A Brief History of CRM: How We Got Here and What's Next

Customer relationship management (CRM) is a mission-critical technology for almost every business today. 

Its unified customer database includes contacts, company names, and activities related to a business' interactions with customers. CRM plays an indispensable role in most sales organizations. But it wasn't always so popular, and its history tells an interesting story, taking place at the intersection of technology, sales, and human interaction.

The 1950s: Two inventions, one decade

CRM has always been around for Millennial and younger generation sales professionals, but previous generation sales professionals had to manage customer data manually. The Rolodex was CRM’s standard analog version. It consisted of a series of rings containing cards on which you could write a contact's information. 

Usually, these were organized alphabetically by last name or company name, and you could scroll through to find relevant information when making sales calls. The Rolodex was such a standard sales tool that the phrase "having a big Rolodex" translated to having many professional contacts.

Today, all this information is contained within the CRM, making it searchable and extensible. CRM software can manage not just contact data but also data from activities, conversations, purchase history, and much more. The best part about CRM is that anyone on the sales team can access it, which fosters transparency and clear communication.

Advanced sales technologies leverage the CRM database as a centralized repository that guides salespeople through different stages of the sales process, arming them with content, effective coaching, and analytical tools and insights. CRM helps managers and sales leaders create better sales strategies and build individual coaching and development.

CRM grew out of two key inventions: analog and digital. Both emerged in the 1950s, long before anyone used the terms "CRM," “the Rolodex,” or “the mainframe computer”.

The heyday of door-to-door sales and the advent of the mainframe computer

Door-to-door selling was quite popular in the 1950s. Salespeople were trained to pitch products, such as vacuum cleaners, brush sets, and hosiery, to homemakers and families, who would then talk about these products over dinner. This sale was straightforward, with vendors often visiting only a specific family.

Salespeople kept extensive records of their contacts to follow up on hesitant prospects. Many carried books full of contacts or left lists in a shoebox or desk drawer.

Meanwhile, business-to-business (B2B) sellers were experiencing a revolution. Arnold Neustadter and Hildaur Neilson invented a new way of managing contacts, the Rolodex, in response to the needs of business people around the world.

The Rolodex was a circular index card holder with plastic handles that made it easy to scroll through contacts to find the needed information. "Rolodex" was short for "Rolling Index". Arnold and Hildaur started marketing the device in 1958, eventually becoming a staple for salespeople.

In a seemingly unrelated field, another, slightly more glamorous invention took hold: the mainframe computer. Inventors had dreamed of computing devices for hundreds of years, but the mid-20th century finally brought the technology needed to make the concept a reality.

The Z4, a digital computer designed by German engineer Konrad Zuse, was sold to ETH Zurich in 1950 and was possibly the first commercially available digital computer. The Z4 enjoyed brief notoriety but never became widespread, thanks to the burgeoning mainframe in the corporate market around the same time that was more commercially viable.

The first mainframe, the Harvard Mark I, went into operation in 1944. It weighed five tons, took seven years to build, and filled an entire room. Its computing power was lower than that of the usual school calculator and would be completely overshadowed by any smartphone.

Several companies began developing mainframe technology for commercial use in the 1950s. IBM is the best known, but Univac, General Electric, RCA, and others also worked on it. These mainframe computers gradually became affordable and practical for business use in the same decade and continued into the next.

These two developments, the business use of digital computers and the advent of the Rolodex, laid the roots for modern CRM.

The 1970s: Digitizing customer information

In the 1970s, some pioneering companies began using mainframe computers to digitize customer information. These simple systems could contain contact information, such as phone numbers and addresses. They collected the information in one central location and made it available to the entire organization.

These rudimentary CRMs improved the analog Rolodex in some ways but had severe limitations. Computers were still big and usually took up most of a room.

To access them, users had to log into a "terminal," which consisted of a monitor, keyboard (no mouse), and wired connection to the mainframe. This inevitably meant they had to be on-site to prevent access to the database while salespeople were on the phone or going door to door.

Mainframe user interfaces were nothing like today's intuitive graphical user interfaces (GUIs). Users had to learn to navigate using a text-based prompt system like command line interfaces (CLI). They needed to know a vocabulary of text commands and how to type them correctly to transfer the data to the desired location. There were no graphics, user interface, or mouse input.

This compelled many companies to train their sales force to understand and embrace the technology. Mainframe acquisition was a problem because it was cumbersome for salespeople, who often found no incentive to share any information with their companies.

