How Customer Relationship Management (CRM) Has Evolved Over Time
It has forever been the primary goal of companies to enhance their relationships with customers, improve retention and increase sales. If you were working in the 1950’s, you were thrilled with the advent of the Rolodex for storing contact information. Its convenient flip-through cards that you wrote on replaced the customer notes you kept on sheets of paper scattered on your desk or shoved into your pockets or folders. Fortunately, times changed.
Enter the desktop computer. Computer hardware and software have been a boon to CRM with the emergence of CRM systems exploding in a relatively short period of time, beginning in the 1980’s and continuing to the present. Through CRM, companies have applied certain practices and strategies to manage and analyze their data and interactions with customers throughout the customer sales relationship lifecycle.
These systems compile personal customer information, buying preferences and history, as well as relevant documents, into a single database with easy access by a business, thus facilitating efficient management of customer relationships. The data is collected at the points of contact with a company in various ways such as company website access, telephone, direct mail, social media and through marketing materials.
The automated tracking aspect of sales force management prevents duplication of efforts on the part of sales staff in sourcing, contacting, following-up and managing customers. It also tracks all contacts made by customers. Another key aspect of a CRM system is that it automates workflow processes like tasks, calendar, and reminders. For managers, it is an ideal tool to stay abreast of performance results and productivity when staff are signed into the system.
Database marketing originally involved manually collecting and analyzing customer information. Through the use of statistical modeling developed by trailblazing pioneers, Robert and Kate Kestnbaum, the data collected helped to standardize direct marketing communications to be used with other potential customers.
The first contact management software (CMS) called Act! was introduced in the form of a digital rolodex. It provided a way for individuals and businesses to efficiently store and organize information gathered about hundreds of thousands of customers. Software platforms released by Goldmine and other CMS vendors soon followed.
By the time the decade closed, use of personal computers was widespread and along with that software development ramped up.
SFA (sales force automation) helped sales organizations to streamline their sales processes and increase productivity. The computing and software revolution led to the adoption of a data and networking strategy called CRM (customer relationship management) with the rise of Brock Control Systems. Richard Brock initially developed his application as a sales and marketing solution aimed at midsized companies.
But because the adopters of sales and marketing automation happened to be those who worked by phone, it was the telesales and telemarketing businesses that more often than not bought this product. Thus, contrary to Brock’s intention, BCS gained a reputation as a tele-solutions provider. Brock persisted and proceeded to expand CMS into sales force automation (SFA). This type of automation combined aspects of database marketing and contact management. As a result, business gained very useful customer information and realized automation of internal functions like inventory control and tracking of customer interactions in sales initiatives. BCS had several years of strong sales and became a powerful player in the marketplace, but in the mid-1990s, several events brought about the demise of the company.
Along came Siebel Systems. Tom Siebel had been employed at Oracle whose databases were at the heart of many corporate information systems. Unable to convince executive management to package and sell what was their internal sales program at the time, Siebel left the company and developed the product on his own. Siebel Systems grew into the foremost SFA provider available to business.
Around this time SFA and CMS took on the aspects of modern CRM software. Lacking a definitive name for this product, it was commonly referred to in such terms as enterprise customer management (ECM) and customer information system (CIS). Ultimately it was called CRM which also identified the industry.
By now, substantial changes had taken place in the CRM industry. Enterprise resource planning (ERP) vendors (Oracle and Baan) emerged into the CRM marketplace as did the German company called SAP (Systems, Applications and Products). Competition exploded, forcing vendors to broaden their suite of services. As a result, new marketing, sales and service applications were being added on an ongoing basis.
An innovative breed, e-CRM vendors, started to infiltrate the marketplace. They focused on intra-organizational collaboration—something that had never been available before in the CRM arena. The entry into the mobile market came with the Siebel Handheld. The end of the decade saw the emergence of the first Software as a Service (SaaS) vendor called Salesforce which was not taken seriously by the larger vendors, including the giant, Siebel Systems. But Salesforce was destined to grow to rival all of them.
