DO YOU KNOW YOUR
TOTAL ADDRESSABLE MARKET?
3 Steps to Modernize Your Go-to-Market Approach
Table of Contents
What is Your Growth Strategy?..............................................................................................................................3
Focus on the Right Customers................................................................................................................................4
– ICP > TAM > ABM: Taming the Alphabet
Step 1: Define Your Market.........................................................................................................................................5
– Create Your Ideal Customer Profile (ICP)
– Clean and Enrich Your Current Data
– Determine How Many Targets Are in Your Database
Step 2: Identify Your Total Addressable Market to Maximize Your Opportunities........9
– Use TAM to Supercharge Your Entire Business
– Tips for TAM Success
Step 3: Use Account-Based Marketing (ABM) to Engage and Win...........................................12
Your Data Will Make or Break Your Go-to-Market Success..............................................................13
2
What is Your Growth Strategy?
In the quest for growth, many companies are simply selling to accounts already
in their CRM and marketing automation systems, unaware of the vast number of
relevant targets not in their data.
Sure, you advertise and sponsor events to attract unknown leads, but it’s
common for 80% to 90% or more of those leads to be totally worthless.
That’s why it is so important for every company to know its total addressable
market, or TAM.
TAM is your universe of potential customers, and it defines the size of your
target market, while helping you avoid wasting time on irrelevant leads.
If you don’t know your entire market, you’re hampering your own efforts for
growth. Targeting your TAM gives your sales and marketing teams access not
just to more of your best leads, it gives them access to all of your best leads.
Total
Addressable
Market
(TAM)
Current
Target
Market
Current
Customers
WHAT ARE YOU
DOING TO FILL THIS
WHITE SPACE?
The first step to finding your TAM is understanding
your ideal customer or who is interested in your products.
Let’s use a simple example: You open a lemonade stand and pitch your drink to kids walking by. Very quickly,
you sell lemonade to every kid in the neighborhood, then interest (and revenue!) dries up. You can try to
increase wallet share by selling more to each customer, but people can only drink so much lemonade.
Your challenge is finding new customers, but who should you target? Well, both kids and adults like lemonade. So do people outside your
neighborhood. People doing yardwork on hot days really like lemonade and might even pay more if you pitched them with a tailored message
at the right time. So, while your initial target market was “kids in your neighborhood,” it only took a little work to expand that market by thinking
about your ideal customer and to focus your efforts by targeting customers at the right time.
PRO TIP:
Without an ideal customer profile (ICP), you’re casting a net and hoping targets
swim into it. But with an ICP, you’re better armed to look for and find everyone in
your total addressable market.
3
Focus on the Right Customers
ICP tells you who to target. TAM tells you who those customers are. Then comes Account-Based Marketing (ABM),
which is how you start targeting those customers, one-by-one. Here’s how all three of these concepts fit together:
ICP > TAM > ABM: TAMING THE ALPHABET
IDEAL CUSTOMER PROFILE
Define your targets.
TOTAL ADDRESSABLE MARKET
Find every matching account.
ACCOUNT-BASED MARKETING
Target them one by one.
PRO TIP:
Who are my perfect customers?
1
IDEAL
OK
Questionable
Bad fit
Where do they work?
What do they do?
What accounts fit that profile?
2
3
Where are they located?
How many are in my database?
Let’s target:
Total
Addressable
Market
(TAM)
Current
Target
Market
Current
Customers
Sally Jones, VP of Sales
MegaCorp, Inc.
San Francisco
Her goals are…
Her challenges are…
My account strategy is…
Each of these concepts builds on the previous, so to be effective, treat it as
a three-step project: Define your best targets, find the data on accounts who match
that profile, then start targeting those accounts one by one.
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Step 1: Define Your Market
Determining your total addressable market starts with your ideal
customer profile (ICP). It helps ensure you have every potential
customer in your sights.
Say you’re selling human resources software to “every B2B
company.” That’s a mistake because you’re not really sure who
does and doesn’t want your products. A one-person consulting
firm doesn’t need HR software, and neither does a big company
whose growth has stagnated, nor does that healthcare provider
with specialized requirements.
Title
Industry
Location
The first step to understanding your next customer is to look at your existing customers.
Maybe your best customers are fast-growing companies with new
HR executives who need help recruiting and onboarding dozens
of new hires every week. Maybe you also find that customers will
devote up to 2% of revenue to HR software, and you have a typical
contract value of $5 million.
WITH THAT DATA, YOU CAN BEGIN
TO DEFINE YOUR ICP AS FOLLOWS:
Employee count has grown more than 10% over last year.
HR executive has been in the role less than three years.
$250 million or more in revenue.
Not in the healthcare industry.
