CRM Has a History of Aspiration, Accomplishment, and Automation
In the world of technology, things move fast, and what is vital one day is obsolete the next.
That is not the case with CRM, though. The technology is just as relevant today as it was 25 years ago, analysts agree, noting that companies are still investing in CRM systems and will continue to do so.
“During the past 25 years, many other concepts and strategies have come and gone, but CRM has remained,” says Donna Fluss, president of DMG Consulting.
“Companies all over the world talk about delivering an outstanding customer experience. A CRM solution is an important tool in achieving this goal,” Fluss continues.
“It is still a necessary technological addition to operationally support customer-facing departments and is a double-digit, growth-mature industry that is well over $50 billion annually,” says the 56 Group’s founder and managing principal, Paul Greenberg, who is often considered the godfather of CRM.
CRM has become “a required, highly operational system that supports marketing, sales, and service,” Greenberg continues, noting that CRM has gone from what had been a nice-to-have to a must-have.
Denis Pombriant, founder and managing principal of Beagle Research, says CRM has not always been perfect. But “as modules and functions have been added, they’ve opened new niches,” he says. “That’s the nature of the beast, and it should be embraced because it demonstrates a thriving ecosystem and speaks for CRM’s longevity.”
That longevity wasn’t always certain, though. In fact, in the early days, there was a lot of doubt that CRM had any kind of staying power.
That’s partly because of the high cost of early iterations of the software. “The biggest shortcoming around 1997 was the huge amount of money companies had to spend on system integration and customization. It wasn’t unheard of to have the initial cost be five to 10 times the cost of the software licensing fees,” recalls Jim Dickie, a research fellow at Sales Mastery. “And that cost didn’t stop with the initial rollout of CRM; every time a new major release came out, the modifications had to be tweaked all over again.”
There were plenty of functional shortcomings as well. Early CRM systems “were not seen as much more than management reporting tools and didn’t help actual users become more effective,” recalls Kate Leggett, a vice president and principal analyst at Forrester Research. “They were on-premises, monolithic applications that were hard to configure and customize. The user experience was forms-based instead of task-based. There was no automation, no artificial intelligence, and completing tasks like updating a customer contact took a really long time.”
Ray Wang, founder, chairman, and principal analyst of Constellation Research, agrees. “Twenty-five years ago, we thought we’d build systems that would change how we track interactions and improve the ability for salespeople to be more productive, marketers to be more effective, and customer service to be more proactive. Early systems did a good job of tracking interactions but added more work to frontline workers so that managers had better visibility,” he says.
Many failed implementations early on also put CRM technology in jeopardy. “This left such a bad taste with so many companies that it took years to recover and for executives to be willing to make investments in similar but much more effective systems and applications,” Fluss says.
CRM’s lack of success early on was as much the vendors’ fault as it was the companies that implemented it.
“Twenty-five years ago, vendors sold CRM technology despite most prospects not being ready to successfully adopt the technology,” says Barton Goldenberg, president of ISM. “There was little to no sales, marketing, or customer service business process enhancement work prior to implementation. Companies also did not properly prepare their organizations for adoption of CRM software; they lacked executive support for the initiative, did too little training, lacked rewards and incentives, and did not effectively communicate the goals and timelines for their CRM initiatives.”
Thankfully, system manufacturers and end users persisted. And because they did, CRM technologies have advanced, keeping up with the times and evolving customer and end user demands.
Over the years, CRM has advanced from the very rudimentary contact management systems pioneered by companies like ACT!, Goldmine, and Maximizer in the late 1980s, to the sales force automation systems of the 1990s, to the robust, multichannel, multidisciplinary systems that they are today.
“New technologies infused in CRM have up-leveled customer and employee experiences,” Leggett says. “Automation offloads repetitive actions. [Artificial intelligence] guides users through the best actions and conversations. Journey analytics and customer intelligence improve customer understanding to drive the best actions. Visual technologies and mixed reality enable more effective customer engagement. Collaboration facilitates group work, and cloud platforms provide extreme scalability.”