From 1997 to 2001 there was significant speculation and growth in the usage of the Internet by businesses and consumers. Many Internet companies were formed (called dot-coms), but were short-lived. By 2002 the bubble had collapsed. The bursting of the dot.com bubble had a serious negative effect on the growth of the CRM industry. Companies the size of Oracle incurred huge license losses as did e-CRM vendors who resisted the dot-com movement.
During this period, there was considerable focus on interoperability with the heritage software. For example, Microsoft formed Dynamics CRM and Oracle bought other application vendors, Siebel being one of them.
This year saw the emergence of cloud-based CRM called Force.com, introduced by Salesforce. It resolved the concerns of many users that cloud-based applications could not be customized.
The late 2000s to Present
By the end of the first decade and right up to the present times, cloud-based and SaaS CRM systems have become the primary conduit for integrating an array of features. Social customer relationship management (CRM) became part of the business world when businesses decided they needed better software to manage their contacts and customers. Applications dealing with customer service and social CRM have become vastly popular given decreasing costs and compatibility with mobile devices.
With the advent of Social CRM tools and the emphasis on social media, the focus has significantly expanded to be that of interaction with customers, as opposed to the traditional emphasis on transactions of much earlier days. Through Social CRM, businesses have enhanced their capability of gathering data, engaging with customers, obtaining their feedback about products and service, and building strong customer relationships. Facebook, Twitter, Google+, Yelp, Trip Advisor, special communities, and forums, etc., are just a few examples of the vast opportunities business and customers have to engage with each other.
Current Trends in CRM
The current environment and anticipated technical changes are in the areas of sales analytics, social selling, mobile device accessibility and skill requirements for sales representatives. In a relatively short period of time, the sales landscape has changed dramatically with the emergence of new and ever-evolving sales technologies. Already Salesforce dominates the market with well over 2,000 business applications of which more than 40% are aimed at sales businesses. Advanced technologies serve to coach sales reps about the right kind of leads and managers in how they can improve training.
What are the ingredients that more likely would close a deal? At the forefront is a rise in a new generation of SaaS software applications driven by innovation in the area of Artificial Intelligence (AI). This is a leading question for CRM in these changing times. Top companies like Salesforce and Microsoft have more recently designed AI tools which help predict which customer leads are the most likely to produce positive results. These tools assimilate current customer and prospective customer data from various sources and the analytic software predicts the leads that have the most likely positive outcomes.
This trend is not about replacing sales and support staff but making the sales process better. Through recorded calls, data input about customer interactions and documented successes, sales professionals can know what has worked and what didn’t. This helps them design better strategies for better customer experiences. Through data collected about existing customers, management can anticipate future results and develops more realistic goals and desirable approaches for sales staff to take in regards to lead generation. The sales focus on quantity of contacts will shift significantly to include quality of contacts in order to maximize successful sales calls.
The role of the Sales Development Representative (SDR) will be a whole different ballgame in the very near future with emphasis placed on enhanced training, on-the-job learning from daily sales activities and practical application of metrics-centric selling. It’s not just about managing accounts the way we knew it. It’s how to use the technology available, being able to interpret data produced and having the pulse on emerging technologies in the field.
Thus, from a human resources standpoint, the traditional sales role will change and demand upgraded competencies. Specialized recruiters will have to know what technical skills and experience to look for when sourcing a slate of candidates to fill positions. With all the AI tools to tap into, onboarding will be much faster.
Harnessing clients through the customer-facing technology of social media (Facebook, LinkedIn, Twitter) and familiar third-party sites (Snapchat) requires technical expertise of Subject Matter Experts (SMEs) who will improve messaging for sales teams and every customer interaction. Tools that provide a means to distribute information and track engagement will assist SMEs and reps with learning and delivering the most effective messaging for every customer interaction.
There will also be more alignment between sales and marketing departments to work in tandem with one another. This will require careful strategic planning in both functions to meet goals and drive customer satisfaction. The expectation is that an organization-wide approach to interfacing with customers and achieving sales goals will evolve.
What will be the next for CRM?
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Author: Nancy Brennan, M.B.A., M.A. @ thewritedoc.com