This article is part of a larger series on CRM.
The term customer relationship management (CRM) is fairly new, but the process of managing customer data started decades ago. The early days of CRM were simply about filing customer profiles on paper, but with tremendous business transformation and progress in technology, CRM has transformed to where it is today. Amid all advancements in CRM, one thing remains the same: Properly managing customers’ data plays an integral role in driving business growth.
Below, we’ll go on a time travel to learn about the early beginnings of CRM. You’ll discover how it evolved from a mere pile of cards with basic customer information into a crucial aspect of modern-day sales operations.
1950s: The Invention of the Rolodex
One of the earliest forms of filing customers’ contact information is through the Rolodex—a rotating filing device invented by Danish engineer Hildaur Neilsen in 1956. Rolodex, a combination of the words “rolling” and “index,” is a desk tool that houses a collection of both index and business cards that people can spin and flip through. In the 1950s, many businesses used the Rolodex to add, update, and store their customers’ information.
1960s: The Mainframe System Becomes Available to Businesses
Mainframe systems are large computer systems used to store and process data. While the first mainframe system was invented between the 1930s and 1940s by Harvard researcher Howard Eiken, it only became available for businesses around the 1960s. Forward-looking companies moved on from the manual Rolodex to using mainframe computers to digitize customer information, such as names, addresses, and contact details.
1980s: The Beginning of Database Marketing & Contact Management Software
At the start of the 1980s, businesses found a way to make use of the customer information they collected through database marketing. Database marketing is the process of reaching out to customers in their database and offering them products or services. This was usually done through direct mail, where brochures and product catalogs were couriered to customers with the goal of convincing them to make a purchase.
Toward the latter part of the decade, businesses started practicing a more proactive approach to selling via outbound sales calls. During this time, computers also became more widely available to businesses, which made filing and managing customer information in a digital format possible.
In 1987, the first contact management software was created by a company called Conductor Software. Dubbed as ACT! (meaning “Activity Control Technology,” then changed to “Automated Contact Tracking”), the software was initially made for the manufacturing industry to track customer and prospect details in a single database.
Early 1990s: The Rise of Sales Force Automation
Years after database marketing and the first contact management software were introduced, new technologies kept being developed to better manage growing customer data. This paved the way for sales force automation (SFA), which businessman and technologist Tom Siebel pioneered.
In 1993, Siebel founded Siebel Systems, which initially offered sales automation tools, and later expanded to develop marketing and customer service applications. Siebel Systems became the market leader and most popular sales force automation system provider at that time.
Did you know? In 1995, the term customer relationship management, or CRM, was officially coined. However, there are debates on who exactly coined it. Suggestions as to who gave CRM its official name include Siebel Systems founder Tom Siebel, educator and globally renowned marketing expert Jagdish N. Seth, and the Gartner Group.
Late 1990s: The Introduction of Mobile CRM & Software as a Service (SaaS)
1999 saw the advent of a handheld CRM when Siebel Systems launched the first-ever mobile CRM called Siebel Sales Handheld. The device, running on the Windows CE OS, allowed users to exchange and sync customer information through the Siebel Sales Enterprise data. This made it possible for sales team members to remain up to date with all customer interactions. Oracle, SAP, and PeopleSoft followed suit and also released their own mobile versions.
Salesforce, a popular CRM service, also launched in 1999. It was designed to deliver software through a new model called software as a service (SaaS) during the time when the internet was becoming widely used. The goal of the company was to eliminate expensive upfront and maintenance costs, as well as lengthy system implementations. Salesforce would eventually own this space to become the world’s largest CRM vendor.
Early 2000s: The Growth of Cloud-based CRM & Open Source Software
Salesforce’s introduction of internet-based software achieved great success and dominated the 2000s. It was considered a breakthrough because it made it possible for users to access sales and customer data through any connected device.
2004 saw the creation of a free, open source CRM program when technologists Clint Oram, John Roberts, and Jacob Taylor worked on a project called Sugar Open Source. Leveraging their past experience working for IBM and Hewlett-Packard, they created and hosted the software on SourceForge, a repository for free and open source software. This eventually led them to found SugarCRM, making the Sugar Open Source version 1.0 publicly available.
