CRM’s Storied Past

CRM’s roots go all the way back to the 1950s with the invention of the Rolodex, which remained a staple on the desks of marketing and sales professionals around the world for decades.

Then in the late 1980s, companies like ACT!, Maximizer, and Goldmine launched solutions that were billed as replacements for the Rolodex, helping companies automate their contact management, appointment scheduling, and similar functions.

ACT! has since been acquired by Swiftpage (in 2013), and many other CRM software companies have come and gone throughout the industry’s history. Indeed, the history of CRM is rife with software acquisitions big and small. Some of those deals have been monumental, like SAP buying BusinessObjects in January 2007 for $6.8 billion; Salesforce’s purchase of ExactTarget in June 2013 for $2.5 billion; Microsoft buying LinkedIn in June 2016 for $26.2 billion; Oracle buying NetSuite in July 2016 for $9.3 billion; Genesys buying Interactive Intelligence in August 2016 for $1.4 billion; Salesforce’s acquisition of Slack in December 2020 for nearly $27 billion; and Microsoft buying Nuance Communications in April 2021 for nearly $20 billion.

The CRM industry has been shaped largely by waves of acquisitions and consolidations that have given larger vendors paths into new geographies, verticals, technological areas, and markets. But CRM has also been rich with a history of innovation that really begins in the mid-1990s.

The 1990s

The early ’90s saw contact database marketing evolve into sales force automation (SFA), consolidating contact, lead, opportunity, and deal management into one overarching infrastructure.

Just as CRM magazine got its start in the 1990s, so too did the industry that the publication covers. True CRM as we know it today dates back to 1993 when Tom Siebel left Oracle to create Siebel Systems. Siebel was the first real SFA software company, integrating contact management features while offering a central resource of information about clients and competitors. Over the next few years, Siebel expanded to develop marketing and customer service applications. It was bought by Oracle in September 2005 for almost $6 billion.

During the late 1990s, traditional enterprise resource planning (ERP) system vendors, including Oracle, SAP, and PeopleSoft, moved into the front office with commercial versions of what were largely their own internal sales applications.

The term customer relationship management, or CRM, reportedly dates back to 1995, though there is some debate about who exactly coined the phrase. Some people credit Siebel himself, while others say it was first used by analysts at Gartner or engineers at IBM.

1999 was an important turning point for CRM technologies, which began to reach into the burgeoning mobile and cloud spaces. That was the year when Siebel Systems launched the first-ever mobile CRM, called Siebel Sales Handheld, a Windows device that allowed sales reps in the field to exchange and sync customer information on the go.

1999 was also the year when former Oracle executive Marc Benioff and a team of software developers founded Salesforce.com, offering web-based CRM services through a new model called software-as-a-service (SaaS). Through the cloud, Salesforce.com sought to eliminate expensive upfront and maintenance costs and protracted system implementations.

The Early 2000s

The new millennium got off to a rocky start with Y2K concerns and the burst of the dotcom bubble, which hit CRM software vendors particularly hard.

The CRM industry came out on the other side stronger and more resilient, with a new metric to tell companies just how well they were doing with customers. The Net Promoter Score (or NPS), developed in 2001 by Fred Reichheld, quickly grew in popularity and broad use among companies largely because of its simplicity: The research typically takes the form of a single survey question asking respondents to rate the likelihood that they would recommend a company, product, or a service to a friend or colleague.

2003 saw Microsoft’s entry into the CRM industry with its launch of the first Dynamics CRM products. Dynamics broke ground with its integrations into the Microsoft Office and Outlook suites.

Then in 2004, a group of former IBM and Hewlett-Packard engineers began working on another breakthrough that ultimately led to the creation of free and open-source software and the launch of SugarCRM.

The early 2000s also brought incredible growth for the cloud-based model pioneered by Salesforce. Its appeal stemmed largely from the ability for users to access sales and customer data through any connected device. This culminated in 2005 with the launch of the Salesforce AppExchange, a third-party marketplace of partner applications that were also capable of working with Salesforce’s cloud-based applications.

