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Happy birthday, CRM

CRM is just approaching maturity, no matter how many candles on the cake. Enterprise Pursuits Nelson King 3/27/2001 Happy birthday, CRM CRM is just approaching maturity, no matter how many candles are on the cake.

There’s no way to wish CRM a happy birthday. First off, customer relationship management is a type of software–a category–and not a product with a specific first day of release (unlike a Lotus 1-2-3). Then too, CRM has been around for such a long time in so many guises that it’d be hard to decide what incarnation to celebrate. Nevertheless, it’s time light a candle for CRM, because it’s beginning to look like it’s maturing.

How so? Well for one thing, more than a few companies that use it are beginning to show it can generate profit. There’s the magic word. As dotcoms fall from the skies and big enterprise projects hit various brick walls, there are enough success stories about CRM to warm the heart of any capitalist (VC or otherwise). If I were a customer, I think I would be celebrating CRM too, but that’s another story.

For the company that chooses to implement “serious” CRM, the road to profitability hasn’t always been well paved. Companies have almost always collected customer data, even before there were computers. This information was mostly oriented toward transactions–for example, had such and such been shipped to so and so (and had they paid for it)? Some companies collected this information for traditional transaction purposes. When computers came along, it occurred to a few of them that other information about customers could be generated–information that reflected not only what they bought, but also what they might buy.

That’s when, I would submit, that true CRM was born. Of course it wasn’t called CRM. Not through the 60’s, 70’s, or 80’s. It was called variously contact management, sales lead generation, customer profiling, customer tracking, and so on. When PC’s came along, the business of customer information migrated quickly out of the glass room–where people understood the data but not the customers–to the sales force and marketing people, who at least theoretically understood the customers.

The marketing and salespeople, however, were somewhat nonplussed by their newfangled computing power, and the IT people were nonplussed at having to deal with the technologically ignorant while at the same time revealing that they didn’t understand what the customer data was supposed to do. This is truth: I have watched both sides flounder through this relationship for years–even decades.

CRM as software suffered the same bifurcation (uh, split) between the heavy-duty database management that only IT specialists could love (called data mining today) and lighter-duty but user-friendly software that brought the information to and from the sales and marketing people. Most of the PC software was in the latter group, and the databases in the IT group. I won’t say that never the twain did meet, but when they did, the joining was rarely seamless.

Then along came the Internet, of course, and changed everything. Well, not everything, but in the world of customer information it did a couple of things: It made it possible to gather and process a wider range of customer information than ever before, and it made it necessary to do so. If I could say that the Internet had one characteristic that impinged the most on business (which I can’t); it would be that differentiation became more difficult and yet more imperative. Some of the old differentiators such as price, brand, and image became much more difficult on the Internet. However, one of the things companies could do on the Internet (and related technologies such as email) is take proactive advantage of customer information. Customer service, customer cultivation, and customer relationships stood apart from the crowd and became important differentiators.

The shift in thinking about customer information from transactional to relationship orientation is in the process of being completed by the Internet. It’s a profound shift, I think, that will become more of the norm in retailing and even B2B. As we started to weather the change in the 90s, most of the PC contact management and sales force software companies either went out of business or merged with the more IT-oriented data mining and warehousing companies. The resulting mergers have fused with the new world order of the Internet to create CRM (by that very name).

In some ways, then, CRM is still in its infancy, and in other ways it’s very old. In my estimation that puts it on the verge of maturity. We know what CRM is now. We know what it is supposed to do. Some companies are even doing it. Sounds like an adult thing to me.

Editor at Large Nelson King also writes Pursuits monthly for ComputerUser magazine.

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