The History of CRM – Moving Beyond the Customer Database

A beautiful idea that swept the business world in the 1990s, Client Relationship Management (CRM) promised to permanently alter how companies of all sizes engage with their customer bases. CRM is an acronym that stands for Customer Relationship Management and Management (CRM). In the near term, however, it proved to be a cumbersome procedure that, for a number of reasons, performed better in theory than in reality.

To begin with, keeping track of and updating the large number of data required was very time consuming and costly. The true promise of CRM is now becoming a reality thanks to updated software systems and sophisticated tracking tools that have dramatically increased CRM capabilities in recent years. Even small companies may profit from bespoke CRM systems now that more affordable, more customised Internet options are available in the marketplace.

In the beginning…

At that time, database marketing was a buzzword to describe the practice of forming customer care teams that could interact with each of a company’s clients personally. It was a great way to stay in touch with important customers who had a lot of business with us, and it allowed us to better serve them.

When it came to smaller customers, the survey-like information provided clogged databases and offered little insight. The basic bones were all that was required in most instances when businesses started monitoring database information: what customers purchase frequently, how much they spend, and what they do.

Advances in the 1990’s

By making Customer Relationship Management more of a two-way street, businesses started to enhance it in the 1990s. Instead of just collecting data for their own use, they started rewarding their consumers with incentives, gifts, and other forms of customer loyalty in addition to the apparent objective of improving customer service.

With CRM monitoring of consumer activity and spending habits came the now well-known frequent flyer programmes, bonus points on credit cards, and a variety of other benefits. As a result, CRM was now being utilised both passively to boost sales and activities to improve customer service.

True CRM comes of age

Today’s Customer Relationship Management (CRM) started to take shape in the early decades of the twenty-first century. With the release of increasingly sophisticated software solutions that could be customised for different sectors, dynamic utilisation of information became possible. To keep abreast of consumer requirements and behaviour, CRM became a method to constantly update information in a static database.

Branching of information, sub-folders, and custom tailored features enabled companies to break down information into smaller subsets so that they could evaluate not only concrete statistics but information on the motivation and reactions of customers.

The Internet provided a huge boon to the development of these huge databases by enabling offsite information storage. Where before companies had difficulty supporting enormous amounts of information, the Internet provided new possibilities and CRM took off as providers began moving toward Internet solutions.

With the increased fluidity of these programs came a less rigid relationship between sales, customer service and marketing. CRM enabled the development of new strategies for more cooperative work between these different divisions through shared information and understanding, leading to increased customer satisfaction from order to end product.

Today, CRM is still utilized most frequently by companies that rely heavily on two distinct features: customer service or technology. The three sectors of a business that relies most heavily on CRM — and use it to great advantage — are

financial services, a variety of high tech corporations and the telecommunications industry.

The financial services industry in particular tracks the level of client satisfaction and what customers are looking for in terms of changes and personalized features. They also track changes in investment habits and spending patterns as the economy shifts. Software specific to the industry can give financial service providers truly impressive feedback in these areas.

Who’s in the CRM game?

About 50% of the CRM market is currently divided between five major players in the industry: PeopleSoft, Oracle, SAP, Siebel and relative newcomer Telemation, based on Linux and developed by an old standard, Database Solutions, Inc.

The other half of the market falls to a variety of other players, although Microsoft’s new emergence in the CRM market may cause a shift soon. Whether Microsoft can capture a share of the market remains to be seen. However, their

brand-name familiarity may give them an edge with small businesses considering a first-time CRM package.

PeopleSoft was founded in the mid-1980’s by Ken Morris and Dave Duffield as a client-server based human resources application. In 1998, PeopleSoft had evolved into a purely Internet based system, PeopleSoft 8.

There’s no client software to maintain and it supports over 150 applications. PeopleSoft 8 is the brainchild of over 2,000 dedicated developers and $500 million in research and development.

PeopleSoft branched out from their original human resources platform in the 1990s and now supports everything from customer service to supply chain management. Its user-friendly system required minimal training is relatively inexpensive to deploy.

One of PeopleSoft’s major contributions to CRM was their detailed analytic program that identifies and ranks the importance of customers based on numerous criteria, including the amount of purchase, cost of supplying them, and frequency of service.

Oracle built a solid base of high-end customers in the late 1980’s, then burst into national attention around 1990 when, under Tom Siebel, the company aggressively marketed a small-to-medium business CRM solution.

Unfortunately, they couldn’t follow up themselves on the incredible sales they garnered and ran into a few years of real problems.

Oracle landed on its feet after a restructuring and their own refocusing on customer needs and by the mid-1990’s the company was once again a leader in CRM technologies. They continue to be one of the leaders in the enterprise marketplace with the Oracle Customer Data Management System.

Telemation’s CRM solution is flexible and user-friendly, with a toolkit that makes changing features and settings relatively easy. The system also provides a quick learning environment that newcomers will appreciate. Its uniqueness lies in that, although compatible with Windows, it was developed as a Linux program. Will Linux be the wave of the future? We don’t know, but if it is, Telemation’s ahead of the game.

The last few years…

In 2002, Oracle released their Global CRM in 90 Days package that promised quick implementation of CRM throughout company offices. Offered with the package was a set fee service for set-up and training for core business needs.

Also in 2002 (a stellar year for CRM), SAP America’s my sap began using a “middleware” hub that was capable of connecting SAP systems to externals and front and back office systems for a unified operation that links partners, employees, process and technologies in a closed-loop function.

Siebel consistently based its business primarily on enterprise size businesses willing to invest millions in CRM systems, which worked for them to the tune of $2.1 billion in 2001. However, in 2002 and 2003 revenues slipped as several smaller CRM firms joined the fray as ASP’s (Application Service Providers). These companies, including UpShot, NetSuite and SalesNet, offered businesses CRM-style tracking and data management without the high cost of traditional CRM start-up.

In October of 2003, Siebel launched CRM OnDemand in collaboration with IBM. Their entry into the hosted, monthly CRM solution niche hit the marketplace with gale force. To some of the monthly ASP’s it was a call to arms, to others it was a sign of Siebel’s increasing confusion over brand identity and increasing loss of market share. In a stroke of genius, Siebel acquired UpShot a few months later to get them started and smooth their transition into the ASP market. It was a successful move.

With Microsoft now in the game, it’s too soon to tell what the results will be, but it seems likely that they may get some share of small businesses that tend to buy based on familiarity and usability. ASP’s will continue to grow in popularity as well, especially with mid-sized businesses, so companies like NetSuite, SalesNet and Siebel’s OnDemand will thrive. CRM on the web has come of age!

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