That’s a great start to tighten the focus of sales and
marketing on only the right prospects. No use wasting
efforts on a $75 million revenue company or one whose
employee count is declining. You know they’re either
not interested or you’re going to work harder for
a slim chance at a smaller deal.
ICP helps you focus on the right customers. So how do you get started?
#
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Step 1 Continued: Define Your Market
Firmographic Criteria
Ideal Customer Profile
FIRST, CREATE YOUR IDEAL CUSTOMER PROFILE
Title
CXO
At a minimum, your ICP should include a geographic region, a target contact title or
level, and an industry. It’s better yet if you can drill down to additional firmographics,
like company size.
Industry
Technology
Geography
America + Canada
Market Insights
Ideal Customer Profile
Company Culture
Innovative
Change in Leadership
New Leader
Company Growth Rate
Positive
Mergers & Acquisitions
Growing/Acquiring
Other criteria might include quantifiable data, like revenue change or recent
M&A activity, and qualitative data or insights, like whether the company is
innovative or has a strategic business initiative related to your offering.
Use a combination of firmographics and market insights
to create a well-defined profile of your ideal customer.
Here’s how to put together your ideal customer profile:
Look at your best customers.
Not every customer is a good, profitable customer. “Best” means those who are a great fit, who see value in your company and offering, and who
buy more, more often, and for longer periods of time. Determine why they needed your product, why they bought from you, and what event may
have prompted a need. Get sales and marketing together to discuss what makes a great target.
List firmographic similarities across customers.
This includes size and industry to decision makers and buying departments. These might be quantifiable and easy to find, like revenue, or they
might be a bit more qualitative, like “aggressively seeking market share” or “early adopter.” Don’t discount those types of measures that require
more intelligent insights. Maybe a recent acquisition signals a good target or companies who hire lots of PhDs. A good data provider can get
you that information!
Evaluate your data to see if you have what you need.
You want to be able to identify similar prospects, so if the number of employees is important, be sure every account has
that data, and that the data is current and accurate. According to sales and service performance company MHI Global,
approximately 35% of sales opportunities are bad targets, such as prospects
who you eventually lose or those who become liabilities after you’ve won. ICP helps you refocus on accounts
you’re more likely to close and those who are more likely to be good, profitable customers you can retain.
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B2B DATA DECAYS:
Step 1 Continued: Define Your Market
1
NEXT, CLEAN AND ENRICH YOUR CURRENT DATA
If you’re looking to target more effectively, you’ll need good data to start.
That means cleaning it up and filling in the blanks so you’re not wasting time and
resources, delaying sales cycles, or stalling opportunities.
5
%
PER MONTH
70
UP TO
&
%
PER YEAR
AT ANY GIVEN TIME:
2
25
UP TO
Many companies don’t realize just how bad their CRM and marketing automation data
can be. Studies have found B2B data decays at near 5% per month just through job
changes, retirements, relocations, acquisitions, and other day-to-day events. In some
cases, B2B data decay can be as high as 70% per year, according to Biznology. In
another study, SiriusDecisions also found that, at any given time, up to 25% of customer
and prospect data contains errors. In addition, many records are missing data elements
or were created quarters or years ago and contain outdated information.
%
OF CUSTOMER AND
PROSPECT DATA
CONTAINS ERRORS
Here’s how to begin your data cleanup:
Purge irrelevant data to save time, cut costs, and focus your efforts.
If a record was created a few years ago, it’s probably no longer useful or accurate. If it’s outside
of your target ICP, it’s just taking up expensive space in your CRM and marketing automation
systems. Since many of those vendors charge by data, purging irrelevant accounts and contacts
can save you thousands of dollars per month—or more!
Stay ahead of data decay by working with a service provider to automatically clean and enrich incoming leads.
As new accounts and contacts are added, let a vendor fill in important missing data, while not overwhelming leads with a long web form or
questions to which they might not know the accurate answers. Good data on incoming leads also helps enable accurate lead scoring and proper
lead routing, so be sure to get it right as soon as a contact record is created.
Be bold and decisive when it comes to cleaning your data.
If a contact hasn’t visited your website in the past 12 months, is he or she still a viable prospect? Eliminating irrelevant data keeps sales and
marketing teams focused on the right accounts, and prevents them from chasing those random larks that waste time and resources.
Sources: 1 Biznology, February 2015; 2 SiriusDecisions
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Step 1 Continued: Define Your Market
FINALLY, DETERMINE HOW MANY TARGETS ARE IN YOUR DATABASE
Remember, it’s all about focus. You’ve developed your ICP to focus on the right targets, so search your own CRM and
marketing automation data to see how many accounts match. It’s probably less than you expect, but it gives you
your starting point. For those accounts that don’t match your ICP, consider archiving them to get them out of the
way. For those that do match your ICP, overlay them on a map to visualize your geographic coverage. Determine
if your resources are in the right locations or if you have opportunities for expansion.
