The Story So Far

Customer Relationship management (CRM) may be a new buzzword - it was coined in the early 1990s - but it's based on a pair of century-old ideas: that technology can make salespeople more efficient and effective and that the best way to sell your products is to know your customer.

By the late 19th century, the Industrial Revolution had made manufactured products plentiful and cheap. Businesses then began trying to apply the same systematic approach they had used to make production more efficient to the age-old practice of selling.

John Henry Patterson, who founded National Cash Register Co. in 1884, gets credit for inventing sales presentations, sales territories and sales quotas. And in 1911, Olympic swimmer and Chicago Tribune advertising staffer Henry Jamison "Jam" Handy began researching why customers bought the products they did and explaining it to salesmen. He used flip charts and industrial films to give trainees a major advantage over the "shoeshine and a smile" approach of earlier salesmen.

Getting Organized

In 1947, another advance in sales technology came when Morris Perkin, an attorney in Allentown, Pa., designed a system that combined an appointment book, a tickler reminder system, a detailed time record, a diary and record of all work done and activities, and a work planner and organizer. His creation, the Day-Timer, eventually became a key tool for salespeople to efficiently manage their time. In 1950, inventor Arnold Neustadter began selling his Rolodex circular card file - then the state of the art for keeping track of sales contacts.

Meanwhile, large businesses were laying the groundwork for the high-technology end of the process: corporate data processing. IBM and Remington Rand were selling punch-card sorters to bookkeeping departments for tracking customer transactions. In 1952, Remington Rand began delivering its model 409 - the first computer designed specifically for business applications - and IBM rolled out the model 701, its first vacuum-tube computer.

The proliferation of mainframe computers and service companies such as Ross Perot's Electronic Data Systems Corp., which in 1962 began renting computer time to companies that couldn't afford to buy mainframes, meant that by the late 1960s, almost all government and corporate data on customer transactions was in electronic form.

Although the number of transactions stored on computers increased spectacularly through the 1960s and 1970s, computer and programming time was too expensive for most companies to use for anything but the simplest sales support. By the early 1980s, there were a few expensive, specialized sales support systems available.

But in 1985, salesman Pat Sullivan created Act, the first commercial PC-based contact management software. It was specifically designed to let salespeople track prospects, customers and customer data on a desktop computer instead of manually. Act was the first major step forward for salespeople since the Day-Timer, and it convinced corporate information systems departments that technology could do a much better job of supporting salespeople.

However, few of the sales force automation projects launched by corporate IT shops in the late 1980s and early 1990s were successful. Some salespeople resisted the technology itself, but more objected to the idea that a computer program was telling them how to deal with customers.

Big Changes

But two other changes in the technology environment made a shift inevitable. One was the opening of the Internet to commercial activity. The World Wide Web gave birth to online stores - and the ability to track customer behavior very closely with technology such as "cookies," which were introduced in Netscape Navigator in 1994. Suddenly, it was possible to use customer information to customize sales pitches on the fly.

The other change was the widespread use of PC-based client/server tools to access and juggle customer transaction data. Online analytical processing made data mining a reality - which, in turn, made even more customized marketing practical.

By the mid-1990s, CRM had become the new buzzword that combined sales force automation, sales-pitch customization and other systems of managing and using customer information. Siebel Systems Inc. in San Mateo, Calif., adopted CRM early as a way of distinguishing itself from other large packaged-system vendors. But today, SAP AG, Oracle Corp. and every other enterprise resource planning vendor offers CRM, too.

And now, on with the story . . .

Special Report

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Sober CRM

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Copyright © 2002 IDG Communications, Inc.

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