CRM Reading Lounge: The Essential CRM Guide

What is CRM and The Rise of CRM: This article is an excerpt from our free CRM Essentials ebook series.

CRM (Customer Relationship Management) is an attitude towards people.

CRM is about your customers, not your business per se. The premise is, of course, that your business will keep the customers whose needs it satisfies. Good customer relations, therefore, are a key component of a successful company, one that business owners and management should embody in their actions as well as their words. More than that, management must foster a customer-centric attitude in their staff. This is a point we will emphasize again and again: CRM is, primarily, having the right attitude towards customers and treating them as if they are important. Just as you don’t need software to manage relationships with your spouse, your family, or your friends (and if you do, you need more help than this book can offer) you don’t need software to have a successful CRM strategy.

However, given the technological emphasis and bias of CRM, “Computerized Relationship Management” might be a more fitting meaning for the acronym. So how, you might ask, can you expect a computer to manage relationships when computers are unable to understand the emotions that underlie every relationship? It can’t. You and your staff have to do that part. What CRM software can do is manage the data upon which your business will build better and stronger customer relationships. Even though that definition doesn’t translate neatly into a standard three-letter acronym, it is that concept, in its entirety, that we explore in this book.

The Rise and Rise of CRM

To fully understand the rapid rise in popularity of CRM systems, we need to take a look at the origins and influences that shaped this multi-billion dollar industry. Customer relationships are as old as the first barter and trade exchanges. You knew your customers personally, knew their families, knew their needs and weaknesses. As trade and markets expanded through the advent of sailing ships, the variety of goods changed, but customer relationships were still face-to-face and based on personal contact. Globalization changed the way we do business.

It could be argued that globalization began many centuries ago, but the modern, formal globalization began with the Bretton Woods conference after World War II. It was this economically sponsored but politically driven conference that gave the world institutions such as the International Monetary Fund (IMF), the World Bank, the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO).

The establishment of international currency regulations and free-trade agreements opened the way for the mass movement of goods across international borders. Initially, it was only the multinational corporations who benefited – although they had to overcome problems such as advertising slogans and pay-off lines that did not translate easily and were faced with growing databases of inventory, customers and prospects that needed to be managed. Computerization helped to do this, but in the 1960s and 1970s computers were expensive and needed large numbers of staff to run them and maintain them, let alone develop new systems. This meant that filing and storage systems were manual or mechanical for all except the wealthier companies.

Help, and hindrance, was on the way in the form of rapidly developing computer technology. The 1980s produced smaller and cheaper computers and faster and cheaper PC networks. As desktop PCs and local area networks replaced mainframe terminals, multiple software systems proliferated across multiple networks, often within a single business. Each network had its own closed database. Worse still, some of the software was running on local hard drives and the data was not centralized. The solution, for the multinational corporate businesses, was to get all their data into a centralized database. In the early 1990s, this, along with the looming year 2000 (Y2K) crisis, was the cue for enterprise resource planning (ERP).

What nobody expected was that the Internet, then the domain of academics and specialist IT people, would blossom and boom in the form of the World Wide Web. It was only after the release of web browsers, such as Mosaic and Netscape Navigator that the general public began to take an interest in the Web. By 1996 it was becoming obvious to many publicly traded companies that a Web presence was no longer an option, but a necessity.

When the dot-com bubble burst in 2001, it left telecommunication companies with excess capacity. This kept the cost of Internet connectivity low, and low-cost Internet connectivity encouraged use of the Internet by individuals, with a concomitant increase in email inquiries and online purchasing. The excess telecommunications bandwidth was a boon to small businesses as they found the way to large international markets open for a relatively small capital outlay.

It was the massive increase in Internet use and web-based sales in the 21st century that has driven the rise and rise of CRM systems. However, it is not only the large corporate businesses that can benefit from CRM; every business can derive benefits from organized and integrated systems.