Customer
Relationship Management (CRM)
is one of those magnificent
concepts that swept the business
world in the 1990’s with the
promise of forever changing
the way businesses small and
large interacted with their
customer bases. In the short
term, however, it proved to
be an unwieldy process that
was better in theory than in
practice for a variety of reasons.
First among these was that it
was simply so difficult and
expensive to track and keep
the high volume of records needed
accurately and constantly update
them. In the last several years,
however, newer software systems
and advanced tracking features
have vastly improved CRM capabilities
and the real promise of CRM
is becoming a reality. As the
price of newer, more customizable
Internet solutions have hit
the marketplace; competition
has driven the prices down so
that even relatively small businesses
are reaping the benefits of
some custom CRM programs. In
the beginning… The 1980’s saw
the emergence of database marketing,
which was simply a catch phrase
to define the practice of setting
up customer service groups to
speak individually to all of
a company’s customers. In the
case of larger, key clients
it was a valuable tool for keeping
the lines of communication open
and tailoring service to the
clients needs. In the case of
smaller clients, however, it
tended to provide repetitive,
survey-like information that
cluttered databases and didn’t
provide much insight. As companies
began tracking database information,
they realized that the bare
bones were all that was needed
in most cases: what they buy
regularly, what they spend,
what they do. Advances in the
1990’s In the 1990’s companies
began to improve on Customer
Relationship Management by making
it more of a two-way street.
Instead of simply gathering
data for their own use, they
began giving back to their customers
not only in terms of the obvious
goal of improved customer service,
but in incentives, gifts and
other perks for customer loyalty.
This was the beginning of the
now familiar frequent flyer
programs, bonus points on credit
cards and a host of other resources
that are based on CRM tracking
of customer activity and spending
patterns. CRM was now being
used as a way to increase sales
passively as well as through
active improvement of customer
service. True CRM comes of age
Real Customer Relationship Management
as it’s thought of today really
began in earnest in the early
years of this century. As software
companies began releasing newer,
more advanced solutions that
were customizable across industries,
it became feasible to really
use the information in a dynamic
way. Instead of feeding information
into a static database for future
reference, CRM became a way
to continuously update understanding
of customer needs and behavior.
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
the 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 business that rely
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 1990’s 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 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 mySAP 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!
This article on the "The History
of CRM" reprinted with permission.
Copyright © 2004-2005 Evaluseek
Publishing.
About the Author Lucy P. Roberts
is a successful freelance writer
providing practical information
and advice for businesses about
everything related to CRM software
solutions and live chat software.
Her numerous articles include
tips for saving both time and
money; product reviews and reports;
and other valuable insights
for persons searching the Internet
for information about how CRM
software works and related topics.
