Most customer relationship management (CRM) software users take for granted that they can track customers, send mailings, or assign requests to customer service representatives. Users today enjoy CRM systems that are highly accessible, both from a cost and technological point of view. But this was not always the case. TEC analyst Raluca Druta surveys the history and evolution of CRM with a view to defining the CRM of the future.
Customer relationship management (CRM) software today is generally understood as having four main components: sales force automation, marketing automation, customer service and support, and reporting and analytics. Most CRM users take for granted that they can track potential customers, send mass mailings, or assign a customer request to the right customer service representative (CSR). Also, users today enjoy CRM systems that are highly accessible, both from a cost and technological point of view. However, this was not always the case.
In his book CRM in Real Time: Empowering Customer Relationships, Barton J. Goldenberg states, “The CRM industry celebrated its 28th anniversary in 2007. To the best of our knowledge, no CRM software vendors are older than 23” (176). The undertaking of defining CRM must recognize that CRM is relatively young. One must also acknowledge the vibrant evolution of this technology, as it has become a commodity, over the past 30 years.
Early CRM Lacks Module Integration
CRM did not start out as the holistic system now commonly used. Its components developed separately and were further integrated following technological and economic turns. A graphical representation of CRM software history reveals two important technological developments taking place in the 1980s: database marketing and the client/server architecture (Furness).
Both innovations formed the nucleus of future CRM software products. Stemming from Lester Wunderman’s notion of direct marketing, database marketing was a method of product distribution that revolved around “tracking the purchase and payment behavior of customers on a one-to-one basis” (McCorkell, 41). Furthermore, with PCs present on office desks, software providers could envision a CRM technology.
As a result, desktop applications could be sold to organizations whose employees would make use of the customer information stored in databases. Thus, the clients were contacted directly and with specific sales proposals. But information was not stored in a centralized system. The marketing database was stand-alone and not related to contact management products. Those were subsequently developed by vendors such as Conductor Software and Goldmine in the late 80s (Furness).
1990s CRM Takes Shape
The rapid transition from a product-driven ecosystem to a customer-centric ecosystem spurred the development of a CRM philosophy. Greenberg explains:
In the 1978, the manufacturing world dominated the economy. Processes were based on division of labor. […] By 1984, Manufacturing Resource Planning and later its sibling MRPII, made its appearance. […] In the mid 1990s, two profound events occurred[:] first the buying power of baby boomers [and] the Internet revolution. (12)
What Greenberg is suggesting is that the shopping appetite of baby boomers in conjunction with the Internet’s uncensored access to product reviews empowered customers tremendously. Consequently, businesses were no longer in a position to dump just anything and in any way on the consumer’s doorstep. A more cohesive product and strategy were needed.
In the 1990s, as companies such as Conductor Software and Siebel Systems were advancing CRM products that focused on sales force automation (SFA), research firms such as Gartner and META Group were developing CRM-specific terminology. It’s Gartner that coined the term “customer relationship management,” in 1995.
At the turn of the millennium, META Group drew up a viable definition of CRM. Greenberg states: “META Group defined CRM as consisting of operational, analytic, and collaborative subsets. This became the industry standard definition that shaped CRM’s voluptuous form in its earlier incarnations” (6).
Indeed, early CRM providers such as Siebel or PeopleSoft evolved their products to incorporate collaborative modules that complemented their SFA (operational) functionalities. In 1998 Siebel acquired the call center technology of Scopus, and in 1999 PeopleSoft acquired the well-known customer support technology developed by Vantive (Furness).
CRM's Wrong Turns
However targeted the marketing campaigns or direct sales, CRM vendors and pundits realized that they still fell short: the client is more than a name in a database. Technology had to change, and more importantly, the perception of how technology can help CRM as a process was set for a correction. The early enthusiasm for the great capabilities of CRM software—to store and analyze large amounts of customer data—faded. CRM implementations oftentimes stopped after deployment.
Two major factors seemed to slow down CRM’s profitability. Users were not seeing the benefits of adopting CRM, and customers were still treated as deals.
The first factor has as its principal cause decision makers' failure to undrstand that employees interacting with the system need to be involved directly in the system's implementation, possibly even its selection. To this point, Greenberg underlines that CRM should not "simply map to business objectives, but also [fulfill] the needs of individual users" (63).
The second factor—the misrepresentation of customers—was mainly caused by a lack of understanding that clients have feelings. Fournier et al. explain
[A] close look suggests that relationships between companies and consumers are troubled at best. When we talk to people about their lives as consumers, we do not hear praise for their so-called corporate partners. Instead, we hear about the confusing, stressful, insensitive, and manipulative marketplace in which they feel trapped and victimized.
Despite the evolving CRM technology, the customer relationship part of CRM was missing the human factor.
So the new perspective regarding CRM constituted a sounder approach. Rather than going to absurd lengths to reach customers in order to close deals, company representatives realized that the customer relationship had to be managed as a relationship proper. Although in most cases it was not personal, it needed to take into account that clients differ from one another, and therefore adaptability and respect for each individual need to be at the heart of each interaction.