If you’ve ever tried to track the history of CRM it’s not exactly a clear path – the vast number of definitions of the term is the issue because while we know the acronym stands for “Customer Relationship Management”, what that actually means has morphed over time.
For example, Salesforce suggest that if you want to define CRM as a transaction between a seller and a buyer then you can go back 20,000 years to the first recorded example of a trade. Apparently volcanic glass that was great for making knives was traded between islands that had this valuable natural resource and those that didn’t – one island was a customer; one was a vendor. But would you ever stand up and say that CRM started in the stone age?
So, if you believe CRM refers just to the software that we use to manage our customer relationships, you might point to the 1956 invention of the Rolodex as a starting point – if you remember, we used it to store valuable information about our business contacts, what’s that if it’s not an early non-tech version of contact management software?
Staying with this thought process – that CRM refers just to the actual software used – then proponents would probably argue that it was the 1987 launch of ACT! that signalled the start of the “CRM industry”. A piece of trivia for you – did you know that ACT! was originally an acronym for Activity Control Technology but was then amended to Automated Contact Tracking…
Moving away from the software, if you, like me, use the term CRM to refer to the way you use data both for informing decisions and targeted marketing, then we can perhaps look to Robert and Kate Kestnbaum who are considered the pioneers of database marketing. Back in the 1980’s, while ACT! was being introduce to salespeople to track their prospects and manage the sales process, the Kestnbaums were analysing customer databases to identify which of them would be most likely to react to a marketing campaign.
The Kestnbaum’s first clients were BT with a database of 20 million customers, British Airways with 10 million, and Barclays with 13 million, and through this work they devised customer lifetime value and other financial models that were applied to the companies’ marketing strategies. This approach took off and the Kestnbaums were then joined by another marketing pioneer, Robert Shaw, who added telephone and field sales channel automation, contact strategy optimisation, campaign management and co-ordination, marketing resource management, marketing accountability and marketing analytics.
This really was the start of targeted marketing as we know it today, but of course back then they were using non-digital channels as well as digital. Archie, the first ever search engine, was only developed in 1993, followed in 1994 by the first clickable advertising banner so it really wasn’t until the late 1990’s got under way and the early skills of the Kestnbaum’s could be used en-masse.
So, let’s take another look at CRM as a software and then CRM as a business strategy and see if we can put some date stamps to the different phases of CRM evolution.
CRM as a Software
I fight tirelessly to ensure the connection between the term “CRM” and the word “software” is broken…. or at least they have several additional words between them. For example, “the right software can enable your CRM progress”, or “within your CRM eco-system you will have different types of software”. This is because of the way the term has evolved – from being a piece of contact management or sales force automation software, to a way that we use data within a business. But for the purpose of this blog post let’s look just at the software see what history we can trace.
1987 – Few would argue that ACT! was the first commercially available software that allowed for the efficient storage and organisation of customer contact information: in effect, a digital Rolodex. Towards the end of the 1980’s, as the use of personal computers grew along with the advent of server/client architecture, we were getting ready for an explosion if the software development industry.
1993 – While many early innovators had started to develop systems that would push the evolution of contact management software toward sales force automation, it was Tom Siebel’s departure from Oracle to create Siebel Systems that really put a focus on this sector. Oracle had developed software for internal use that would take some of the features of Kestnbaum’s early database marketing approach, automate them, and combine them with contract management but when Siebel approached Oracle’s CEO, Larry Ellison, with a suggestion they develop this internal process as a stand-alone product, Siebel CRM was born.
1995 – Sales force automation and contact management had evolved, and the term CRM was adopted. ERP vendors like Oracle entered the market, using their might to start introducing more “CRM” functionality with a focus on marketing, sales, and service applications.
1999 – Salesforce is born, and let’s face it, you can’t look at a history of CRM and refer to sales force automation without mentioning them. And they do it in the cloud!
2002 – Siebel Systems holds an incredible 45% of the market for sales force automation and contact management software (i.e., “traditional CRM definition”), SAP are just behind with 16%, PeopleSoft 8% and Oracle 7%.
2003 – Microsoft CRM 1.0 is released offering basic contact management and email campaign functionality aimed at small and medium businesses. Note that in deference to my position that CRM is not just about software, Microsoft rebranded their product to Dynamics in 2016. That’s got to mean something, right?
2005 – Oracle buy Siebel Systems for €5.8 billion.
2008 – Salesforce reaches $1 billion in annual sales, the first cloud computing company to do so! 2020 – Google “CRM software” and you get 239,000,000 results in 0.62 seconds. I think it’s sufficient to say that the term is here to say but, in the meantime, let’s move on to a more interesting definition and look at CRM as a business strategy.
CRM as a Strategy
So, this is where it gets interesting to me – when we move away from “CRM as a software” and instead look at what CRM is supposed to do for you. And the definition we use for that is “right message right person right time” or my favourite which takes it from six words down to four is Don Pepper’s “treating different customers differently”.
So, let’s see if we can chart the history of this more evolved definition that reflects the use of data in our digital world.
1978 – a commercial email is sent as the first ever mass emailing…. although the “mass” was only to 400 recipients! Gary Thuerk, a Marketing Manager at Digital Equipment Corp, hit the SEND button, generated $13 million worth of sales, and launched email as an effective channel for direct marketing.
1991 – the Internet was unleashed on the world and completely revolutionised the way we live, work and play. And for marketers, provided a whole new way to get their messages in front of their target customers.
1992 – the first SMS message is sent by Vodafone – the text of the message was “Merry Christmas”!
1994 – The first clickable website banner ad was purchased by AT&T for $30,000 over three months and produced a 44% click through rate (CTR), a number that you’d struggle to deliver today. And so, began the world of web advertising!
