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.
The 1980s: Digital Rolodexes and Database Marketing
Pioneered by Robert and Kate Kestnbaum, database marketing involves collecting and analyzing customer information. Using statistical modeling, the 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 1990s marked the first significant step toward the development of actual CRM software. Early innovators, such as Brock Control Systems, helped drive 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, such as inventory control and sales tasks, including customer interaction tracking.
In 1993, Tom Siebel left Oracle to create Siebel Systems. While at Oracle, Siebel unsuccessfully attempted to convince CEO Larry Ellison to package and sell their internal sales application as a standalone product. Siebel Systems quickly became the leading provider of SFA 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. Terms such as enterprise customer management (ECM) and customer information system (CIS) were also used. According to Pivotal Software’s then-Director of Marketing, Sharka Chobot Stuyt, Pivotal first coined the term CRM, which ultimately prevailed.
The last half of the decade brought considerable changes to the CRM industry. Enterprise resource planning (ERP) vendors, such as Oracle and Baan, entered the CRM market, hoping to leverage their size and ERP inroads to dominate the industry.
Unlike other software companies transitioning to CRM, SAP entered the market to capitalize on emerging applications. This competition prompted CRM vendors to offer a more comprehensive 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 intranets, extranets, and the internet, eCRM vendors offered intra-organizational collaboration previously unavailable in the CRM industry.
CRM also made its first foray into the mobile market with the introduction of Siebel Handheld.
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 the debut of 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 sector retracted, with giants like Oracle reporting a loss of more than 25% in licenses. Due to a reluctance to use “dot-com” technologies, eCRM vendors were hit the hardest.
In the early 2000s, Paul Greenberg’s book ‘CRM at the Speed of Light’ proposed a more comprehensive CRM system that manages all business relationships. By the decade’s end, this became common thinking across the CRM industry.
Interoperability with legacy software became more critical from the beginning to the middle of the decade. 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.
From the end of the first decade to the present day, cloud-based and SaaS CRM solutions have continued to integrate additional features, including customer service and social CRM. They are also gaining popularity, primarily due to their lower initial cost and ease of integration with mobile devices.
In 2009, Salesforce reached the $1 billion 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, enabling businesses to connect with customers and manage their social interactions more effectively.
The rise of smartphones and tablets has led to the development of mobile CRM applications, enabling salespeople and other users to access CRM data on the go.
Marketing automation systems from vendors such as Marketo, HubSpot, and Pardot have surged in popularity. Integration with leading CRM systems became a requirement for many organizations.
Companies began to focus more on the customer experience, utilizing 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, such as Salesforce and Zoho, have become the rule rather than the exception, thanks to their scalability, flexibility, and lower upfront costs.
With the growing importance of data, CRM providers have emphasized security features to protect sensitive customer information.
The 2020s: Work from Home and AI
With the sudden shift to working from home in 2020, the increasing prevalence of CRM systems becoming primarily cloud-based proved 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, such as GreenRope, gained attention.
Due to this convergence, the number of steps in the CRM process has 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.
