Since transitioning out of my revenue leadership role, I have used the past few weeks to reflect on key learnings within my first startup journey.
Everyone obsesses over TAM in the early days, especially founders and investors. “We estimate the market to be X big, we play in the $100B+ space.”
While TAM is usually one of the most sought after figures to determine long-term potential and ROI, it's important for early leadership teams to further segment and include layers for SAM (serviceable addressable market) and SOM (serviceable obtainable market).
These were terms as a sales leader I was only vaguely familiar with, and had largely ignored.
TAM can often be a distraction and a bad proxy in the company’s infancy stages. Why?
Because your product offering, brand value & awareness, and service model are not ready for the broader market e.g. the late majority and laggards.
SAM takes these limitations into account while SOM factors in shifts in market conditions/preferences, competition, and current resourcing.
What this demands is 𝐚 𝐜𝐥𝐞𝐚𝐫𝐥𝐲 𝐝𝐞𝐟𝐢𝐧𝐞𝐝, 𝐚𝐧𝐝 𝐮𝐧𝐢𝐯𝐞𝐫𝐬𝐚𝐥𝐥𝐲 𝐚𝐠𝐫𝐞𝐞𝐝 𝐮𝐩𝐨𝐧 𝐈𝐂𝐏 𝐝𝐞𝐟𝐢𝐧𝐢𝐭𝐢𝐨𝐧. If you could only touch 100 prospects, who are they and why?
This profile needs to go well beyond the industry and should include finer firmographic and technographic detail – company attributes, maturity & growth profile, tech stack, values/missions, etc.
This is mission critical in today’s environment of profitability and operational efficiency & rigor.
Having sales and marketing resources focus on bad fit prospects, or even worse, uncertainty of fit, will severely hamper CAC and LTV unit economics.
In the day and age of diminishing results with outbound efforts, this is one of the single biggest areas to increase sales rep productivity.
As Peter Thiel outlines in 𝑍𝑒𝑟𝑜 𝑡𝑜 𝑂𝑛𝑒, focus on a specific and niche cohort first. Maximize this segment’s needs and value, and only then extend your product offering based on the unmet customer voice.
Can your entire team from leadership to product to sales/marketing articulate the same customer profile with proper granularity?
#sales #revenue #b2b #opentowork #startups
Partner at Bain Capital Ventures
1w🙌