Getting there was a slow, gradual process. Some of the main technology advances along the way included the move to the cloud, first introduced with Salesforce’s entry in the market in 1999; the advancement of sales systems to include marketing, customer service, and commerce applications; mobility; open-source development; social media capabilities; integrations into other front- and back-office systems; verticalization that led to solutions geared toward very specific industries and market segments; and the incorporation of artificial intelligence into almost everything.
Some of those developments have, of course, been more game changing than others.
“The biggest shift was the move to the cloud, followed by the move to ambient experiences,” Wang says. “The cloud enables faster innovation cycles, easier adoption, and lower entry price points. Analytics, automation, and AI are enabling the ambient experiences to come to life.”
For Leggett, the moves to mobile computing and the cloud were probably the most significant innovations to hit the CRM landscape. Mobility, she says, “empowered the front office to work from anywhere and have a full view of their customers at their fingertips.”
Cloud computing did the same, and more, she adds. “It allowed the front-office worker to work from anywhere. It made software updates easier and more continuous and made configurations more streamlined, all of which allowed companies to evolve their CRMs to best support their users in getting their jobs done.”
Pombriant says the cloud was a democratizing factor. The software-as-a-service model “made CRM affordable to any business, unlike the lumbering, client-server, back-office systems,” he says.
Most of the credit for CRM’s move to the cloud goes to Salesforce, which started as a company in 1999 with the “no-software” model in which software is not physically installed on servers, computers, or mobile devices but gets downloaded and accessed via the Internet.
At the time, Salesforce had to make the case for multitenancy when companies were wary of having their data co-mingling with other companies’ data offsite in the cloud, according to Brent Leary, cofounder and partner of CRM Essentials. The company succeeded in that effort, and now there is almost no CRM technology that cannot be deployed in the cloud. In 2011, Oracle, one of the last holdouts, entered the cloud wars with its launch of Fusion CRM.
Cloud computing has had another important side effect on the CRM industry.
“It’s accelerated innovation in the space,” says Rebecca Wettemann, founder and principal at Valoir, “because companies can experiment with emerging technologies with little IT investment, and vendors can deliver incremental improvements over time without the cost and disruption of traditional upgrades.”
Dickie also sees the cloud as revolutionary, saying it made CRM “available to any size company.”
Other analysts see artificial intelligence as the most transformative development.
“The move away from outdated concepts like Big Data toward the real application of AI to power human performance” was huge, Dickie states. “With access to real data, marketing and sales are becoming more science and less art. The speed at which companies are able to see changes in their marketplaces and react accordingly is way beyond what we could do even a decade ago, and that is only getting better and faster.”
Fluss’s expertise is in the contact center, so she takes a more nuanced stance when it comes to which technologies were the most transformative for the CRM industry. “For contact centers, the most important system was and still is the omnichannel automatic call distributor, as it controls the flow of interactions and routes and queues them, making sure that they can get to the right person to be handled properly,” she says.
But, taking a wider view, Fluss can’t deny AI’s impact to the wider CRM industry. AI, she says, “has the greatest potential to change the world of service, sales, and marketing.”
Wettemann agrees. “We’re still only scratching the surface of how artificial intelligence can automate CRM processes, making sales and service more productive and driving a positive customer experience,” she says.
Analysts also view the move from isolated systems to larger platforms and integrated software suites as a significant development in the history of CRM.
Goldenberg, for example, sees the integration of external information as a key milestone. Microsoft was a key driving force in that effort when in 2016 it acquired LinkedIn for $26.2 billion. It had previously broken ground by tying together its Dynamics CRM product with its Outlook email and Office applications.
Another significant development took place around the same time.
“Ten or 15 years ago, CRM was in danger of being just another fragile application set because we were always trying to make it do something else, resulting in brittle code and systems. Trying to manage the integration of social, analytics, workflow, and many other side apps by hand became impossible,” Pombriant recalls, “The platform changed all this because it kept specifications and fed them into code generators. Today, we have business processes that are almost unimaginably complex, but they are supported easily thanks to flawless code generation.”
Leggett also sees CRM’s underpinning with low-code/no-code platforms as having a demonstrative effect on the industry. “This allows non-IT users to support business-led development of applications that extend capabilities within packaged CRM,” she says.
