Customer Relationship Management (CRM) is one of those great concepts

who swept the business world in the 1990s with the promise of forever changing

the way companies small and large interact with their customer bases. In the

in the short term, however, it turned out to be an unwieldy process that was best in

theory than in practice for various reasons. The first of them was that

it was simply so difficult and expensive to track and maintain the high volume of

necessary records accurately and constantly update them.

In recent years, however, newer and more advanced software systems

Tracking features have greatly enhanced CRM capabilities and the true promise of

CRM is becoming a reality. As the newest and most customizable internet price

solutions have reached the market; competition has pushed prices down so

that even relatively small businesses are reaping the benefits of some customs

CRM programs.

At first…

The 1980s saw the rise of database marketing, which was simply a scam.

phrase to define the practice of establishing customer service groups to talk

individually to all customers of a company.

In the case of larger key clients, it was a valuable tool in maintaining

open lines of communication and service tailored to customer needs. In the

However, for smaller clients, it tended to provide repetitive survey-like information.

information that cluttered the databases and did not provide much information. ace

companies began to scour the information in the database, they realized that the basic bones

were all that was needed in most cases: what they buy regularly, what

spend, what they do.

Advances in the 1990s

In the 1990s, companies began to get better at managing customer relationships.

making it more like a two-way street. Instead of simply collecting data to

for their own use, they began to give back to their clients not only in terms of

the obvious objective of improving customer service, but in incentives, gifts and

other advantages for customer loyalty.

This was the beginning of the now familiar frequent flyer programs, voucher

points on credit cards and a number of other resources that are based on CRM

Track customer activity and spending patterns. CRM was now 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 is thought of today, really began

seriously in the early years of this century. When software companies started

releasing newer and more advanced solutions that could be customized in

industries, it became feasible to actually use information dynamically.

Instead of entering information into a static database for future reference,

CRM has become a way to continually update the understanding of customer needs and

behaviour. Information branching, subfolders and custom features

allowed companies to break down information into smaller subsets so that

could evaluate not only concrete statistics, but information about motivation

and customer reactions.

The Internet provided a great help in the development of these huge databases.

by enabling off-site storage of information. Where before companies struggled

Supporting the enormous amounts of information, the Internet provided new

possibilities and CRM took off when vendors began to move to the Internet

solutions

With the greater fluidity of these programs came a less rigid relationship

between sales, customer service and marketing. CRM enabled the development of

new strategies for a more cooperative work between these different divisions

through shared information and understanding, leading to an increase in customers

satisfaction from the order to the final product.

Today, CRM is still used with increasing frequency by companies that rely heavily on

in two well differentiated characteristics: customer service or technology. The three sectors of

The companies that rely the most on CRM, and use it to great advantage, are

financial services, a variety of high-tech corporations, and the

telecommunication industry

The financial services industry, in particular, tracks the customer level

satisfaction and what customers are looking for in terms of changes and

custom features. They also track changes in investing and spending habits.

patterns as the economy changes. Industry-specific software can give

Financial service providers truly impressive feedback in these areas.

Who’s in the CRM game?

Around 50% of the CRM market is currently split between five major players

in the industry: PeopleSoft, Oracle, SAP, Siebel and relatively new

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, though

Microsoft’s new appearance in the CRM market may bring about a change soon. Either

Whether Microsoft can capture a piece of the market remains to be seen. However, their

Brand familiarity can give them an advantage with small businesses considering a

CRM package for the first time.

PeopleSoft was founded in the mid-1980s by Ken Morris and Dave

Duffield as a client-server based HR application. In 1998,

PeopleSoft had become a purely Internet-based system, PeopleSoft 8.

There is no client software to maintain and it supports over 150 applications.

PeopleSoft 8 is the brainchild of over 2,000 dedicated developers and $500

millions in research and development.

PeopleSoft built on its original human resources platform in the

1990 and now supports everything from customer service to supply chain

management. Its easy-to-use system that requires minimal training is relatively

cheap to implement. .

One of PeopleSoft’s major contributions to CRM was its detailed analysis

program that identifies and ranks customer importance based on numerous

criteria, including purchase amount, cost to supply, and frequency of

Service.

Oracle built a strong base of high-end customers in the late 1980s,

then burst into national attention around 1990 when, under Tom Siebel, the

company aggressively marketed a CRM solution for small and medium-sized businesses.

Unfortunately, they couldn’t keep up with the incredible sales that

reaped and ran into some years of real trouble.

Oracle landed on its feet after a restructuring and its own refocus on

customer needs, and by the mid-1990s, the company once again became a leader in CRM.

technologies continue to be one of the leaders in the company.

market with Oracle Customer Data Management System.

Telemation’s CRM solution is flexible and easy to use, with a

toolkit that makes changing features and settings relatively easy. The system

it also provides a fast learning environment that newcomers will appreciate. Their

The singularity is 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 yes

That is, Telemation is ahead of the game.

The last years…

In 2002, Oracle released its 90-day Global CRM package that promised

rapid implementation of CRM in all company offices. Offered with the package

it was a flat fee service for setup 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 able to connect SAP systems to external and

front and back office systems for a unified operation that links partners,

employees, processes and technologies in a closed loop function.

siebel

consistently based its business primarily on enterprise-size companies 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 fell due to several

CRM firms joined the fray as ASPs (Application Service Providers). Thesis

Companies including UpShot, NetSuite, and SalesNet offered CRM-style business

data tracking and management without the high cost of traditional CRM startups.

In October 2003, Siebel launched CRM OnDemand in collaboration with IBM.

Its entry into the hosted monthly CRM solution niche hit the market with

scabies force For some of the monthly ASPs it was a call to arms, for others it was

a sign of Siebel’s growing confusion over brand identity and growing loss

of market share. In a stroke of genius, Siebel acquired UpShot a few months

later to get them started and smooth their transition to the ASP market. It’s

it was a successful move.

With Microsoft now in the game, it’s too early to tell.

what the results will be, but it seems likely that they may get a piece of

small businesses that tend to buy based on familiarity and usability. will of asp

It will continue to grow in popularity as well, especially among midsize businesses, so

Companies like NetSuite, SalesNet, and Siebel’s OnDemand will thrive. CRM in the

The web has come of age!

This article on “The History of CRM” reprinted with

permission.

Copyright © 2004-2005 Evaluseek Publishing.