CRM: The History & Evolution of CRM

Customer relationship management (CRM) is a relatively recent term, but managing client data has been a practice for decades. The early days of CRM were primarily concerned with keeping track of clients on paper. However, continuous changes in business processes led to the CRM that we have today.

Despite advancements in CRM, the goal has stayed the same: to make it easy for businesses to keep track of their customers and manage their relationships.

This article will help us understand more about the beginnings of CRM to how much it has evolved into these modern-day operations. Let’s take a look at the history and evolution of CRM.

What is CRM?

Customer relationship management (CRM) is a business technology that focuses on managing all of your company’s customer and potential consumer interactions. The aim is straightforward: Enhance corporate connections. A CRM system aids in the maintenance of contact with consumers, the optimization of procedures, and increased profits for businesses.

When discussing CRM, people usually talk about a CRM system, which is software that aids with contact management, sales management, productivity, and other functions.

A CRM system helps you focus on your organization’s connections with individual people — clients, service users, coworkers, and suppliers — during the whole lifecycle of those relationships, from finding new consumers to keeping them happy and loyal.

What is the origin of CRM?

The term Customer Relational Management (CRM) was coined in the early 1970s when management at business units realized it would be better to be customer emphatic rather than product emphatic. This wise attention is what gave rise to CRM. ‘The primary business of every firm is to create and retain customers,’ says Peter Drucker, a famous writer, and management consultant. Traditionally, each transaction was recorded on paper, reliant on goodwill, which caused delays in attracting clients.

Customers used to be pleased with hardworking salespeople who offered new goods and services to attract more consumers; they were prepared to work longer hours for greater client acquisition to expand their company. It resulted in some level of customer delight and loyalty, but there was no connection or tie between the two to continue with future business effectively. Previously, dealing with customers was simple because it was a one-to-one situation without any defined process.

The approach, however, was unsuccessful due to mounting problems in communication. Due to dependence on new strategies and technologies in the global market and a vast degree of competition in business, the technique had to be altered from reactive to proactive. 

The origin of CRM turned out to be a simple move for suppliers and customers as they started t reap its benefits. Customer relationship management (CRM) emerged as a set of procedures for managing client interactions that extend beyond the company.

Who invented CRM?

Mike Sullivan and Mitch Muhney created “ACT!” in 1987 as the first CRM software. It was essentially a digital Rolodex that allowed customers to manage and store their entire customer lifecycle information. Features like lead scoring, segmentation, automated prospecting, and more didn’t exist in the ’80s. With its usage of Customer Relationship Management software, Act! demonstrated the advantages of scalable software that utilizes consumer information to help a firm better manage its connections.

At that time, CRM was a relatively new term. It was only in the 1990s that people started employing it. Sales automation, enterprise resource planning, and marketing tools were added to the software’s contact management functions, and the first CRM systems emerged.

What are the stages of CRM evolution?

There are eight significant stages in the evolution of CRM. They are as follows:

1. The Rolodex’s Development (the 1950s)

2. Database Marketing And Digital Rolodexes (the 1980S)

3. Sales Force Automation (1993)

4. Invention of the term CRM (1995)

5. The first mobile CRM system in the world (the Late 1990s)

6. Cloud Based CRM (2007)

7. Social CRM (2008)

8. Artificial Intelligence And CRM

1. The Rolodex’s Development (the 1950s)

It all started with the Rolodex, a card index system used to store customer contact information that was invented in the 1950s.

The Rolodex is one of the first methods for organizations to store contact information for clients, invented by Danish engineer Hildaur Neilsen in 1956. The Rolodex is a desk gadget that houses a collection of index cards and business cards people can spin and turn through.

Many businesses used Rolodex in the 1950s to keep track of, add, change, and store their customers’ information.

2. Database Marketing And Digital Rolodexes (the 1980S)

The 1980s saw the development of a method to use customer information gathered through database marketing. The technique of contacting clients in their database and offering them products or services is known as database marketing. Most of these were generated by direct mail, where brochures and product catalogs are sent to customers to get them to buy something.

