3 min read

History of Customer Relationship Management

Customer relationship development
from paper stacks to digital age
Table of Contents

The history of CRM is not very long. Although companies have managed customer relationships for decades, it has never been truly organized.

When salesman A dealt with customer A, then salesman B had no knowledge of customer A. All information and correspondance was on papers or post-it notes on salesman A table. Therefore, it was very hard to have an overview of all the customers.

This was the situation until the first computer-based programs were developed.

After the release of computer-based programs, companies started to put more emphasis on managing customer relations.

How it all began …

Until the 1980’s all customer information was stored in lists and folders. This made retrieving data a long and cumbersome task.
Since then, database marketing emerged and replaced the list and folder system. It was known as a new and improved form of direct marketing.

Robert and Kate Kestnbaum were the pioneers behind the new and improved way of keeping track of customer data – database marketing.
They introduced new metrics and methods, such as Customer Lifetime Value, econometrics and financial modelling into marketing strategies. This made it possible to not only gather information about potential clients, but also analyze the data in order to categorize it.

Having more information about a customer and an analysis on their behaviour as a customer, increased the company’s chances of getting an order significantly.

In the end of 1980’s several companies like Act! and Goldmine started to build upon the existing database marketing. A new development – Contact Management Software (CMS) was introduced. It quickly became very popular.

… the birth of an acronym

Relationship marketing. 1990’s were the decade where companies started to realize the importance of creating and maintaining good customer relations. This was the time where loyalty programs, such as frequent flyer miles, credit card points, client cards, were created. This set the base for collecting customer data to give existing customers a better experience and inviting new customers to buy.

In the start of the 1990’s companies like Brock Control Systems started to mold the existing contact management software towards improved sales force automation (SFA). This new system has automated the features of database marketing and combined them with elements from CMS to create a more efficient sales tool.

By the year 1995, both SFA and CMS systems had evolved into a system very similar to the CRM software that is available today, but there was no name….

Names, such as Enterprise Customer Management (ECM) used by Yankee Group (acquired by 451 research in 2013), Customer Information System (CIS) used by Aberdeen Group and Customer Relationship Management (CRM) used by Gartner, were the most popular.

The three big players fought hard for their names, but in the end CRM won the title and the new relationship-oriented industry got a name.

The age of Customer Relationship Management

The end of 1990’s and start of a new century was the high-time for the new industry. With the internet and computers quickly becoming household things, competition on the CRM software market increased significantly.

Instead of being a static database, CRM was developing into a way to continuously understand the needs and behaviour of different customers. Different folders, functions and customizable add-ons made it now possible to break the incoming data into smaller portions. This made it possible to create statistics and other analyses on either certain segments or customer groups.

With implementing internet into the system, CRM became more functional and easier for users to use. It quickly became a tool that improved the cooperation and made communication more efficient between departments like sales, marketing and customer service.

In 2007 Salesforce took the familiar system a step further into the future. Force.com introduced a cloud-based CRM that was as customizable and efficient as the system that was developed for on-premise use.

Since then, the innovations kept on coming. Shortly after welcoming cloud-based systems to the CRM world, social medias joined in and Social CRM was born.

The future seems bright to the system that started off as stacks of paper lists.

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