Ready for an insightful journey through the world of B2B SaaS marketing strategies? In this post, we’re diving into the essential components of a successful Go-to-Market (GTM) strategy.
Get ready to unwind some acronyms and discover how mastering the ABCs of GTM can make all the difference in your B2B SaaS company’s success.
TAM, SAM, SOM, ICP… Decoding the Alphabet Soup
If you’re stepping into the world of B2B SaaS marketing, you’ve probably encountered terms like TAM, SAM, SOM, and ICP. These acronyms might seem like a jumble of letters, but each holds a critical piece of the puzzle in your GTM strategy.
Let’s get started.
TAM: Total Available Market
Let’s start with the biggest piece of the puzzle, the Total Available Market (TAM), sometimes referred to as Total Addressable Market.
Imagine you’re selling a groundbreaking digital marketing tool that could cater to any business. In a perfect world, everyone could benefit from it. This vast expanse of potential customers is your TAM. It encompasses every conceivable customer contract, multiplying the annual revenue per contract by the number of potential customers.
For instance, if your solution has an Annual Contract Value (ACV) of $10,000 and you have a pool of one million potential customers, your TAM would be a whopping $10 billion. An exciting prospect, right?
But remember, TAM isn’t the whole story. It’s essential not to confuse your total addressable market with your actual target audience.
Targeting so many people will lead to a plethora of RevOps problems. You will end up having to adjust to whichever customers you stumble upon instead of going after the customers you want.
SAM: Serviceable Addressable Market
Here’s where realism kicks in. The Serviceable Addressable Market (SAM) takes TAM and narrows it down. It’s about identifying the market opportunity that aligns with your company’s core competencies and past performance.
SAM factors in technographics, firmographics, scale, and persona-product fit to define the subset of customers you can realistically target. Think of SAM as a more refined view of your TAM.
For example, say you’re targeting the US market with companies that have 10 to 1,000 employees, leadership roles in sales, marketing, or RevOps, and utilize CRM and cadence tools. If we pop those criteria into SalesIntel, we get 72K companies and 257K contacts.
We’re down to 1/15 of the total addressable market size and starting to look at a more reasonable number of companies to be chasing. At least you won’t be trying to fit a million contacts into your CRM!
SAM serves as a practical filter that prevents you from chasing unattainable numbers and helps you focus your efforts.
But before we move on to the next term, let’s dive deeper to better understand SAM with firmographic and technographic data.
Firmographic data includes both company-wide and user-specific data. As a result of B2B segmentation using firmographics, you may get a clearer picture of ideal client identities and target them with relevant information.
Firmographic data include details like:
- Annual Revenue
- Type of Industry
- Number of Employees
- Company Age
For your team to concentrate their time on leads and organizations who are qualified for your product or service, firmographic data is essential. It ensures your communication is as relevant to your target audience as possible.
Company technographics refers to a set of data that provides insight into organizations’ technological capabilities and preferences.
This data includes information like:
- hardware, software, and technology services used
- their IT budget and priorities.
Understanding a company’s technographics can help businesses identify opportunities to sell their products or services and target their marketing efforts more effectively.
One of the main advantages of using both firmographic and technographic data for targeting is its ability to provide more accurate and specific insights into a company’s makeup and technology stack. This information can be used to create more targeted and effective marketing campaigns and help you understand your TAM, SAM, and finally, your SOM.
SOM: Serviceable Obtainable Market
Now, let’s zoom in even further with the Serviceable Obtainable Market (SOM). This is the portion of your SAM that you can realistically capture. It considers your market share, historical win/loss ratios, and your ability to compete effectively. If your SAM is your target segment, SOM is your segment where you expect the best chance to win deals.
Calculating SOM involves analyzing your internal data. It’s about being realistic and strategic about where you focus your efforts. It’s the sweet spot where your market share and historical success converge.
You can calculate a basic SOM by multiplying your market share with your SAM. But, a more sophisticated version involves analyzing your internal data on closed-won, lost, renewed, churned, and expanded accounts.
This is where your Ideal Customer Profile (ICP) comes into play. If you’re using a data provider like SalesIntel, we can run your SOM calculation and provide your targeted list. Besides having a model for revenue forecasting, you’ll know which deals you’re most likely to win and can make them a priority.
ICP: Ideal Customer Profile
The ICP is your guiding star in the vast galaxy of potential customers. It defines the attributes of accounts that are most likely to become your most valuable customers.
Your ICP is like a well-crafted recipe with firmographic, environmental, and behavioral attributes. It should align with your company’s strengths and target market, setting the foundation for predictable revenue growth.
This is the base on which all other decisions are made. Your ICP is the cornerstone of your strategy.
This crystal-clear picture guides all your decisions, leading to predictable revenue and sustained growth. When creating your ICP – we recommend you start with the big picture and work your way to more granular details. Review and segment your internal data to build your ICP, similar to how you would build your SOM.
Specifically, start with account firmographics.
What country or geographic area? What verticals? What size company?
Then go to account technographics.
What technologies help define your ICP? What competitors?
Finally, end with personas using contact data.
Too often people define their ICP on contact data alone – avoid this common mistake by starting with company data.
Applying Knowledge for Success
Mastering these terms isn’t just about knowing jargon – it’s about leveraging this knowledge to drive your B2B SaaS business forward. Your GTM strategy hinges on focusing your efforts where they matter most. With knowledge of TAM, SAM, SOM, and ICP in your arsenal, you’re equipped to:
Narrow Down Your Scope: Instead of chasing every potential customer, concentrate on the ones that align with your strengths and offerings.
Strategically Target: Develop laser-focused marketing campaigns that speak directly to the needs and pain points of your target audience.
Optimize Resource Allocation: Allocate your resources efficiently by prioritizing opportunities with a higher chance of success.
Enhance Personalization: Tailor your messaging and engagement to resonate with the decision-makers and influencers in your target organizations.
In the world of B2B SaaS, knowledge truly is power. Understanding the ABCs of GTM – TAM, SAM, SOM, and ICP – empowers you to craft a focused, strategic, and effective marketing strategy. By targeting the right customers, refining your approach, and engaging with precision, you’re not just marketing – you’re winning.
If you’re not sure where to start, give SalesIntel a try. With our free trial, you can dive right in and begin finding and connecting to your ICP.