And for most analysts, the addition of new platforms for interaction, new channels and types of media, and new devices on which CRM systems can operate are all of paramount importance.
Among them was social media, and that is another area where Salesforce led. Though other companies, led by Pivotal, had toyed with social media as early as 2008, Salesforce’s 2011 acquisition of social media monitoring company Radian6 was seen as a game changer. That deal, valued at about $325 million, “moved the needle significantly for social media’s integration with CRM,” Leary says.
But not everyone is as positive about social media and CRM. Pombriant, for example, calls it “an ultimate failure” as a CRM tool.
“Once social began capturing personal data and using it or selling it, the customer was put at a potential disadvantage relative to the algorithms,” he says.
Greenberg takes a different stance. Social didn’t fail but just got rolled into larger CRM systems, he asserts. “Neither CRM in its current form, CX as a technology, nor customer engagement systems are likely to exist if it wasn’t for the birth and short life of social CRM before it became just mainstream CRM,” he says.
Social is certainly not the only channel to emerge in the past 25 years. Email, SMS messaging, chat, instant messaging apps like Facebook Messenger, and collaboration and communications platforms like Zoom and Microsoft Teams have all come into existence and stretched the boundaries of CRM.
The latest channel is the so-called metaverse, which Constellation Research projects will be a $20.7 trillion environment by 2030. The metaverse, Wang says, “will play a big role as a new channel for CRM.”
“The next hype cycle will be the metaverse,” Wettemann agrees. “Although an increase in digital engagement, particularly in service, will drive some interesting value propositions, metaverse is the next shiny object in CRM.”
Goldenberg, though, maintains that the CRM industry as a whole is far behind in adopting the metaverse.
AND THEN CAME COVID
As the world has undergone radical technological, social, economic, political, and ideological shifts, no one single event has had a greater impact on CRM than the COVID-19 pandemic. When the coronavirus first surfaced in late 2019 and early 2020, companies needed to accelerate their digital transformations and moves to the cloud. Contact center agents, salespeople, and marketers quickly transitioned to work-from-home models, and companies needed to enable that almost overnight. In-person events and live interactions were banned, and companies needed to find alternatives to continue doing business.
Analysts do not expect businesses to ever really return to the way things were done prior to the pandemic.
“We’re seeing some big shifts now—partly as a result of the pandemic—that are not going away,” Wettemann maintains. “Moving forward, it’s all about breaking down not just physical barriers but the traditional ways we measure customer interactions and bringing all interactions and channels under one virtual roof.”
Leary says the pandemic’s effect spreads even further.
“The pandemic put a spotlight on how important it is to have strong relationships with customers and why it is important to make them feel valued beyond what they can add to your bottom line,” he says. “If your relationships with customers are only as good as your latest transactions with them, you probably lost a lot of customers. But if you engaged them during the darkest days of the last couple of years and found ways to work with them, even when they couldn’t afford business as usual, you probably made valued customers for life.”
CRM systems have truly changed a lot in the past 25 years, but their history has not been without some failures along the way. Sadly, most of them have been rooted in how the technology is used rather than in the technologies themselves. Technological bugs can be fixed with a few lines of code, but people and process shortcomings are far more difficult to overcome.
One of the main challenges early on—and it’s one that the industry has yet to address adequately today—centered on adoption.
Leary maintains that at many companies, a prevailing mind-set has been “What’s in it for me?” It’s a question that is “still being asked by too many sales folks 25 years in,” he says.
Over the years, customer-facing employees have given lots of reasons for not using the CRM systems that their companies spent hundred of thousands if not millions of dollars to buy and deploy. The reasons are many, but a common user complaint over the past 25 years is that it is just too cumbersome and time-consuming to put information into CRM systems and too hard to get it out when needed. That is really part of a larger problem.
“The challenge comes to the incentives process,” Wang says. “A sales rep still has little incentive to forecast pipelines and share contacts. Marketers don’t always want all their tracking to be reported unfettered. Service and support personnel have been punished for bad metrics with less staff and resources as their performance improves.”
