Forrester Predicts Sales Of Incentive Management Solutions To Soar To $935 Million By 2024

The market for channel incentives and program management (CIPM) solutions will climb to $935 million by 2024, predicts Forrester. In its recently published report, “Now Tech: Channel Incentives And Program Management, Q1 2019, Forrester also predicted that another $1.9 billion will be generated in services in this ecosystem.

Currently 29 channel software vendors offer CIPM solutions, driving $426 million (USD) in pure software revenue. Another $800 million is estimated to be driven via services, either direct or third-party.

The growing demand for CIPM systems can be attributed in part to the increasing complexity of channel incentive programs. “While channel incentives programs are growing in scope, complexity, and scale, 22% of global marketers already consider managing their channel partners to be one of their greatest challenges,” wrote Jay McBain, Forrester’s Principal Analyst – Channels, Partnerships & Alliances,  in a blog announcing the report.

Channel incentives are usually performance-based and aim to improve the yield, reach, or mix of a group of partners, McBain explained. Common incentives include volume rebates, new customer bonuses, sales performance incentive funds (SPIFs), market development funds (MDFs), embedded headcount, and activity-based rewards. Modern incentive programs are experimenting with non-monetary rewards, micropayments, and gamification.

Changing demographics of partners, especially in the IT industry, will require channel leaders to rethink their incentive strategies, McBain noted. “It is estimated by CompTIA, the world’s largest IT association, that 75% of the channel will be comprised of Millennials by 2024. This number is even higher in sales and customer-facing roles that need the most consideration in terms of motivating behaviors.”

McBain also highlighted a significant change is the mix of transacting versus non-transacting partners. “As the majority of new partners look more like influencers, advocates, and alliances, there is a fundamental change in how incentives programs work,” noted McBain. “Without a set-discount- or percentage-of-revenue-type target, brands are looking at how to accomplish similar behavior modification of partners using capital spending.”