RedThread Research today unveiled its latest report, People Analytics Technology: State of the Market 2024, revealing that while the market has reached its largest size yet—$8.1 billion—growth has slowed significantly, and customer satisfaction has declined. Sponsored by the RedThread Tech Consortium, this report explores challenges such as declining Net Promoter Scores® (NPS), unrealized expectations around AI, and the critical need for better support and ROI.
WOODSIDE, Calif., Sept. 11, 2024 /PRNewswire-PRWeb/ -- RedThread Research today unveiled its 2024 report, People Analytics Technology: State of the Market, revealing that while the People Analytics Technology (PAT) market has reached $8.1 billion in size, its year-over-year growth has slowed to 36%, a marked decrease from 50% in the previous year. Coupled with this slowdown, the report shows a continued decline in Net Promoter Score® (NPS). Customers that gave higher NPS and renewal likelihood had vendors that ensured a high return on investment and strong support services.
"The market for People Analytics Tech continues to expand, but growth is slowing," said Stacia Garr, RedThread's co-founder and principal report analyst. "Declining NPS means it's critical for vendors to address issues around support and return on investment, as those two factors are predictive of subscription renewal likelihood. Many organizations are heavily promoting their AI offerings, but that is not driving renewals or perceptions of value. Many customers don't yet see the impact of AI or understand what problems it is solving."
Key findings from the report include:
- The PAT market reached $8.1 billion in 2023, but YOY growth slowed to 36%.
Customer satisfaction declined, with the average Net Promoter Score® (NPS) dropping to 44, down from 50 in 2022. - Customers who see a high ROI from their PAT solutions are nearly 3x more likely to promote their vendor and 1.6x more likely to renew their subscriptions — with strong customer support driving a 1.7x renewal rate.
- 90% of vendors claim to offer AI capabilities, but only 40% of customers believe those capabilities deliver.
- About half of vendors invest heavily in security, accuracy, and ethical/responsible AI, though approaches are evolving. Vendors are also focused on enabling greater data transparency.
ROI and Customer Support the Key to Customer Renewal
The PAT report makes it clear that showing return on investment (ROI) and delivering on customer support are critical to subscription renewal. Vendors who prioritize helping their customers achieve measurable ROI, providing better customer support, and setting realistic expectations for AI capabilities are more likely to maintain customer satisfaction and increase renewal rates.
Customers who experience high ROI from their PAT solutions were 2.94 times more likely to promote their vendor and 1.6 times more likely to renew their subscription, according to the research. Moreover, those who perceive strong support were 1.7 times more likely to renew.
Big AI Promises, But Small AI Impact – For the Moment
The report emphasizes that while AI has been a key selling point for many vendors, the reality has not yet lived up to the marketing hype.
"Nine out of ten vendors say they have Gen AI or ML capabilities, yet fewer than half of their customers agree," said Priyanka Mehrotra, Senior Analyst at RedThread Research. "Given this, it is unsurprising that the presence of AI is not a strong driver of renewals yet. Our interviews revealed that vendors need to work on connecting AI offerings to real business problems critical to customers before it will be seen as a critical factor in whether a customer renews or not."
Rise in Data Transparency a Bright Spot This Year
One of the more positive developments highlighted in the report is vendors' growing focus on enabling data transparency. Around 80% of vendors are enabling customers to be more transparent about how people's data is used, a significant improvement from previous years. This trend is particularly strong among European vendors, with 100% reporting that they enable transparency, compared to about three-quarters of North American vendors. This focus on transparency is helping to build trust in the PAT market and improve customer satisfaction in some segments, the report observes.
Research Sponsored by Expanding RedThread Tech Consortium
This research report was sponsored by the RedThread Research Tech Consortium, a growing community that remains focused on underwriting high-quality, unbiased market research. Consortium member organizations collaborate with RedThread to push the boundaries of people analytics technology and contribute to cutting-edge research. Current Tech Consortium members include: Absorb, Augmentir, Betterworks, Bongo, Claro, Cornerstone, Culture Amp, Degreed, Docebo, Eightfold, LearnUpon, Lightcast, LinkedIn, Medallia, Microsoft, OneModel, OpenSesame, Perceptyx, Qualtrics, QuestionPro, Retrain, Revelio Labs, Salary.com, Seekout, TechWolf, Top Employers, Tribute, UKG, Visier, Workday, Workera, and ZeroedIn.
September 12 Webinar to Unpack Findings
To dive deeper into the report's findings and explore what's next for the People Analytics Technology market, RedThread invites HR and people analytics professionals to join its complimentary Q3 Tech Consortium webinar on Thursday, September 12. https://landing.redthreadresearch.com/tcwebinar_aipeopletech-0
The webinar will focus on key insights from the report and discuss strategies for addressing the challenges uncovered in the research.
For more information and to register for the webinar, visit http://www.redthreadresearch.com. Join the RedThread Research Tech Consortium and access cutting-edge research by emailing [email protected].
About RedThread Research
At RedThread Research, we get it.
Sure, we're experts in performance, people analytics, learning, and D&I – and we're well-versed in the technologies that support them. But we're also truth-seekers and storytellers in an industry often short on substance, and too full of #!%. Our mission (indeed, our very reason for existing) is to cut through the noise, and amplify what's good. We look for the connections (or red threads) between people, data, and ideas – even among seemingly unrelated concepts. The result is high-quality, unbiased, transformative foresight that helps you build a stronger business.
To learn more, visit http://www.redthreadresearch.com
Stacia Garr
RedThread Research
202-957-4130
Email > [email protected]
Media Contact
Stacia Garr, RedThread Research, 202-957-4130, [email protected], https://www.redthreadresearch.com
SOURCE RedThread Research
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