Although customer relationship management (CRM) software has only been around for a few decades, business has come a long way in understanding and using what it knows about customers to drive sales and improve the overall consumer experience. Different companies use customer-driven data in different ways, and to varying degrees of success, but the overall themes of customer engagement and influence are only becoming more prominent as the Internet takes its place in the culture of everything.
1980s: Database Marketing and Relationship Marketing — The Birth of an Idea
Customer relationship management has firm roots within two forms of marketing that came to prominence as real-world models in the 1980s and 1990s:
- database marketing, the concept that customer directories could be kept and maintained to create smoother direct marketing, and
- relationship marketing, the concept that developing long-term customer retention through satisfaction and valuable friendships could be beneficial to a business.
These theories of effective marketing management became academic subjects of study as people realized their implications on the world economy.
Unlike traditional mass market efforts, database marketing and relationship marketing focus on the idea that granularity in the customer experience leads to personalization, friendship, and a significant reduction in churn due to long-term retention. By tailoring marketing and sales efforts to intended recipients, businesses began to see that these strategies actually increased the effectiveness of their marketing messages and sales calls.
Such a shift in paradigm about the customer’s role in the longevity of a business required an intimate knowledge of consumer behavior. Coupled with the rise of the Internet and personal computing, this shift created a need for storing huge amounts of data, leading to the development of computerized databases in which this information could be studied, stored, and re-applied to future sales.
Initially these tools were helpful primarily to very large organizations. Small businesses that worked with just a few clients didn’t initially benefit from the nascent large-scale, data-driven communication techniques of technologies at the time.
The stage was practically set, however, for the next step as it became clear that a scalable answer to customer management using databases was exactly what business needed to stay relevant in the age of the web.
More reading on relationship management and database marketing
- The Commitment-Trust Theory of Relationship Marketing, by Robert M. Morgan and Shelby D. Hunt
- Implementing a relationship marketing program: a case study and managerial implications, by Glenn B. Voss and Zannie Giraud Voss
- A Framework for Drivers and Enablers of Relationship Marketing, by Arne Floh and Horst Treiblmaier