The global customer relationship management market size was valued at $40.2 billion in 2019 and is expected to grow to more than $80 billion by 2025, Microsoft Dynamics 365 remains one of the market leaders.
How did the CRM market emerge and grow into such a paramount element of the modern-day sales business function?
Let’s start simple, the term “customer relationship management” known as CRM was actually only coined in 1995 and quickly became popularised from 1997 to 2000 by the work of the large players in sales software at the time such as Siebel, Gartner and IBM…
But we need to wind back even further than this to fully understand how this renowned term has become the robust, standalone software that so many businesses rely on today. Over the past decades, it has evolved out of a variety of other business programmes and during that time, the CRM industry has undergone drastic changes and improvements that have disrupted the entire concept.
The first CRM software programmes were one dimensional – filing cards with customer details were stored and used to contain very high-level customer information. Today, information & technology has revolutionised this type of CRM software, but the basic goal remains the same: use and manage customer data to generate sales.
1950s to 1970s: Independent mainframe solutions
This period saw the launch of independent mainframe systems, which could retrieve customer data and automate sales by creating and managing databases. Companies like IBM, NCR and Honeywell were the first to manufacture these systems, but the extent of the technology only allowed users to categorise customers in basic spreadsheets and lists. The systems were mainly used to digitise manual files to allow for quicker searching and to save storage space. During the same period, IBM coined the term “helpdesk” to refer to their calling screen system.
Pictured left: IBM System/360 Model 30 Pictured right:IBM system/360 Model 22
Mid 1980s: Database marketing
During the 1980’s sales reps shifted from direct marketing to database marketing. This was a drastic shift from cold outreach to contacts where the information was valid, to gaining extensive data on individual contacts which allowed companies to strategically customise their communications to improve conversion rates. These were the early days of integrating customer information with sales strategy.
Late 1980’s: Contact management software
In 1986, Conductor Software launched ACT! – the first contact management tool. The system was bulky, clunky, and required a high level of technical expertise to appropriately use and adopt. To use ‘ACT!’, companies had to invest a lot into the on-premise based system such as IT experts, expensive hardware and software. Marketers began consolidating and integrating platforms such as analytics, transactional databases, and customer data to create a more connected digital ecosystem that brought about internal benefits as well as more sophisticated sales strategies. Additionally, helpdesk started answering and resolving simple customer queries.
Early 1990s: Enterprise resource planning (ERP)
Following the 80s, the evolution of CRM made a rapid adjustment; database marketing transformed into sales force automation (SFA) and the CRM framework consolidated contact, lead and opportunity management into one CRM system; hence the term was coined during this decade. Furthermore, help desks became popular and companies began to empower their customer service team to help themselves via CRM systems.
Late 1990s: Online CRM
In 1999, Siebel launched the first mobile CRM called the Siebel Sales Handheld. Meanwhile, established enterprise resource planning (ERP) companies such as SAP, Oracle, Peoplesoft and Navision started to extend their sales, distribution, and customer service capabilities by embedding CRM modules within their ERP solutions. Main of these same companies launched their own mobile versions too in order to compete with Siebel but the software was ahead of the hardware at the time and therefore adoption was poor due to the affordability and lack of mobile devices.
1999 saw the advent of cloud CRM software. Companies began to realise that cloud-based services and solutions were a much cheaper alternative to maintaining large, complex and expensive on premise systems. Salesforce introduced the first software as a service (SaaS) CRM which initially was better suited to small businesses before quickly scaling up to become more powerful and cater to larger enterprises.
Early 2000s: The internet bubble
The dotcom bubble, also know as the internet bubble occurred from 1995 – 2000 whereby a rapid rise in US technology stock equity valuations fuelled by investments into internet-based companies caused exponential market growth that eventually lead to a market crash in 2001/2002 as equities entered a bear market. In 2003, Microsoft entered the CRM game with Microsoft Business Solutions Customer Relationship Management 1.0. Microsoft quickly became a leading player in the on-premise CRM industry by merging CRM with its legacy systems such as Office and Outlook to provide richer and connected functionality. During the same time, Helpdesk evolved into support centres.
Mid-Late 2000s: Cloud-based CRM & social CRM
SugarCRM pioneered open-source enterprise systems in 2004 which allowed companies to use CRM much more cheaply that the cost of on premise applications. The company later launched a cloud-based version which has now become a standard aspect of CRM solutions in the industry. The later part of this period saw CRM shift from a transaction model to an interaction relationship. Around 2009, developers began to profit from social media’s impressive momentum by designing tools to help companies become accessible on the users’ favourite networks. Some startups provided exclusive social CRM solutions such as Base and Nutshell and in the same year, Gartner organised the first Customer Relationship Management Summit whereby the company summarised the features that make up and classify a CRM system. In 2007, customer service systems began to enter the market too.
The CRM market certainly looks healthy and still in rapid growth with cloud-based and SaaS solutions gaining more traction and becoming increasingly essential for organisations. One trend that we have seen through the last decade is an increase of industry specific CRM solutions. These are specialised to perform specific actions and provide unique tools that are aligned to certain verticals making them a cheaper option than full customisation. Mobile CRM is seeing drastic growth with independent research organisations supporting the fact that companies with mobile CRM are outperforming those without and a in such a connected world, CRM users are working from increasingly remote locations.
The future of the CRM market is still highly promising. Business will continue to increase their investment into CRM solutions, and this is fuelled largely by improving sales results as well as the need to keep up with competitors who are equally trying to create a great customer experience. Companies such as Microsoft now offer a full suite of purpose-built business applications across their Dynamics 365 software stack that allows the CRM application (Dynamics 365 Sales) to seamlessly communicate and therefore benefit from the other applications that have been built under the same common data model to break down the traditional data silos that were experienced in recent decades.
The infusion of AI and other embedded intelligence tools also appears to be increasing and becoming more commonplace whilst the ability to customise CRM systems using out of the box, low code development tools is also becoming more prevalent and essential to the future of the industry. In addition, software such Microsoft Business Central also enhances customer service management and value. Its AI and cloud features is a plus for organisations.
2020 is set to still be “the year of the customer” with consumers performing an increasing amount of product research before engaging with individual CRM providers. In order to suitably engage with potential customers across multiple devices in multiple channels, you need data and processes. And CRM software enables users to create that ever so needed 360-degree view of every person you connect with.
What should you do?
If your business has yet to adopt a CRM, there has never been a better time to invest. And if you’re accessing your CRM system via desktop and other on-premise means, then you should start to evaluate a transition to the cloud and mobile.
Infinity Group are experienced Microsoft Dynamics 365 Consultants and Microsoft Partners and have implemented this platform for 100’s of businesses. Microsoft Dynamics offers the flexibility and functionality to support an SME looking for a basic CRM setup to an Enterprise looking for CRM and complex ERP functionality. Please get in touch to find out more.
Image credits IBM