Late 2000s: Social CRM Enters the Scene
In 2009, Salesforce reached another milestone when it introduced the Service Cloud. Using the SaaS model, the Service Cloud offered customer service and support automation features. In the same year, the first application built on Force.com for Apple’s iPhone was launched and became the first enterprise partner on Apple’s App Store.
The late 2000s was also referred to as the “Hashtag Age.” It was during this time businesses started using social media channels, such as Facebook and Twitter, as a way to interact with customers. Companies started using social media in their CRM strategy, shifting from transactional to interactive client relationship management.
Fast forward to the present time—social media has become an important channel in communicating with customers, and a lot of providers have included this feature in their systems. Check out our article on the best social CRM platforms and see how top providers can help you track your engagements, listen to your audience, and provide a way for you to communicate interactively with your customers.
2010s: The Explosion of Technology & Rise of CRM Providers
The last decade saw a dramatic advancement in technology and how businesses rely on it. During the 2010s, CRM systems—and technology in general—truly became mobile due to the increase of smartphones, tablets, and other smart devices. The industry shifted from simply using traditional desktops or laptops when accessing the internet to having on-the-go, multi-channel connectivity.
With these developments came an influx of dozens of new CRM software with their own unique selling propositions. Apart from simply offering universal CRM options, these providers specialize in addressing certain business needs or servicing specific industries, such as:
CRMs for accounting professionals are designed to help accountants, bookkeepers, and finance staff manage invoicing and billing in a centralized platform. It offers finance-related features, such as payment processing and tax computations.
CRMs for real estate professionals provide tools for managing property transactions, generating homebuying leads, and monitoring listings. It also offers features for tracking leads and marketing to them through email, phone, online advertising, and social media.
CRMs for construction businesses offer tools to manage contract leads, bids, and current projects. These include general contracting and specialty trades like carpentry, demolition, plumbing, electric work, restoration, and welding.
CRMs for insurance professionals—including independent insurance agents and brokers—help users prospect and nurture leads. It also tracks new deals and goals, manages policies and plans, and logs activities like emails and meeting interactions.
In the 2010s, CRM systems also saw an increase in integrations with hundreds of other business intelligence tools that are likewise undergoing rapid growth. These other types of software include:
- Accounting: Performs various accounting and bookkeeping tasks, such as invoicing, financial statements, bill payments, and payroll processing.
- Invoicing: Lets users create customized invoices quickly and get paid faster by allowing customers to pay online. It is often included in accounting software, but could also be purchased separately.
- Email marketing: Allows businesses to email their leads and customers individually or on a mass scale without leaving the tool. It also provides reports showing how the recipients interacted with emails.
- VoIP: Voice-over-internet-protocol (VoIP) systems transmit calls as data over the internet in order to provide cheaper calling, texting, and voicemail features than landline or cellular alternatives.
Today: Further Sophistication of CRMs & Building Customer Strategy
More sophisticated advancements in various CRM functionalities, such as analytics, reporting, and data intelligence when processing customer information, are inevitable. CRMs are expected to keep adapting a more robust, all-in-one nature, further reducing the need for third-party integrations.
Some of the most advanced and forward-thinking CRM providers have started integrating artificial intelligence (AI) into their software. Machine learning processes massive amounts of data for qualifying leads, automating tedious processes, and giving users the most comprehensive picture of each of their prospects.
Because of various advancements in CRM, it’s only natural that it is being integrated into businesses’ overall customer experience (CX) strategy. Moreover, it can accurately predict how customers will interact with their brand based on their past experiences. Businesses can see how customers behave, starting from awareness to evaluation and purchase phases. This ultimately enables them to personalize and customize their offerings on a granular level.
If you’re in the market for a CRM system, check out our guide on the best small business CRMs and see which one suits your business needs most.
CRMs have come a long way from their early beginnings as a humble desk tool called the Rolodex. One thing remains the same: Knowing who your customers are is paramount. While the extensiveness of customer information that businesses can manage has evolved tremendously, we can expect advancements in technology to continue helping businesses offer the best services to their customers in the years to come.