960s. The main focus was on maintaining accounting records, either on accounting machines or computers, in banks, stock exchanges and government departments. As the price of computers decreased dramatically, by the 70s, even small business could afford to join the computing revolution.

The customer list belonged to the accounts department; salespeople kept their own records on index cards, either in a tray or held by a Rolodex, and believe it or not, you can still buy this 1950s invention on Amazon today, maybe there are more Luddites out there than we realize, and maybe we should take them more seriously.

It gradually became apparent that automation could be useful in other areas of the business, especially in sales, and in a few short years, CRM, in its digital format, emerged.

Automating Sales and Marketing.

The beginnings of CRM as we know it started in the 1980s. Robert and Kate Kestnbaum were pioneers of database marketing. Which was a form of direct marketing that analysed the customer database statistically to identify which customers would be most likely to react to a marketing campaign. The concept took off and Kestnbaum, together with Robert Shaw, brought us new concepts and methodologies, ranging from customer lifetime value to channel management. There is a lot of debate about who invented CRM, but, if you take Bob Kestnbaum's contributions to modern marketing and strategy, he probably has earned the crown.

Others who argue when CRM was introduced will suggest that two Texans, Pat Sullivan and Mike Muhney, were the guys who invented CRM, with their product ACT!. Act went through many name changes and acquisitions, but is still around today.While the acronym ACT stood for "Automated Contact Tracking" early in its product life, it could well be regarded as the first automated CRM.

The Emergence of CRM as a Product

Where these pioneers led, there were many early followers, and the 1990s saw many new products that managed customer data. The acronym "SFA" (Sales Force Automation) described these products, that were an amalgamation of database marketing and contact management. One of the early products from a pioneer, Tom Siebel, who was working at Oracle at the time, left to form Siebel and sell his solution, which became the market leader in its day.  The ERP companies also saw an opportunity and the market became very competitive. However, not all companies were offering megalithic and expensive solutions. Companies such as Goldmine (1990) and Maximizer (1987) provided off-the-shelf software that was affordable for small businesses, but had enough features that made them attractive to large multinationals. Both companies are still around today.

By the mid-90s this market skyrocketed into product offers of all shapes and sizes, now known as CRM systems. Customers were spoilt for choice, although aggressive acquisitions made it hard to work out who your vendor would be in a year's time.

Then in 1999, there were two major changes:

  • mobile and e-CRM was offered by companies such as Siebel
  • Salesforce hit the scene with its cloud offering

Electronic and Mobile CRM

Technologic advancements impacted the CRM market with new devices and new channels, both for internal and customer-facing use. When Siebel launched its "Siebel Sales Handheld", the other vendors soon followed suit with products of varying consistency and reliability. Market demand created the need and the vendors were quick to respond.

Software as a Service: Salesforce the Stealth Bomber

Salesforce did not create a great stir when it launched in 1999; most competitors regarded cloud services as a fad and not a good vehicle for CRM. Salesforce's initial attention was directed at small to medium businesses and by the time competitors woke up to the migration of customers to the cloud, Salesforce had become the world's largest vendor of CRM.

CRM in the 21st Century

As of now, the market for new CRM products does not seem to have reached it’s saturation point. New companies continue to come to market with cloud products, while existing vendors have changed their licensing models to offer cloud alternatives to traditional site licenses. The latest shift is the rise of social data and the need to interact with customers on the various social platforms.

Mobile has become even more imperative as an offering with the advent of the smartphone.  The pace of change is so rapid that many vendors are battling to keep abreast of the latest developments, ranging from chatbots to big data and AI.

While it could be expected that CRM products have matured, customers still experience difficulty in achieving successful implementations. This is because they too, are struggling to keep their business models relevant and sustainable in this disruptive age.  

It will be interesting to see what happens next in our turbulent future. Maybe even the phrase "Customer Relationship Management" and its acronym, CRM is due for a change, since it now encompasses much more than it did at it’s inception.

What's in a Name?

There is even a lot of debate about who coined CRM as a term in the first place. Chances are it came from academe or one of the consultancies. Some of the contenders are:-

What is certain is that it was used within some businesses as a new label for sales staff as early as the 1980s, so people who ascribe its origins to the 1990s are a bit off the mark. It does not really matter who coined the name, CRM is here to stay, until it gets replaced with a new acronym more suitable for Industry 4.0

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