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History and Evolution of CRM Software

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CRM software or Customer Relationship Management Software is a term that refers to technologies that companies use to manage and analyze customer interactions and data throughout the customer lifecycle, with the goal of improving business relationships with customers, assisting in customer retention and driving sales growth.

But the CRM software hasn’t always been the robust, and stand-alone application that so many businesses rely on today. Over the past decades, it has evolved out of a variety of other business programs starting from the Database Marketing and Call Centers software to today’s Social and Mobile CRM Software with a significant level of automation.

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Evolution of CRM Software

CRM analysts agree that the evolution of a CRM Software can be divided into 3 main periods or stages. We believe that the 4th stage of the CRM evolution has already began.

  1. The 1980s or The Origins Stage
  2. The 1990s or The Expansion Stage
  3. The 2000s or The Modern CRM Stage
  4. The 2010 and beyond: Cloud-Social-Mobile-Integrated CRM software

The Origins Stage: Database Marketing

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The origins of the modern CRM software date back to the mid 80’s when direct marketing evolved into database marketing. Pioneered by Robert and Kate Kestnbaum, database marketing collected and analyzed customer information. Using statistical modeling, the collected data was used to help customize communications with potential customers. This is the period when companies began sending more personalized marketing messages and building bigger campaigns because the contacts were more efficiently organized and accessible in the database.

The use of the PCs became more common in an office environment, and in addition, client/server architecture was introduced in the workplace which paved the way for an explosive growth in software development.

In the second half of the1980s the first contact management software (CMS Software) was developed. This simple CMS Solutions allowed customer details to be collected and stored in an organized way, as well as to be easily accessed, but not much else could be done with them.

The Expansion Stage: Birth of the CRM acronym and growth of the industry

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With the explosive growth of the PC’s and client/server architecture, the 1990s brought the first major step towards a true CRM Software. These and other advances pushed the evolution of contact management software toward sales force automation (SFA). SFA allowed companies to automate their database marketing saving significant time, effort, and cost. SFA took many of the features of database marketing, automated them, and combined them with contact management solutions. The idea behind SFA system was to deal with the pre-sales activities. This systems were used for telemarketing, lead generation, as well as preparing sales quotes and orders.

At the same time customer service and support (CSS) functionality were developed to handle the post-sales activities. The CSS software was the base on which the customer contact centers and help desk departments were developed within organizations. The main downside of the CSS software at that time, was that stored data in the CSS database was not linked up with any other organizational system. This made it challenging for organizations to do anything useful with the data since other departments such as marketing were not able to correlate this data with their own information sourced through other activities.

By 1995, SFA and contact management had evolved to closely resemble modern CRM software. This is the year when CRM acronym won the battle over ECM (enterprise customer management) and CIS (customer information system), and the CRM industry finally had its standardized name.

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The second half of the decade brought huge changes to the CRM industry. ERP vendors entered the CRM market, hoping to use their size and ERP in order to dominate the industry. All of this competition pushed CRM vendors to provide a broader suite of services which included sales, services, marketing tools as well as inventory control and customer interaction tracking. New customer related features were added to CRM systems.

Near the end of the decade a number of notable, high-value acquisitions consolidated the overall market, while the rapid growth of the Internet saw the development of e-CRM systems. Using intranet, extranet, and internet, e-CRM vendors offered a level of intra-organizational collaboration that hadn’t previously been available in the CRM industry. CRM software also made its first step into the mobile market with the introduction of Handheld and Pocket PCs.

The Modern CRM Stage: Birth of the CRM software with strategy and beginning of the Cloud CRM Solutions

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Like most software industries, the CRM vendors took a huge hit in the early 2000’s with the failure of the dot-com bubble. The hardest hit took the е-CRM vendors. But the innovation that came out of the decade, which included a cloud base, mobile solutions, and more offsite storage capability, was more than enough to recover from the hit.

After 2002 a really strategic approach began to be implemented into organizations with regards to CRM software. Instead of looking at just cutting down on expenses, companies were looking for approaches that would help them to grow their revenues by working with customers to better understand their needs. Companies that began succeeding at CRM software development were working to develop more comprehensive solutions that would help organizations manage all business relationships.

CRM software started becoming more flexible and agile. Organizations have completely embraced the concept that CRM software is not just a contact management tool but it is rather a more strategic tool that supports the overall sales and marketing effort.

In 2007, the next big change in the CRM industry happened. The cloud-based CRM software was introduced to the world. At this time the cloud-based applications weren’t customizable. By 2010 cloud technology began to be integrated into CRM software, allowing organizations to be able to pay per use. This made CRM software become more affordable for different kinds of organizations. Therefore, organizations of all sizes started implementing CRM solutions!

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It had become clear that everyone in the organization needed to be involved in customer relationship management activities, not just one solo department. Management, staff and technology were all required to be operating together to achieve CRM efficiency.

The 2010 & beyond: Cloud – Social – Mobile – Integrated CRM software

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In the second half of this decade, social media marketing was beginning to grab the attention of the organizations around the globe. They began to see the power of social media marketing to attract customers. Social CRM software exploded onto the market with the introduction of ComcastCares—an application that 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, largely due to their lower initial cost and easy integration with mobile devices.

As more companies look to expand and more startups look to grow in 2016, it certainly seems like the need and demand for a strong CRM software will only increase. With the ever changing world of technology showing no signs of slowing down either, it appears that the future of CRM software is linked closely with adapting to or integrating with new technologies as they are introduced. And from there, using these advances to better serve their potential buyers. Mobile CRM software is gaining popularity these days as customers look to be able to access businesses from anywhere.

The predicted goal is to reduce the on-site resources and equipment necessary to deliver CRM software. As companies are more ready to listen their customers, it seems like customers are going to drive innovation in a way that they never have been able to before, opening up CRM software to new areas of the business.

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