It is my belief that nailing a company’s total addressable market trumps understanding its buyer personas. There has been so much talk about creating buyer personas that I think business professionals failed to consider what would happen if a buyer persona was created for the wrong target market.
So what is total addressable market?
Total addressable market (TAM) is a term that is typically used to reference the revenue opportunity available for a product or service.
Picking the definition apart we get “revenue” and “product” or “service”. So it really comes down to not the total size of what your market is worth. For Sales Acceleration, my industry, it’s estimated at $ 12 billion. But rather what revenue can I capture with my product or service.
Not easy to find and very few companies have completely nailed it.
So what’s a company to do? Especially the ones entering a new market, are just starting out or have multiple product lines or services.
Look at your competition. Not fool-proof. However, analyzing who is attracted to your competition will provide you with a tool set to tackle the market.
TIP: Choose competitors that have been in business for twice as long as you. If you don’t have many competitors, find companies aligned with your product or service. A CRM is aligned with an email marketing tool, a point of sale with a merchant service, you get the point.
Once you have a good list of competitors. You can use tools like BuzzSumo to enter a URL or company name and find highest shared content and then extract that list to see who has shared it.
We use content because it’s a good indicator of genuine interest. Sure interest can fall into the spectrum of customer, potential customer, employee, fan or just regular Joe. However, remember content marketing is intended to attract prospective customers. So within a list of all the above, I can guarantee you will find customers and prospects.
Once you have a good list of companies and people who have interacted with your competitor’s content you can start analyzing and putting the pieces together.
I consider total addressable market to be:
TAM = Total Market – Attributes
Attributes are unique to your brand. They can be defined as ideal size, sector, geography, market and internal systems. Once Attributes can be identified, your total market (ie: the $ 12 billion I referenced before) shrinks to what’s significant to me and my business case.
Going back to the list you just generated, look at what Industries the companies and users are in and then create a chart for low friction to high friction, which will be your guide for all other Attributes. Low friction meaning industries that you consider to have shorter sales cycles, larger revenue opportunity. High friction can mean longer sales cycles and multiple decision makers.
For instance:
When you can visualize the industries of where your best customers are you can then fill in the blanks of the remaining Attributes. TIP: use LinkedIn to find this data from company pages.
Once you have a good understanding of your TAM you can use sales prospecting tools to uncover prospects that are clearly defined as your best, most likely to buy.
To learn more about TAM, and to create a sales prospecting list of your best customers, join me for a free webinar on February 16th.
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