Evolution of CRM: Timeline, Milestones, and Future Challenges

CRM Timeline Overview

The evolution of Customer Relationship Management (CRM) can be traced across three broad periods. In the 1970s and 1980s, business was primarily product-centric, though the foundations of CRM began to take shape. By the 1990s, CRM started gaining popularity among organizations as competitive pressures mounted. In the 21st century, the advent of e-CRM established CRM as one of the most important tools in the success of any modern business.

Key Milestones in CRM Evolution

In the early 1990s, following the initial development of CRM thinking in the 1970s and 1980s, many organizations began returning to the way business had been conducted in the pre-industrialized era — that is, on the basis of strong, direct relationships with customers. The introduction of the internet played a very important role in driving CRM adoption, as increased connectivity and a trend toward deregulation intensified competition. Organizations came to recognize that their customers were their most important asset, and customers were given a level of importance and respect they had not experienced before.

In the 1960s and 1970s, the primary goal for most companies was to sell as many products as possible, resulting in a highly product-centric approach. This trend began to shift in the late 1970s as organizations started to recognize the importance of their customers (Khera, 2010).

CRM's popularity grew further in the 1990s when the internet became widespread and many companies moved online. During this period, companies recognized how critical a strong customer base was to surviving intensifying competition. Customers were no longer left waiting for hours to speak with a customer service representative or forced to stand in long lines. They began to realize their own value and rights, and through globalization and the internet, they could compare prices, quality, and product features across different brands to choose whatever suited them best (Khera, 2010).

Recognizing this shift, organizations became increasingly attentive to average consumers. They understood that these customers — more so than large business clients — would help grow their customer base. As a result, organizations began giving greater importance to individual consumers rather than focusing exclusively on business customers, revenues, profits, or margins — a priority that had not existed before (Khera, 2010).

The Rise of Customer Databases and e-CRM

At the end of the 20th century and into the early 21st century, many online organizations — or their online branches — shut down. This development led companies to appreciate the importance of their enterprise customers more acutely. In response, e-CRM was launched with the primary goal of ensuring that all customers were catered to. However, because e-CRM applications responded to all customers uniformly through automated processes, customers who wanted their needs addressed on an individual basis were often overlooked (Khera, 2010).

To address this limitation of automated responses, organizations developed customer information databases. The internet was instrumental in making this infrastructure possible. To build these databases, companies drew on multiple internal departments, including Contact Centers, Sales, Field Assistance, Marketing, Billing, Accounting, and Distribution and Logistics. The underlying rationale was that in an increasingly competitive environment, organizations could only survive by meeting not just the general needs of customers but their individual needs as well. By collecting data about individual customers, organizations became capable of understanding personal preferences and tailoring their products and offerings to attract the maximum number of customers. For this reason, the customer database became the single most significant factor influencing CRM outcomes — positively or negatively — depending on how an organization acquires, analyzes, and reviews that data (Thomas et al., 2001).

To ensure that collected information is accurate and usable, most organizations now maintain dedicated departments for information warehousing, information quality, and information mining. The information warehouse collects and stores customer data; the information quality function ensures the accuracy of that data; and information mining extracts relevant insights from the stored information (Thomas et al., 2001).

Conclusion

Organizations have recognized that a relationship-centric approach toward customers is far more important than a purely product-centric one. In today's business environment, an organization can only survive if its customers are loyal to it, and that loyalty is only achievable when the organization has built a strong, customer-focused relationship at its core.

References

Khera, M. (2010). The evolution of CRM and the challenges of personalized e-support. Maaya Corporation.

Sheth, J. N., & Parvatiyar, A. (1995). The evolution of relationship marketing. International Business Review, 4(4), 397–418.

Thomas, J. C., Kellogg, W. A., & Erickson, T. (2001). The knowledge management puzzle: Human factors and knowledge management. IBM Systems Journal, 40(4).

Webster, F. E., Jr. (1992). The changing role of marketing in the corporation. Journal of Marketing, 56(4), 1–17.