CRM-Trend-2004-to-2015

in Insights

How a coffee maker unintentionally launched a $100bn industry (…and why we exist)

With virtually no market or industry for sales softwares in 1983, in just a couple of years, one company in San Diego was selling $100,000 licences of this new software and raking in multiple millions in revenue, virtually giving birth to the entire sales automation/enablement industry and putting in the foundation of what was to become a CRM software. But what exactly triggered its rise?

In order to understand that, it is important to understand the context first. Sales and marketers these days are spending more money on technology than CTOs. With the dawn of internet, the tools to sell and market have also changed drastically. Emails have replaced physical mails. Video conferencing has replaced meetings. A small chip on your phone can store contact information of a thousand rolodexes. Cloud solutions have only taken this capacity much further. Sales and marketers are now spoilt for choice for productivity apps and tools. Apart from the ubiquitous spreadsheets and powerpoints, CRM tools have recently turned out to be the single biggest revolution in the productivity space for salespeople.

An entire generation of sales and marketers, in businesses both big and small, has grown up using CRM tools and a variety of them. Much required as it is, there has been little innovation since the first CRM tool came about to be 20 years back in 1991 by Siebel. Although it is hard to imagine a world today without CRM, it solves the problem only partly. Managing the relationships and sales pipeline effectively is but, only a part of the challenges that salespeople face. There lies an unsolved or rather poorly solved challenge that lies for sales people in pitching their ideas efficiently. Communication tools today like emails and virtual meeting softwares only solve that problem to a certain extent. The exact scenario was getting playing out around 30 years back in the pre-CRM era when most salesguys had little more than a few simple programs like rolodexes and spreadsheets to maintain their growing records.

Coming back to our original story. Back in 1983, a San Diego businessman Sean Curtis used to run a small coffee delivery business by the name of Coffee Ambassador. Amongst Sean’s several problems was of the increasing difficulty in managing his ever growing clientele all the while increasing his business. Not amongst the ones to be happy with the status quo, Sean decided to contact a gentleman named Michael McCafferty, a software consultant, who had already consulted Sean on a similar software before which he wasn’t too happy with, to do something about it. Michael was no ordinary consultant. An ex-IBM salesman, he had built and sold several successful companies before. His last one being an electronic yellow pages of sorts, a modern day classifieds if I can say that. He lost control and was ultimately let go from the company he founded by the very own investors he had brought in when he needed additional capital to infuse in his business. A string of bad luck pursued leading him to personal bankruptcy. After much deep a thought and gathering courage, Michael had ultimately decided to get back into the game again as a computer consultant. And Sean was just one of his several clients. Having heard Sean’s problems with the current softwares from several other clients, Michael decided to offer to Sean to build this software for him for a fee, $5000. Sean agreed and thus was born, TeleMagic, a telemarketing sales software which was a combination of an electronic rolodex managing all contacts and a spreadsheet keeping track of all sales all updated in one place. TeleMagic software, wildly successful which sold more than 200,000 copies, got ultimately bought out by Sage group by the dawn of 1992 around when more than 600 “me too” softwares had sprung up which slowly morphed into the CRM softwares of today.

Search query interest on CRM shows a declining trend. Image: Search query interest on CRM shows a declining trend.

 

TeleMagic and the entire CRM industry characterised the first wave of sales force automation technologies focused on improving efficiency through better contact management. CRM systems such as Siebel and Salesforce helped sales teams organize prospect data, track sales and marketing interactions, and more accurately forecast sales revenue. While these efficiency gains helped sales management better manage their teams’ performance, they didn’t always help salespeople sell more effectively. No wonder why we now needed something more than just a CRM/contact management tool to further improve our closure rates. We needed a tool to help the next generation of salespeople pitch more effectively and close faster.

In an ideal world, salespeople directly want to contact a person who wants to buy X, buy it now, has a budget for it and then they go and sell X to her. But is that even possible? We can’t peek inside a customer’s mind or tell what she’s thinking! Or can we?

About a couple of years ago, Forbes broke this news about how the retail store giant, Target figured out a teen girl was pregnant before her father did. The article states how Target assigns a Guest ID number to each computer and links it with the email address and credit card used to shop on the site. Sophisticated statistical wizardry running on large servers carefully records each click and purchase, which gets synthesized into a persona of the buyer based on which Target recommends relevant products to these customers. Andrew Pole, Target’s statistics expert at the time, explains in this snippet from a related article in NYT:

“ [Pole] ran test after test, analyzing the data, and before long some useful patterns emerged. Lotions, for example. Lots of people buy lotion, but one of Pole’s colleagues noticed that women on the baby registry were buying larger quantities of unscented lotion around the beginning of their second trimester. Another analyst noted that sometime in the first 20 weeks, pregnant women loaded up on supplements like calcium, magnesium and zinc. Many shoppers purchase soap and cotton balls, but when someone suddenly starts buying lots of scent-free soap and extra-big bags of cotton balls, in addition to hand sanitizers and washcloths, it signals they could be getting close to their delivery date.”

This is, but, one of the examples of the advances technology has made which could help salesmen of today sell better and faster. Knowing what the prospect/client wants before you even get on that first phone call reduces the sales cycle by half by saving the time spent on low quality leads.

Image: A TV salesman convincing a prospective buyer face to face. Although most effective in knowing customers’ feedback, face-to-face is not scalable when trying to sell to a large number of customers. Hence, importance of smart sales tools increases even more.

As per a recent study by consulting giant Accenture in 2011, salespeople spend 60% time on internal activities including researching, admin work and making pitches. Salespeople are paid to ring in more sales and not fiddle with software and data entry. Salespeople having to put up more time in managing sales than in making sales is one of the biggest problems faced by our sales soldiers in modern times. Also, it is no breaking news that, despite external factors which can be quite diverse, the only definitive way to increase sales productivity for salespeople is through introducing smart tools that increase productivity. No wonder then, 56% CSOs say their top priority is increasing sales effectiveness, automate with sales force technology that delivers distinctive value to sales representatives and in the end customers.

(Shameless plug: To tackle that same problem, we wanted to build a solution to help salespeople while they’re selling. It strives to make pitching really easy and letting salesreps know how interested their prospects are making their follow-up way smarter ultimately reducing sales cycles and improving closure rates! We’re a couple of ex-Google folks working hard to make this work. We’ve just launched and some quality feedback would go a long way. Thank you for reading this far. We’re Salespatron.com)

 

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