To increase CRM adoption, Wang says, companies will need to address CRM and customer experience “from the inside out.” This means shifting the focus to system users and customers.
Dickie goes a step further. Navigation, he says, is one of the key problems with CRM today, and it’s a long-standing problem that hasn’t really been addressed. “It still takes effort to figure out how to make CRM work for users vs. users having to conform their workflows to what CRM does,” he says.
Also holding CRM back has been the fact that the technology is often deployed in silos. That’s another problem that’s as fresh today as it was in the early days.
In fact, Forrester found in a recent survey that 68 percent of people involved in a recent CRM technology project said their organizations struggled with a shared view of customer data.
This is a concern that Fluss shares. “Sales, marketing, and customer service departments continue not to work for the betterment of the company and customers, and most companies still do not have a complete view of their relationships with their customers,” she laments. “If companies could get all of their customer-facing departments to share some of the same goals, such as delivering an outstanding customer experience, they would see progress in getting the departments to work together. Sounds easy, but this has proven to be very difficult, and clearly impossible, in many organizations.”
The data itself has also been a persistent problem. In the Forrester study, 39 percent of respondents said data quality was a problem in their organizations, and because of that, 48 percent said they struggled to create customer insights to drive decision making.
To correct this, Leggett says, companies first must elevate CRM to a strategic role to foster real customer-centricity, foster alignment around customer journeys via shared success measures, automate as much repetitive work as possible, make sure CRM projects embed user feedback and continuous improvement cycles, and measure value by direct impact to customer retention and enrichment.
That will not be an easy task, especially considering that governance and change management are also problems. In Forrester’s research, 39 percent of respondents said their CRM solution required too much organizational change, and 44 percent said they did not fully understand the challenges involved in gaining acceptance for new CRM projects.
“To fix this, realize that CRM is a technology, but, more important, that it is a strategy,” Leggett says. “CRM must be viewed as a business-led initiative supported by IT, not the other way around.”
And then, a significant share of the blame falls squarely on CRM system vendors themselves.
“The very design of CRM tools seems to have been done to provide solid reporting to management but not to be intuitively usable by frontline employees. To remedy this, CRM tools—both at the vendor level and the custom development done by brands—need to start with proper human-centered design,” says Ian Jacobs, a vice president and research director at Forrester.
It doesn’t help that vendors often push out solutions without properly addressing implementation or integration challenges, instead leaving those issues to systems integrators or the end users themselves to resolve.
“What’s needed now is much better integration,” Pombriant contends. “It’s unlikely that businesses will be monocultures of a single vendor, so that means we’ll always need to integrate.”
That becomes especially important as the industry continues to undergo vendor shifts brought about by mergers, acquisitions, and new entrants.
“CRM is as exciting as it’s ever been, mainly because of the continuous stream of new players coming in,” Dickie says.
Though industry giants Salesforce, Oracle, SAP, and Microsoft have been the dominant players for years, there has always been room for niche players to come in and fill particular needs as they arise. “A big milestone was the arrival of SMB players, like Zoho, that are moving up the stack, and Shopify, that are fighting the status quo,” Wang says.
The industry has also seen specialty vendors that go deep in industries or functional areas. These include vendors like Pegasystems, Verint, and Zendesk. And then there have been smaller vendors that focus on the small and midsize business segment. These include Zoho, Freshworks, HubSpot, Creatio, Infor, Insightly, SugarCRM, and Zendesk, according to Forrester.
And finally, there are a number of niche vendors with solutions geared toward particular industry verticals. According to Forrester, these include Amdocs for telecommunications, Blackbaud for nonprofits, Book4Time for health and wellness, and IQVIA for life sciences.
“CRM is healthy, and there’s plenty of room for new entrants,” Pombriant says.
This is because the definition of CRM is always growing. “The notion of what falls into the CRM [stack] continues to expand: Partner management, field service, commerce—these are all coming under CRM’s big tent,” Jacobs adds. “Even if this expansion does nothing more than give all parts of companies a common vocabulary, that’s a big win.”
Leonard Klie is the editor of CRM. He can be reached at firstname.lastname@example.org.