Deep Dive: history of Customer Relationship Management

Knowing customers most often starts with collecting their data and the primary tool for this is of course the CRM. Let’s take a gander at how this tool has evolved, what problems its solved and how it might change to reflect the issues of today.

Early Days

Imagine being a knife salesman in the middle of the Gobi Desert. Wherever people have been around, there has always been an exchange of goods, services or currency. The first recorded instance of this goes back 20,000 years ago to what is now Papua New Guinea as obsidian knives were traded to local islands where the material wasn’t found. It is not long after that we begin to see records of sales, accounting and even customer lists spring up. We even have the earliest form of segmentation in ledgers where personal wealth and ability to pay were recorded for different customers. While our modern understanding of CRM systems may incorporate all manner of features, they can all trace their roots back to simple record keeping.

 

1950-1970’S

Skip ahead to 50’s and computers become commercially viable and adopted by businesses. Accounting was one of the first areas to be digitised. By the time we reach the 70s, even small businesses could afford to join the computing revolution. While computerised accounting had long been developed, customer management had not. There were a few systems which sought to digitise and centralise customer information, but these were only a small step above a digital Rolodex, which were still in popular use by salespeople. Not surprisingly most salespeople were very reluctant to share their hard-earned information with the rest of the company and so the concept never really took off.

 

1980’s

Big cultural shifts in the 80’s saw true global opportunities for brands, in order to support this rapid growth, brands understood that they not only record customers but understand them too. In 1986 ACT! introduced what is arguably the first CRM. ACT stands for Automated Contact Tracking and it collected consumer information and to a limited degree could analyse that data and digitally customise communications. Whilst this system was significantly more convenient that its predecessors (which required you to sit at a company terminal) its adoption was still poor. Salespeople were left to their own devices regarding what to do with the information, how to sell, and many saw no benefit to a digital system as opposed to pen and paper. During this time period that we start to see advancements in terms of using a database for promotions. Robert and Kate Kestnbaum are credited as pioneers of this new technique which analysed current customers to statistically identify those which would be most likely to react to marketing campaigns. They also introduced concepts such as customer lifetime value and channel management.

 

1990’s

Technology evolves and we see the amalgamation of the above two concepts. New software the takes features of database marketing, automates them, and combines this with contact management. As internet adoption grew, we start to see the acronym CRM used as vendors offered a level of cross-organisational collaboration through combination of intranet, extranet, and internet. Suddenly different departments outside of sales or accounting could all access and leverage the same information. Although the internet was in many ways still in its infancy, we start to see that data which had previously been difficult to obtain become far more accessible. Best practice had certainly not been established at this point and so while data was growing, few knew how to use it for competitive advantage outside of what would seem obvious by today’s standards.

 

2000s – today

Salesforce’s cloud-based CRM platform quickly disrupts the market. In its original form it made collecting information a lot easier, it wasn’t designed to help with selling! It is also during this time that social media explodes, and brands suddenly had to contend with new channels and new 2-way communication with customers. Today’s CRM needs to record communications, track website visitors, lead score prospects, automate emails and more. Systems have grown in complexity but in many cases while our info on customers has grown, our knowledge has not. It’s still true today that trial and error is involved in unlocking the best ways to manage and communicate with customers.

 

The future

The CRM started at record keeping. It then evolved into a sales and marketing tool. Today it can help you understand interactions on multiple channels, but it offers no context. 40 people signed up to your webinar…is that good? 39% of people liked email subject A vs B…Is that useful data? It’s time to cut out the trail and error and involve your customers in your decision making. Combine your CRM data with an insight community. Test and tweak with real customers. Get live feedback on recent transactions. Get more qualitative feedback.

Why not get in touch to see how our Community Module can be incorporated with your existing systems and 3rd party data to create a single view of your customers?

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