During the 1970’s, the friendly corner store clerk and the door-to-door salesman provided one-on-one, personalized service to their clientele. The early 1980’s brought the age of mass marketing, in which widespread use of TV, radio, and print media replaced the intimacy of direct interaction with customers. While customers benefited from the cost efficiencies of these arrangements, there was a definite loss of personalized service and sense of connection with the businesses.

In the mid 1980s, telemarketing arose as a means to communicate directly with the customer. Unlike mass marketing, telemarketing provided immediate feedback. Response rates measured success. As a result of using such targeted marketing techniques, businesses recognized the need to interact more with customers. During this phase the relationship between producer and consumer moved one step closer to personal interaction.

CRM is the next step in the evolution, and it moves businesses towards developing an intimacy with customers, using direct contact, the Internet and new technologies to service customers at a more personal level.

Customer Relationship Management allows businesses to provide individualized service to customers, thereby building relationships based on trust and loyalty. The success of CRM is based on two variables. The first is information and analysis, or knowledge of what the customer wants, needs, and values. This information is often gathered through surveys, which collect demographic, lifestyle and purchasing behavior information. Questions based on gender, age, income, and occupation create a customer profile. Questions about hobbies can reveal spending habits. Questions about the type of car driven, and whether it is bought or leased indicate socioeconomic standards.

This information is collected and stored in a database. Tools such as OLAP (On-Line Analytical Processing) and data mining enable businesses to sift through mountains of data to extract invaluable information about their customer base. Information about how the customers prefer to be contacted, and how they have responded to promotions in the past can also be used to develop effective marketing strategies.

Companies are realizing that their customer base is not homogeneous, and are using new tools, technologies, and resources to track the individual nature of their customers. With the help of CRM, companies are managing their business processes more effectively. Workflow technology allows companies to design automated processes to enhance the productivity and responsiveness of their workforce, as well as to deliver new levels of service resulting in a higher quality of customer service. 

Simply stated, CRM, through the acquisition and deployment of knowledge about customers, enables a company to sell more of its product or service more efficiently.