The eras of CRM

Slowly but surely, CRM (Customer Relationship Management) has become mission-critical for all commercial businesses. And with the benefit of hindsight, we can see how it has taken a roller coaster evolution through three distinct and important stages.

The era of the customer The first stage – the “customer” age – took off in the 80s and 90s. The advent of technologies that enabled the capture and analysis of detailed data on buying habits meant that the customer base was no longer an amorphous and unknowable mass, it could now be understood as a set of demographic segments. Specific patterns and trends could be detected and acted upon. Causes and effects could be monitored in detail. The result was a win-win for customers and businesses alike: smarter product assortments, more efficient pricing and promotions, better stock allocations.

Data ruled the management era The second stage – the “management” age – was built on the foundations of the first. Through the 90s, 00s and 10s, ever-more sophisticated data capture and analytics techniques allowed for increasingly granular segmentation. Retailers and marketers gleaned deeper insights about the unique habits and tastes of their customers and used them to craft targeted and personalized offers and messages.

It was smart, but the problem was (and is) – it got sketchy. Root cause: businesses assumed that personal data and customer relationships were theirs to manage, and CRM became mainly about revenue maximization – regardless of the consequences. As customers and lawmakers got increasingly fed up with this they began to push back: e.g. the Google Glass flop; the Facebook / Cambridge Analytica scandal; 2018’s GDPR legislation.

CX is at the heart of the relationship era As a constructive response to all this, the third stage – the “relationship” age – is now starting to take root. Smarter and more socially-aware businesses have already woken up to the fact that long-term and mutually beneficial relationships count for a lot more than short-term exploitative ones.

They know that wallet-gouging and opportunistic ‘spearfish’ marketing tactics are not appreciated by customers. They see that being chased around the internet by the same advert for 2 weeks is not cool. They realize that real loyalty doesn’t reside in points or coupons, it comes from treating customers with respect, like they’re human beings and not merely dollar opportunities.

Not only is it ethically better to act this way, it’s also becoming an economic necessity. As commerce evolves from an ownership-oriented model towards service- and subscription-based systems, firms need to show they are ready to have a relationship for life – not just the next 15 minutes.