Time to read: 2 Minutes
Most marketers and business people don’t start here. But they should and we’re here to lay out the case for why your strategy starts with knowing total addressable market.
First, let’s start with tossing out some critical definitions. Let’s make sure we’re all on the same page.
Key Definitions on the Total Addressable Market Concept
What is the Total Addressable Market?
Often referred to as the TAM list, this is the universe of potential buyers for your product. Everyone. All organizations. Anyone who would pay for your product or service.
What is the Serviceable Market?
This is the part of the universe that you can reach. Think of this as the markets you can reach using all available channels. Even if you don’t, but you could.
What is the Target Market?
This is the part that is the easy sell. The low-handing fruit.
These three concepts boil down to one simple thing: market sizing.
Now why do you need to know this stuff?
The Best Strategies Start with Knowing Total Addressable Market
You simply cannot make intelligent decisions on marketing strategy and campaign tactics without them. Nor can you make sure you price your services to actually get enough revenue to stay in business.
So, knowing total addressable market is pretty important. Don’t neglect sizes for your serviceable market and your target, either. It’s easy to use a third-party data source like ZoomInfo for helping in knowing total addressable market. There are other marketing data sets you can use, too.
The serviceable market and target markets, though, are not as straightforward. Both need honest estimates of the potential size. Particularly for a B2B company. It’s especially crucial for SaaS applications. Even more so, if it serves a small niche.
There’s always conservative and optimistic estimates of expected market penetration. So, be realistic. Getting your pricing strategy correct, one that yields growth-sustaining revenue, depends on it.
Knowing Total Addressable Market = Numbers of Potential Buyers
Pay attention to the numbers of enterprises. Knowing total addressable market means knowing its composition. How many large organizations are there? What about medium-sized ones? How many small and micro-businesses make up your total addressable market? You might have to play around to find the size definitions that work best for you.
And it’ll be crucial to know the average numbers of employees per enterprise size range. You need to therefore make sure your prices are high enough to stay in business.
Additionally, there is some reward to such diligence. A nice byproduct of market sizing is thus, understanding vertical industry segments and sizes. All great information for campaign planning. For example, you now know enough to choose the best targets and devise the best strategies and campaign tactics for them.
Besides, it helps you craft your strategy over time. Conquer that first target and tomorrow, and then expand channels to grow reach. It’s then that channel expansion that grows penetration into your serviceable market.
So let’s cheat the competition and escape the bears. We can customize our marketing size tool, to make sure your strategy starts with knowing total addressable market sizes. That way, you know your serviceable market and your targets, too.
And the very best part is that market sizing takes the guess work out of pricing and planning. It truly lights your way through the growth marketing wilderness.