Contact information has been a valuable resource and often one of the keys to a salesperson’s success. Sales reps understood that once they entered information into the mainframe, it became company property. Most preferred to keep it to themselves in their Rolodexes. This didn't change much until CRM became more practical and useful in the 1980s and 90s.

The 1980s: The personal computer and the world’s first real contact management system

In the 1980s, computers became much smaller. For the first time in history, the digital computer could be built in a size that made it practical and inexpensive for ordinary people to have one in their homes.

Early adopters eagerly bought the Sinclair ZX80, the Texas Instruments TI 99/4, and the Commodore VIC-20. In 1982, the famous Commodore 64 came with its 64K of RAM and actual graphics capability, and consumers gobbled it up.

Television shows taught audiences the amazing capabilities of these home technologies, and computer manufacturers competed to capture a slice of the growing market.

These early home computers were excruciatingly slow by modern standards and had limited capabilities. Savvy companies incorporated them into their tech stack, but software makers struggled to make them useful.

Some forward-thinking companies equipped their sales force with personal computers. In some cases, these computers were portable, allowing sales reps to carry them on the go and enter contact information into rudimentary CRM-like systems. This advancement increased PC adoption rates as PCs were more practical and realistic tools for sales departments.

In 1987, Mike Muhney and Pat Sullivan created a revolutionary software product for personal computers called ACT! They allowed sales reps to maintain their contacts in a digital format and offered rudimentary search and analytics capabilities.

Although "customer relationship management" and "CRM" were still a few years away, many sales professionals consider ACT! the first true CRM. Despite these advances, digitized contact management remained a niche tool, and adoption rates remained low into the 1990s.

The 1990s: CRM expands rapidly

CRM gained significant speed in the 1990s, alongside several major technological advancements. For one, personal computers became mainstream at home and work. Internet’s birth in the 1960s as an academic research project turned into a global commercial network.

This led to an explosion in internet use for personal and commercial purposes. Internet-based businesses naturally took off. Companies started setting up corporate websites, although they were still considered modern, and many companies didn't see their value.

Email came along and changed the way people communicated. While phone calls were still the most common form of instant long-distance communication, email became popular, allowing salespeople to instantly deliver a written message to contacts. It was also free when long-distance calls were expensive.

Toward the end of the 1990s, the internet became more accessible, and BlackBerry came along. BlackBerry was a handheld device that resembled a primitive smartphone but was far less advanced. The user interface was less intuitive than modern smartphones, and touchscreens were still a thing of the future. 

Entries had to be made via a tiny connected keyboard. Despite this, BlackBerry revolutionized the way salespeople and others could communicate on the go. By providing access to the internet, BlackBerry enabled salespeople to send emails, text messages, and make phone calls using the same device.

Meanwhile, the internet allowed sales reps (especially B2B sellers) to gather information about contacts before they even spoke to them. They could research companies online, create online surveys, and find out the organizational structure of companies with websites.

Technology companies jumped on the bandwagon to develop tools for the sales industry. For example, Siebel Systems built on the legacy contact management systems like ACT! and developed the first Sales Force Automation (SFA) tools.

These newfound technologies simplified tracking contact information and automated previously manual tasks like tracking customer interactions. The glamorized databases evolved rapidly in the 1990s, and the term Customer Relationship Management emerged.

Many large CRM companies began consolidating with other technology companies to develop comprehensive business tools. Linking CRM to enterprise resource planning (ERP) tools allowed companies to connect sales to inventory but also introduced significant technical complexity that many users dismissed.

Smaller CRM companies entered the market to offer simpler solutions. Some companies used the internet to provide users with collaboration tools that enabled data sharing and communication within the CRM system.

Siebel Handheld launched the first handheld CRM. In the late 1990s, Salesforce, now the largest CRM company, launched the first Software as a Service (SaaS) CRM. This new player, who was scrappy and young in the late 1990s, became the main sales player for the whole of the next decade.

The 2000s: The cloud and smartphones signal a tectonic shift

In the 2000s, cloud-based storage and applications became widespread. During this decade, Salesforce took the CRM world by introducing a cloud-based CRM platform.

Founded by Mark Benioff, a former Oracle executive, and inspired by Amazon.com, Salesforce pioneered the software industry's move to the cloud.

It also took inspiration from Amazon's famous tab feature to navigate between modules and data lists. Salesforce simplified CRM usage for smaller companies that could quickly get started without large upfront investments in hardware and ongoing maintenance.

