History of Customer Relationship Management (CRM).
Let me tell you, History is not always a dull, monotonous subject.
However I never understood – what is the point of knowing King X fought with King Y 1000 years ago! 🙂
Here is our king – CRM.
It is good to know how CRM is evolved.
I am telling you, History of CRM is not boring like our History subject.
Over the past few decades, CRM have undergone sea-changes – from old ledger days to today’s Cloud/SaaS based CRM.
So, let’s start the fun!
History Of CRM:
Beginning Of Journey – The Ledger
CRM started its journey from those old days when businesses used paper and pen to note down basic customer details and sales information.
Late 1950s – The Rolodex
Do you remember a device with rotating wheel fitted with removable cards?
Yes, that’s a Rolodex – a rotating file device to store contact information.
Rolling + Index = Rolodex
It holds special kind of index cards that can be removed or added to the rotating spindle. Each card contains details about a person or company.
In 1956, Danish engineer Hildaur Neilsen invented Rolodex, an improved version of Wheeldex. (Source: Wikipedia).
It made life bit easier than ledger as business could easily locate customers, update details or add new customers.
Early 1970s – Mainframe System
Digitization started with Mainframe system.
Mainframe digitized all manual files to save storage space, organize customer data and facilitate quick search.
But mainly large organizations used it for critical applications and bulk data processing such as consumer statistics, enterprise resource planning and transaction processing.
Though mainframe was invented in late 1950s, there was no user interface till early 1970s.
In earlier days, data was mainly uploaded in batch mode in Mainframe system using punched cards, paper tape, or magnetic tape.
By early 1970s, many mainframes got interactive user interfaces. It helped users to work simultaneously along with batch processing.
IBM played a major role in producing mainframe system.
Since inception, mainframe system has gone through many ups and downs. Modern mainframe can run multiple different instances of operating systems at the same time. This technique of virtual machines enables applications to run as if they were on physically distinct computers.
Many organizations, mainly financial and airline sector, still use it for back end transaction processing.
In 2015, IBM launched its most recent generation mainframe – IBM z13.
Early 1980s – Database Marketing
Database marketing played a major role in history of CRM software. It was the first big move to integrate customers with sales strategy.
Database marketing was improved form of direct marketing. Organizations started to collect and analyze customer details to gain better insight about customers’ behavior.
Marketing professionals used to communicate directly with customers or prospects for higher conversion. It helped business to send personalized communications to increase sales.
But it was more like a one way communication. There was no way to track customers’ responses.
Mainly credit goes to Robert D. Bob and Kate Kestnbaum who pioneered database marketing. They developed new metrics including customer lifetime value and applying financial modelling to marketing strategies.
In 1967, they founded a consulting firm ‘Kestnbaum & Co‘. This was the training ground for many of database marketing leaders and thinkers like Robert Blattberg, Rick Courtheaux and Robert Shaw.(Source: Wikipedia).
In 1980s, Kestnbaum collaborated with Robert Shaw and developed marketing database for many big organizations like BT (20 million customers), BA (10 million), Barclays (13 million).
Shaw introduced new features into the Kestnbaum approach such as
- Telephone and field sales channel automation
- Contact strategy optimization
- Campaign management
- Marketing resource management
- Marketing accountability and analytics (Source: Wikipedia)
Later these features have been incorporated into CRM.
Late 1980s – Contact Management Software
YES! – acronym for “Yes, Everybody Sells!”.
In 1986, Mike Muhney and Pat Sullivan founded Conductor Software in Carrollton, Texas. They started a new project named as ‘YES!’. This was later known as ‘ACT!’.
In 1987, Conductor Software lunched first contact management software – ACT!.
Original name was Activity Control Technology and then changed to Automated Contact Tracking.
It was the first contact management software. Later Goldmine and other vendors also released CMS applications.
CMS was a digital rolodex.
It helped business to store and manage customer data efficiently. It also connected various business units like sales, marketing, service mostly by back end jobs.
To use CMS system, companies had to invest a lot in software and hardware maintenance, dedicated IT employees.
Early 1990s – Sales Force Automation
In early 90s, database marketing transformed into Sales Force Automation (SFA). It enabled companies to track leads, contacts, opportunities, quotes and many other sales related business functionalities efficiently.
Sales Force Automation = Contact Management System + Lead Tracking System
Those days, Siebel was the most popular SFA software in the market. It played an important role in evolution of Customer Relationship Management.
In 1993, Thomas Siebel and Patricia House founded Siebel Inc.
In 1995, Siebel Inc. released first Siebel Sales Enterprise software for sales force automation.
Today SFA is a part of CRM beside marketing and customer service.
1995 – Birth Of CRM Acronym
In 1995, Customer Relationship Management (CRM) is coined.
Who invented that name?
That’s a debatable matter.
Mostly credit goes to technology research company Gartner. But some point to Tom Siebel also.
Few other names were also considered like Customer Information Management (CIM), Customer Information System (CIS), Enterprise Customer Management (ECM). But CRM stood out and accepted by majority.
Late 1990s – CRM On Mobile
ERP vendors like Oracle, SAP entered into CRM market via acquisitions or in-house development.
In 1997, Siebel made two acquisitions – InterActive WorkPlace Inc.and Nomadic Systems Inc. It became the fastest growing company in United States.
In 1999, Siebel released first mobile CRM – Siebel Sales handheld.
Oracle, SAP, Peoplesoft also launched mobile version of their CRM applications.
Mobile adoption was not so popular those days due to lack of devices and network connectivity.
In 1999, former Oracle executive Marc Benioff and 3 others (Parker Harris, Dave Moellenhoff, and Frank Dominguez) formed Salesforce.com, a company specialized in software as a service (SaaS). (Source: Wikipedia )
A new era of CRM began…
2000 – Y2K Strike
Like other software applications, CRM was also hit hard by dot-com bubble.
Oracle experienced a loss in licenses of over 25%. Siebel reported first decline in quarterly revenue.
Cloud based software industries were hit hardest as companies stopped spending on dot.com technology.
2000s – Acquisition And Innovation
Post Y2K, many new vendors entered into CRM market.
In 2001, Microsoft acquired Navision and released Dynamic CRM in 2003. The main benefit of this CRM is its strong integration with other Microsoft products like Outlook, MS Word.
In 2006, Oracle acquired Siebel in a deal worth $5.8 billion.
In 2007, Salesforce.com launched force.com, cloud based application development environment. This was a major step to push CRM in the cloud – Software As A Service.
Force.com is a platform as a service (PaaS) that allows developers to create multi-tenant add-on applications.
In 2008, CRM turned into Social CRM. Companies started to track customers’ social behavior more closely to give better customer experience.
CRM has completed a long journey from ledger to SaaS to server customers better.
Today’s CRM is more social and mobile. Companies have shifted their focus from Transaction to Interaction.
With help of big data, CRM is now more focused on understanding customer data. It helps businesses to run targeted campaign, reduce sales time, increase customer experience and loyalty, predict ROI and customer response.
Today we have more than 100 CRM applications from different vendors.
Though Salesforce, Oracle, SAP and Microsoft collectively hold almost 50% of CRM market share, few other niche players are –
- Sugar CRM
As per Gartner, worldwide CRM revenue will touch $36.5B by 2017, up from $13.9B in 2010.
In future, we will see better integration among CRM, Big data and IoT.
Now it is your turn. Please share what do you think about history of CRM software.
Did we miss any?
Where CRM is heading in near future?
And a difficult question – who invented CRM ? 😀