Customer relationship management (CRM) is an approach to manage a company’s interaction with current and potential customers. It uses data analysis about customers’ history with a company to improve business relationships with customers, specifically focusing on customer retention and ultimately driving sales growth.
One important aspect of the CRM approach is the systems of CRM that compile data from a range of different communication channels, including a company’s website, telephone, email, live chat, marketing materials, and more recently, social media. Through the CRM approach and the systems used to facilitate it, businesses learn more about their target audiences and how to best cater to their needs.
The concept of customer relationship management started in the early 1970s, when customer satisfaction was evaluated using annual surveys or by front-line asking. At that time, businesses had to rely on standalone mainframe systems to automate sales, but the extent of technology allowed them to categorize customers in spreadsheets and lists. In 1982, Kate and Robert Kestnbaum introduced the concept of Database marketing, namely applying statistical methods to analyze and gather customer data. By 1986, Pat Sullivan and Mike Muhney released a customer evaluation system called ACT! based on the principle of digital rolodex, which offered a contact management service for the first time.
The trend was followed by numerous developers trying to maximize leads’ potential, including Tom Siebel, who signed the first CRM product Siebel Systems in 1993. Nevertheless, customer relationship management popularized in 1997, due to the work of Siebel, Gartner, and IBM. Between 1997 and 2000, leading CRM products were enriched with enterprise resource planning functions, and shipping and marketing capabilities. Siebel introduced the first mobile CRM app called Siebel Sales Handheld in 1999. The idea of a cloud-hosted and moveable customer bases was soon adopted by other leading providers at the time, including PeopleSoft, Oracle, and SAP.
The first open-source CRM system was developed by SugarCRM in 2004. During this period, CRM was rapidly migrating to cloud, as a result of which it became accessible to sole entrepreneurs and small teams, and underwent a huge wave of price reduction. Around 2009, developers began considering the options to profit from social media’s momentum, and designed tools to help companies become accessible on all users’ favorite networks. Many startups at the time benefited from this trend to provide exclusively social CRM solutions, including Base and Nutshell. The same year, Gartner organized and held the first Customer Relationship Management Summit, and summarized the features systems should offer to be classified as CRM solutions. In 2013 and 2014, most of the popular CRM products were linked to business intelligence systems and communication software to improve corporate communication and end-users’ experience. The leading trend is to replace standardized CRM solutions with industry-specific ones, or to make them customizable enough to meet the needs of every business.