The Late 2000s

By the second half of the decade, social media was a fledgling technology that needed to be explored, and CRM finally began branching out beyond its foundations in marketing and SFA.

In 2008, CRM went social, with companies looking to not only reach out to customers on new channels but also to track customer activity on those channels and mine them for additional data about their customers and prospects. Social media opened new customer communication pathways that were both two-way and interactive and that required a more timely response.

It was also during this time span that the “United Breaks Guitars” saga—brought about when United Airlines botched its response when Canadian musician Dave Carroll’s guitar was broken during a trip in 2008—created industrywide awareness of the need for good customer experience (CX). The entire situation was a huge public-relations embarrassment for the airline.

2010-2015

The next half-decade saw a dramatic shift in technology and how businesses rely on it. During the early 2010s, CRM systems truly became mobile due to the proliferation of smartphones, tablets, and other powerful devices. The industry shifted from simply using traditional desktops or laptops to constant, on-the-go, multichannel connectivity, and businesses needed to be on those platforms to keep in touch with customers anytime and anywhere in the world. In 2014 and 2015, companies scrambled to make versions of their software that could run on the Apple Watch, which was supposed to be all the rage at the time but never quite lived up to the hype.

It was during this five-year span that CRM vendors began to integrate their applications into other business systems, including business intelligence and communications. This also led to huge advancements in analytics, reporting, performance tracking, and customer feedback management.

The 2010s also saw the number of CRM software vendors skyrocket, and to differentiate, system providers began to move away from universal CRM options to specialized solutions geared toward specific industry verticals.

These few years also saw CRM systems bridged into contact centers, which had largely operated in isolation for decades. The birth of new channels and platforms created a wide variety of channels for customers to contact companies and vice versa.

2016-2020

The latter half of the 2010s saw artificial intelligence become mainstream in most CRM applications, creating new capabilities for predictive insights, next-best-action recommendations, sales forecasting, and much more.

The end of the 2010s also saw the rise in customer data security and privacy concerns. The European Union passed its General Data Protection Regulation (GDPR) in April 2016, and the law took effect in May 2018.

GDPR requires companies doing business in EU member countries to get consumers’ consent via an explicit opt-in process before collecting and sharing information about them; to provide a way for consumers to correct, update, and delete the data that companies hold about them; to fully disclose what information is being collected and how it will be used; and to properly notify all parties involved when there is a data breach. Prior to the law taking effect and for months afterward, companies of all types scrambled to make sure that their solutions were in compliance.

Following the European Union’s lead, three U.S. states passed their own versions of the GDPR: California’s law passed in June 2018, Virginia’s in March 2021, and Colorado’s in July 2021. China in late 2021 put forth its own legislation, called the Personal Information Protection Law.

The 2020s and Today

The past few years have, of course, been dominated by the COVID-19 pandemic, and the coronavirus’ impact on the business world cannot be overstated. COVID accelerated companies’ digital transformations, which had largely stalled in the years prior to 2020. With social distancing mandates and forced closures, everything moved online, and cloud deployments went from a nice-to-have to a business imperative.

In the past two years, some of the most advanced and forward-thinking CRM vendors have been integrating AI into every aspect of their software. AI today processes massive amounts of data for qualifying leads, automating tedious processes, and giving users the most comprehensive picture of each of their prospects. It can predict how customers will interact with marketing messages based on their past experiences and how they will behave, starting from awareness to evaluation to purchases to post-sales service and technical support. This ultimately enables companies to personalize and customize their offerings on a granular level.

CRM systems have come a long way from their humble beginnings in the Rolodex. While the amount of customer information that businesses can collect and need to manage has grown tremendously, advancements in CRM technology will continue helping businesses offer the best services to their customers in the years to come.

Leonard Klie is the editor of CRM magazine. He can be reached at lklie@infotoday.com.