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Summary
Organizational interest in sales performance management as a set of activities and processes is changing the market landscape for sales-related technology. Traditional customer relationship management (CRM) and sales force automation (SFA) software focus on efficiency and automation in tracking activities or executing transactions; in contrast, sales performance management targets improvement of sales effectiveness. To estimate the potential size of this market, Ventana Research built a target buyer model based on the total population of users then factored in market maturity and demand characteristics to project the market size over the next three years. We conclude the U.S. market for sales operations and performance technology will reach $3.89 billion in 2008 and grow to $8.2 billion in 2010.

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In general, sales organizations are less sophisticated in their use of information and technology than other areas of business, and management finally has realized this. One result of this is a blossoming market for sales performance management products. A growing understanding of the importance of improving the performance of sales operations will drive significant growth in market size from now through 2010. We have developed a market model that relies on the population of potential users and buyers and the maturity of their organizations to project the revenue size of the U.S. market for software that supports sales performance management.

Our market sizing model analyzes the potential market by considering the total number of users and then applying a market maturity index to determine purchasing interest. The result is a projection of market revenue categories of buyers will generate in a software market in a particular geography and time period. Ventana Research’s approach to market sizing differs from that of other industry analysts that analyze not a universe of users but rather sales and revenue projections provided by a selection of technology suppliers. This latter approach fails in that it cannot be more accurate than the supplier data on which it is based and represents not the whole potential market but only a subset of it, the suppliers.

Our model finds that for 2008 the sales performance management target market for United States organizations that employ more than 50 sales people is $3.89 billion. It will grow to $8.2 billion in 2010. We subdivide this market into specific categories. The supporting software for sales operations includes asset management, compensation, quotas and territory, promotion and referral, proposal and quote and workflow and collaboration capabilities; it will be $1.89 billion in 2008 and $4 billion in 2010. Sales performance includes sales-focused analytics, coaching, incentives, forecasting, objectives and market intelligence; it will be $1.99 billion in 2008 and $4.23 billion in 2010. (We exclude sales force automation from the sales performance management market but project it to be $3.5 billion in 2008 and $5.25 billion in 2010 – a significantly slower growth rate.)

Assessment
Ventana Research views the market for sales performance management as one of the most promising areas of growth for software suppliers through 2010 and beyond, and our market size projections confirm this belief. There is a pressing need for sales organizations to come closer to achieving their maximum potential, and improving the quality of their information and the capabilities of the technology they use are primary means for doing that. They will need to replace spreadsheets, presentations and e-mail as the primary mechanisms for tracking sales activities and performance with a suite of applications that are designed specifically for the various aspects of sales and as well for finance, operations and even human resources activities that support sales. We see a shift away from narrow investments in sales force automation to ones that support the management of operations and performance-driven activities and processes that improve the outcomes of sales efforts.

With finance and operations management helping sponsor improvements, sales performance management can be one of the most important strategic investments organizations will make in the next few years. Ventana Research’s market model from the perspective of buyers and the total user population indicates the market potential and likely growth of sales performance management.