1994 – Business Week published a cover story titled “Database Marketing”: “Companies are collecting mountains of information about you, crunching it to predict how likely you are to buy a product, and using that knowledge to craft a marketing message precisely calibrated to get you to do so… An earlier flush of enthusiasm prompted by the spread of checkout scanners in the 1980s ended in widespread disappointment: Many companies were too overwhelmed by the sheer quantity of data to do anything useful with the information… Still, many companies believe they have no choice but to brave the database-marketing frontier.”
1996 – Hotmail (originally HoTMaiL as a nod to “HTML”) was introduced so individuals could finally get free personal email addresses and lots of marketing emails! Email was previously used only for students and employees.
2004 – According to Google Trends, the term “digital marketing” was searched for four times in January that year with “data-driven marketing” first searched for in June the following year. I wish I knew who these forward-thinkers were. Maybe they all worked at Google?
2009 – ReturnPath reported that nearly 30% of commercial emails sent did not reach a recipient’s inbox and a lack of relevance was the biggest reason users decided to opt-out of emails. Now that recipients could dictate what email they chose to receive and were given the power to block those they didn’t want, marketers started to realise that they needed to be more strategic with what they were sending: just hitting send and hoping it would be received, opened, and read was no longer an option!
Also, this year Apple introduced APNS, Apple Push Notification Services for iPhone users. Now we could use mobile phones as well as email for sending targeted messaging!
2013 – Facebook introduce Custom Audiences to their Facebook advertising function with the “list upload” feature that enables marketers to include or exclude groups.
2014 – The global SMS messaging business was worth over $100 billion, and Google’s advertising introduced the ability to target users based on certain demographics. Now we’re using email, mobile phones, social channels, and websites to be provide targeted marketing channels!
2020 – There are now 1,258 marketing technology solutions that use data to provide targeted messaging and out of the whole martech environment, those platforms driven by data are growing at the fastest rate year on year: 25.5% versus 13.7% for social, 4.1% for advertising and promotion.
CRM as a way of ensuring the right message that gets to the right person at the right time, or to enable you to treat different customers differently, is here to stay! But what about the role of data to underpin all this personalisation, segmentation, and automation, the cornerstone of CRM intelligent customer engagement, or digital transformation. What’s the history there?
Data Analysis to Support CRM
Whether you’re looking at a traditional CRM definition of contact management and sales force automation software, or right message right person right time, both applications use data to underpin their functions so let’s take a look at a potted history of the use of analytics in business.
1911 – Frederick Winslow Taylor is credited as being one of industry’s first management consultants, and in his book “The Principles of Scientific Management” talked about time management exercises. Around this time Henry Ford was measuring the speed of assembly lines, driven by his desire to produce cars for the masses. This meant increased efficiency leading to a greater output.
1964 – As the modern computer is developed and became decision-making support systems, the analysis of data starts to receive more attention.
1970 – Edgar F Codd invented relational databases while working at IBM, using a structure that allows data to be represented in ordered lists and grouped into relations, more commonly referred to as database schemas. Codd’s paper, “A Relational Model of Data for Large Shared Data Banks” leads directly to the creation of SQL, the most common database programming language.
1989 – While the term Business Intelligence was first used in 1865 to describe a banker who profited from information by gathering and acting on it before his competition, it was Howard Dresner at Gartner who used it to describe making better business decisions through searching, gathering, and analysing an organisation’s the accumulated data. This year also saw the first Knowledge Discovery in Databases annual workshop that had three specific sessions: Data-Driven Discovery, Knowledge-Based Approaches, and Systems and Applications. The term KDD is still used today to refer to the process of finding knowledge in data, emphasising the “high-level” application of data mining methods.
2009 – The first time the words “data” and “sexy” are used in the same sentence when Google’s chief economist, Hal Varian, is interviewed for the McKinsey Quarterly and states: “I keep saying the sexy job in the next ten years will be statisticians. People think I’m joking, but who would’ve guessed that computer engineers would’ve been the sexy job of the 1990s? The ability to take data—to be able to understand it, to process it, to extract value from it, to visualize it, to communicate it—that’s going to be a hugely important skill in the next decades…”
2012 – The second time the words “data” and “sexy” are used in the same sentence with Harvard Business Review’s seminal article “Data Scientist: The Sexiest Job of the 21st Century”.
Fast forward to 2020 and the European Union published a report citing data as a critical skills gap across the continent and multiple publications in the USA stating the same shortage. The demand for data, whether we use CRM as a software or CRM as a strategy is not going away – it’s only ever increasing.
So, there you have it, a potted history of “CRM” but more importantly, not the usual run down of software launches. I’ve added the same timeline for the development of data-driven marketing and data science because in this day and age CRM is not just about software – regardless of Google’s search results!
To demonstrate the role of technology in today’s definition of CRM, Winners use a framework that considers five specific areas of focus, and technology is just one of them. Winners’ perfect circle also highlights the importance of strategy, data, process, and culture, and if you ask me to say which is the most important, I won’t. You have to place equal emphasis on all of them or the circle will collapse.
Where to go Next
If you want to learn more about Winners technology-neutral approach we’ve got two routes for you:
1) Read our book, Winning with Data: CRM and Analytics in the Business of Sports, the first and only book dedicated to the multiple disciplines applied by the sports industry for the use of data to inform decisions and support targeted marketing.
2) Take a look at our online course, packed with videos, quizzes, and exercises to help you upskill and meet the industry’s demand for more data skills. The course is based on a self-learning model so you can go through it at your own pace and focus on the areas that are of most interest to you, but you also have the opportunity to book one-to-one sessions with me and the course tutors at any time.