Toward the latter half of the decade, outbound sales calls became more prevalent among businesses. Computers became more accessible to organizations during this period, allowing them to file and manage customer information in a digital format.

In 1987, Conductor Software released the first contact management software. The program, called ACT! (meaning “Activity Control Technology”), was initially designed for the manufacturing sector to keep track of customer and prospect information in a single database.

3. Sales Force Automation (1993)

After database marketing and the first contact management software debuted, new technologies were created to enhance managing customer data. It provided the basis for sales force automation (SFA), pioneered by businessman and technologist Tom Siebel.

Siebel Systems, founded in 1993, initially produced sales automation solutions and has since expanded to provide marketing and customer service applications. At the time, Siebel Systems was the market leader and most widely used sales force automation system provider.

4. Invention of the term CRM (1995)

In 1995, software company Siebel Systems coined the term CRM (customer relationship management). The concept of CRM took off soon after, and various software vendors began offering their solutions.

During the last several decades, it has evolved out of various other business programs, and during that time, the CRM industry as a whole has seen significant improvements and disruptions.

5. The first mobile CRM system in the world (the Late 1990s)

In 1997, PDA devices became more prevalent, and people began using them for tasks such as email and calendar management. It led to the development of the first mobile CRM system in the world, called Mobile Sales Assistant (MSA), created by a company called Salesforce.

MSA allowed salespeople to access customer information stored in a central database while they were on the go. It was a game-changer for salespeople, who no longer had to be tied to their desks to do their jobs.

In 1999, Salesforce.com, a popular CRM software, was launched. It was created to provide software through a new business model called software as a service (SaaS) while the internet was still in its infancy. Salesforce planned to eliminate expensive up-front and maintenance expenses and complicated system implementations. Salesforce would eventually take over this sector to become the world’s largest CRM software supplier.

6. Cloud Based CRM (2007)

In the 2000s, Salesforce’s introduction of internet-based applications was a huge success. It was hailed as a breakthrough since it allowed users to access sales and customer data from any connected device.

In 2004, when computer scientists Clint Oram, John Roberts, and Jacob Taylor were working on a project called Sugar Open Source, they made it possible for businesses to create a free, open-source customer relationship management (CRM) program.

They used their prior experience at IBM and Hewlett-Packard to build and host the software on SourceForge, a repository for free and open-source applications. As a result of this work, Oram et al. formed SugarCRM later that year and made the first version of Sugar Open Source publicly available.

The software was downloaded 5,000 times in the first month.

7. Social CRM (2008)

The rise of social media in the early 21st century led to the development of social CRM (SCRM). SCRM is a combination of social media and traditional CRM tools that helps businesses engage with customers and prospects through social media channels.

In 2008, Salesforce.com acquired Jigsaw, a crowdsourced data provider, for $175 million. The acquisition was a way for Salesforce to enter the social CRM space.

Later that year, they also launched Radian6, a social media monitoring tool that helps businesses track and measure online conversations.

8. Artificial Intelligence And CRM

Artificial intelligence (AI) has recently begun to play a role in CRM. AI can be used for lead scoring, identifying customer needs, and providing recommendations.

Today’s businesses confront the most challenging problem of managing data consistent with consumer requirements. The reason for this condition is the interaction between consumers, which generates more data.

There are methods to manage such situations and turn them into opportunities with the help of cutting-edge technologies. As a result, artificial intelligence and CRM integration are excellent answers. Artificial intelligence makes it simple to determine user requirements and behavior. As a result, it’s helpful in the sales and marketing industry.

CRM has come a long way since its inception in the 1950s. What started as a simple Rolodex has evolved into a complex system that helps businesses manage customer data and engagement.

The future of CRM looks bright, with new technologies such as artificial intelligence beginning to play a role in the field. As data management becomes more complex, CRM will continue evolving to meet businesses’ and consumers’ needs.