Brief History of CRM

The post presents the history of Customer Relationship Management (CRM) within the context of academic research and business applications. This is the excerpt English from the article published in Croatian in April 2010 in “Mreza”, magazine for IT professionals. The CRM history is described from its starts in mid eighties to day, with a view on the years to come.

The history of CRM can’t be observed without considering the development of business applications with contemporary academic research.

Eighties, THE second half

MARKETING SCHOLARS: After the concept of services marketing, particularly developed within the so-called Nordic school of marketing, a new concept has emerged. Early definitions of Relationship Marketing could be found mid eighties (1985 Jackson).

BUSINESS APPLICATIONS: Sales Force Automation (SFA) and Customer Service (CS) applications were still considered as part of the wide family of ERP solutions. Few years later a new and distinct software solution category emerged and SFA and CS became part of so called Customer Relationship Management (CRM) software.

Nineties, the first half

MARKETING SCHOLARS: Relationship Marketing has been studied by Morgan and Hunt (1994) and Reichheld (1996). In 1995 Relationship Marketing was defined by Koiranen as “approach to establishing, keeping and enhancing the long-term relationships with customers and other shareholders.”

BUSINESS APPLICATIONS: Analysts from the first half of the nineties still did not recognize the rising strength of CRM. SFA and CS were classified as a small sub-segment of the ERP market. In 1994 the total CRM software (SFA and CS) market amounted to around 200 million US dollars, compared to the 6.4 billion of the global ERP sales.

Nineties, the second half

MARKETING SCHOLARS: Unlike Relationship Marketing, the CRM was studied relatively late by the academics. First academic definitions of CRM were written relatively late compared to Relationship Marketing. In the 1999 Srivastava, Shervani and Fahey described CRM as a broader concept than Relationship Marketing defining it as “a process that identifies customers, creates knowledge about customers, builds relationships with customers, and forms customers’ perception around the organization and its offerings.”

BUSINESS APPLICATIONS: Towards the end of the nineties, CRM fever heats up. The awareness of the big new market is rapidly growing. Everyone sees the opportunity for a continued growth in a somewhat saturated ERP market. During previous years, ERP applications have generated and stored an impressive amount of data about customers, so indispensible to fuel successful CRM initiatives.

Year 2000 to date

MARKETING SCHOLARS: Despite some terminological dissonance, academics are better aligned with the business practice. Through basic research, they contribute to the development of business concepts that are being embedded within CRM.

BUSINESS APPLICATIONS: Many applications are experiencing their maturity, backed up by better understanding of business processes as well as motivation agendas of individuals and departments within organizations . This maturity was influenced by the evolution of information technologies backed up by cheaper and faster data storage systems, accessible broadband and flexible IT environments, like service-oriented architecture (SOA), SAAS (software as a service) and cloud computing.

2010 and years to come

MARKETING SCHOLARS: The intensive progress in behavioral studies over the past two decades creates the basis for “intelligent” approach to large customer segments. In addition to corporate business systems, such segments are emerging within the social networks of the coming years.

BUSINESS APPLICATIONS: Social networks are opening a new page on the CRM agenda. Facebook, Twitter, LinkedIn, Second Life and other engaging social media networks, enable a more precise segmentation, affinity grouping, customer participation in offer definition and their impact on formulating corporate strategies, in a way that has never been possible before.

 

Social Networks' role in CRM
Social networks in CRM ecosystems enable a more precise segmentation and customer involvement. ©2010 Alen Gojčeta, Mreza magazine April 2010

This is the excerpt in English from the article published in the issue of April 2010 of Croatian magazine for IT professionals “Mreža“. The work above us the copyright of Alen Gojčeta and the Mreža magazine. The CRM history is part of the findings of the research done for author’s master degree thesis “Segmentation models in CRM”, 2006.

 

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