A Brief History of Customer Relationship Management

Customer Relationship Management (CRM) hasn’t always been the robust, stand-alone software many businesses rely on today.

Over the past four decades, it has evolved from various other business programs. During that time, the CRM industry underwent sea changes and shakeups that could have derailed the concept.

A Brief History of Customer Relationship Management

The 1980s: Digital Rolodexes and Database Marketing

Pioneered by Robert and Kate Kestnbaum, database marketing collected and analyzed customer information. Using statistical modeling, that data was used to help customize communications with other potential customers.

In 1986, ACT! introduced the business world to contact management software. Essentially a digital Rolodex, ACT! allowed for the efficient storage and organization of customer contact information. Goldmine and other vendors also released CMS programs throughout the 80s.

Near the close of the decade, the proliferation of personal computers and the advent of server/client architecture paved the way for explosive growth in software development.

The 1990s: Birth of an Acronym and Growth of an Industry

The beginning of the 90s brought the first significant step toward actual CRM software. Early innovators like Brock Control Systems helped push the evolution of contact management software toward sales force automation (SFA).

SFA took many of the features of database marketing, automated them, and combined them with contact management. This provided businesses with much more helpful customer information. It also automated business tasks like inventory control and sales tasks like customer interaction tracking.

In 1993, Tom Siebel left Oracle to create Siebel Systems. While at Oracle, Siebel unsuccessfully tried convincing CEO Larry Ellison to package and sell their internal sales application as a standalone product. Siebel Systems quickly became the leading SFA provider on the market.

By 1995, SFA and contact management had evolved to resemble modern CRM software. However, this emerging product still didn’t have a proper name. Some terms like enterprise customer management (ECM) and customer information system (CIS) were used. According to Pivotal Software’s then Director of Marketing, Sharka Chobot Stuyt, Pivotal first coined the term CRM, which won out.

The last half of the decade brought considerable changes to the CRM industry. Enterprise resource management (ERP) vendors like Oracle and Baan entered the CRM market, hoping to use their size and ERP in-roads to dominate the industry.

Unlike other software companies transitioning to CRM, SAP entered the market to capitalize on emerging applications. This competition pushed CRM vendors to provide a broader suite of services. More marketing, sales, and service applications were added to CRM on a near-constant basis.

1999 was a busy year for the CRM industry. Several notable, high-value acquisitions consolidated the overall market while emerging eCRM vendors provided fierce competition. Using intranet, extranet, and internet, eCRM vendors offered intra-organizational collaboration previously unavailable in the CRM industry.

CRM also made its first foray into the mobile market by introducing Siebel Handheld.

A CRM CEO on Stage

In 1998, ACT! co-creator Pat Sullivan founded SalesLogix, which relied on ‘store and forward’ synchronization between a server CRM database and distributed local user databases.

The ’90s ended with debuting the first significant Software as a Service (SaaS) vendor. Geared toward smaller businesses, Salesforce was initially ignored by more prominent vendors.

Under the leadership of Mark Benioff, Salesforce eventually grew to rival CRM industry giants like Siebel Systems.

The 2000s: From The Abyss to Floating on Clouds

Like most software industries, the CRM industry was hit hard by the bursting of the dot-com bubble. The entire industry retracted, with giants like Oracle reporting more than twenty-five percent license losses. Due to a reluctance to use “dot-com” technologies, eCRM vendors were hit the hardest.

In the early years of the ’00s, Paul Greenberg’s book “CRM at the Speed of Light” suggested a more comprehensive CRM system that manages all business relationships. By the decade’s end, this became common thinking across the CRM industry.

Through the middle of the decade, interoperability with legacy software became more critical. Software giant Microsoft entered the CRM market with Dynamics CRM, and Oracle acquired Siebel and numerous other enterprise application vendors.

Social CRM exploded onto the market with the introduction of ComcastCares—an application focused more on interaction than transaction. Most large corporations quickly followed Comcast’s example, solidifying the place of social CRM.

Through the end of the first decade and up to the present day, cloud-based and SaaS CRM solutions continue to integrate more features like customer service and social CRM. Cloud-based and SaaS CRM solutions continue to gain popularity, mainly due to their lower initial cost and easy integration with mobile devices.

In 2009, Salesforce reached the $1 billion dollar mark.

The 2010s: A Mature Industry

In the 2010s, the CRM industry saw significant advances and changes.

CRM systems began integrating with social media platforms, allowing businesses to better connect with customers and manage their social interactions.

The rise of smartphones and tablets led to the development of mobile CRM applications, offering salespeople and other users access to CRM data on the go.

Marketing automation systems from vendors like Marketo, HubSpot, and Pardot surged in popularity. Integration with leading CRM systems became a requirement for many organizations.

Companies started focusing more on the customer experience, using CRM tools to gather insights and personalize interactions.

There was an increased adoption of advanced analytics in CRM systems for better prediction, segmentation, and customization.

Cloud-based CRM solutions like Salesforce and Zoho became the rule rather than the exception, thanks to their scalability, flexibility, and lower upfront costs.

With data’s growing importance, CRM providers emphasized security features to protect sensitive customer information.

The 2020s: Work from Home and AI

With the sudden shift to work from home in 2020, the fact that CRM has become primarily cloud-based was fortuitous.

Salespeople could sell from anywhere, and, in many industries, customer service and support could be provided from home offices.

In the 2020s, the lines between CRM and marketing automation (MA) continued to blur. MA vendor HubSpot increased its push into the CRM market. Salesforce further integrated Marketing Cloud functionality into various editions. Smaller, all-in-one systems like GreenRope gained attention.

Because of this convergence, the number of steps in the CRM process expanded to encompass steps previously considered part of a separate marketing process.

A race began to incorporate AI and LLMs into CRM systems in ways designed to add value for users.

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