The smartphone also appeared in this decade and was quickly adopted by salespeople and consumers alike. The smartphone was a major improvement over BlackBerry, offering a graphical user interface and a touchscreen.

App developers jumped into the market, offering salespeople ways to work from their phones in ways they never dreamed of in the 1990s. Meanwhile, Salesforce continued to expand its platform.

It was built on the idea that recording, tracking, and accessing customer data in the cloud should be easy. It also introduced the ability to automate manual tasks and manage and schedule sales activities with contacts.

Meanwhile, smaller companies entered the market offering cheaper or simpler versions of a cloud-based CRM, often with different or, in some cases, revolutionary features.

The 2010s: CRM becomes a behemoth

In the 2010s, Salesforce continued to grow in the CRM market. From a scrappy little company in the late 1990s, it grew into a giant in the market. As its revenue and user count grew, so did its complexity.

It took over smaller organizations and added new functionality at breakneck speed. At Steve Jobs' recommendation, Salesforce introduced an app store-like marketplace to allow third-party vendors to develop add-on products for Salesforce customers.

Hundreds of other sales tools since hit the market. Some of these were CRM competitors, while others offered tools to record calls, automate emails, create org charts, analyze data, create charts of accounts, or perform other functions that traditional CRM systems lacked.

Marketing automation emerged when Hubspot introduced the concept of inbound marketing. Content marketing also became a buzzword. This changed how leads were routed to the sales team and fueled the emergence of more technologies to integrate data from marketing into sales.

While each new technology tried to solve a problem, the proliferation of software also created problems. The biggest challenge for most sales organizations in the 2010s was managing their growing “tech stack” – the collection of technologies they were trying to use to manage their workload.

Changing customer expectations and behaviors also prompted a change in the 2010s, forcing salespeople to become more efficient and find new ways to connect with customers. Tools like social media and instant messaging meant that sales reps and customer service representatives needed to be available across multiple platforms and channels, resulting in CRM having to integrate data coming from those platforms.

Salesforce kept pace by continuing to acquire and consolidate, adding features, and becoming the "one system that can do it all". But despite the explosion of available technology, sales effectiveness stagnated for most of the decade, suggesting that all was not well in the CRM world.

The 2020s: Making CRM serve the people

The 2020s is still a young decade. However, there is no doubt that it has already changed the distribution and technology world significantly and will continue to do so at a breathtaking pace.

One of the biggest challenges for the industry this decade will be reducing complexity. The massive growth in technology in the 2010s led to a correspondingly massive increase in complexity. Due to the growth rate, most of that complexity has been patched together, creating gargantuan software platforms everyone dislikes.

Salespeople who once managed their entire business with a phone, a car, and a Rolodex now manage dozens of apps and platforms. They switch between CRM, content management, and communication platforms throughout the day.

Many feel they’re drowning in complexity, and this seems endless. Platforms like Salesforce promise a consolidated system and the ability to do everything in one place. Still, to achieve what Salesforce promises, companies must invest heavily and spend years integrating all the tools and modules for the necessary functionalities.

Consolidation focuses more on the data that still affects the user experience and, ultimately, the people who use it. No one knows exactly where CRM will be headed in this decade, but the sales industry is crying out for a revolution.

The CRM of the future shouldn’t only manage data, but help salespeople and customers manage complexity. It should guide salespeople through different processes and provide training and information in the real-time context of their day-to-day work.

They should be able to visualize where customers are in each sales process, what else is needed from each contact, and get access to activation content in context.

The CRM technology of the future will be simple, streamlined, beautiful, and easy to implement. It will integrate the advances of the last thirty years to make the lives of salespeople and their customers easier, improve win rates, and support collaboration.

CRM will also provide analytics and insights for the leadership team, enable better coaching and support, and make it easy for leaders to see what they need to make good decisions.

The CRM of the future will focus on sales effectiveness and help salespeople help customers. To achieve this, software makers of the 2020s need to move away from complexity and build technology that empowers the people who use it.

Modern CRM has come a long way

Modern CRM has come a long way since the 1950s, when it was only dreamed of in the form of Rolodex and mainframe computers. From flipping through manual cards to entering data through a terminal to today's smartphone apps and workflow-enabled CRM platforms, this sales technology has evolved over time. 

Like other technologies, it will continue to grow, with younger tech companies constantly bringing new concepts and approaches to the table. It will be interesting to see what CRM will look like at the end of the 2020s.

Choosing a CRM is just the start. Learn six ways you can give a boost to your sales strategy starting today.