Here’s how to evaluate your data:
TAM DATA VISUALIZATION
Look for gaps to see how many accounts are missing
critical information, such as addresses, industry codes or
employee counts. Whatever is important to your ICP,
you’ll want to be sure every account has that data.
Total TAM - Business Segment
250-499
13,853
<250
Look at recency by setting a maximum age for your
500-749
9,255
4,318
Total TAM - Industry
your potential or annoying prospects with too many
redundant touches. When you find duplicates, merge
them into one.
PRO TIP:
36,308
% of TAM Captured
9.9%
data. If some data is stale, build a plan to refresh the data
and bring it up to date.
Eliminate duplicate records so you’re not inflating
Total TAM - Total Companies
Retail
Total TAM Map - (State)
9,041
Media
7,780
Insurance
7,609
A service provider can make sure firmographics are correct, and critical fields are
all complete and current. A good provider can also help ensure duplicates are correctly
matched and quickly merged.
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Step 2: Identify Your TAM to
Maximize Your Opportunities
To identify your TAM, you’re going to need a third-party service
provider, one that you’re sure has access to current, accurate,
and complete data. We’ve found that companies have as little
as 10% of their TAM in their current systems. You can’t rely on
advertising or lead generation to find your entire TAM, so cut
to the chase and work with a reputable provider to get the
complete picture instantly.
You can then compare your data and ICP to their market
intelligence and find what’s missing. That missing data is called
your white space.
It’s all of the target accounts that aren’t in your database and
all of the individual data elements not populated for accounts
you already have. But it’s not just missing accounts; it’s the
thousands of missing contacts within those accounts, and the
missing attributes (email address, phone number, etc.) of
those individual contacts.
Here’s what else you can do once
you know your white space:
Quantify the size of the white space opportunity
by multiplying your average contract value by the number of
new white space accounts. You might only win a percentage
of those accounts, but you can quickly see the huge potential
opportunity hiding in the white space.
Get support for new initiatives using your focused
approach, and show executives where budget is needed
based on potential opportunity.
Better allocate your resources to achieve faster growth
by planning more events where targets reside or by focusing
more campaigns on more targeted channels.
PRO TIP:
Once you identify your white space, import those net new prospects into your
marketing automation and CRM systems. Now you’re ready to get to work on growth…
and educating your company on the opportunities in front of you!
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Step 2 Continued: Identify Your TAM to Maximize Your Opportunities
USE TAM TO SUPERCHARGE YOUR ENTIRE BUSINESS
On one hand, TAM is just a number (e.g., you have 2,389 potential targets).
On the other hand, TAM is a list of accounts and contacts giving you access to
your entire market. But what else can you do with this windfall of data?
Build Smarter Go-to-Market Strategies
This is where TAM really helps supercharge other initiatives, such as sales
planning and allocation. It helps focus every go-to-market program on
precisely the accounts that fit your targeting criteria. TAM can help you assign
sales quotas with more accuracy. Once you know your TAM, you know where
accounts reside, and can assign potential values to accounts and regions.
TAM can also help align sales and marketing on the right targets, bringing
both teams together with more focus and more agreement on programs,
campaigns, and budget allocations. Being able to visualize your market is
a bonus that helps with defining and assigning territories, allocating field
resources, and focusing marketing efforts.
Make Better Business Decisions
As you look to expand and grow, TAM can also be used to gauge the size of
new markets, justify investments in a current market, or evaluate new product
opportunities. In every case, having an accurate TAM is critical to making the
best business decisions. A good example comes from HgCapital, a private
equity investor based in London and Munich, who says that “being able to tell
a clear story of what truly defines a company’s addressable market is a great
starting point for thinking creatively about where to invest for growth.”
If, for example, your average contract value is expected to be $25,000 and the
TAM is 1,237, then simply multiplying those two values puts the total potential
market opportunity at $31 million. If your TAM is inaccurate, even by a small
margin, you might make the wrong decision.
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Step 2 Continued: Identify Your TAM to Maximize Your Opportunities
TIPS FOR TAM SUCCESS
Now that you’re fully briefed on TAM, here are some extra tips to help along the way:
Don’t skimp on data cleansing. Data is the key to informed growth, and if it’s bad, you’ll make bad decisions,
marketing will target the wrong leads, and sales will waste time.
TAM is not a one-and-done project. It’s an ongoing initiative and evolves as your business grows.
Reevaluate your ICP, and target accounts at least annually.
Keep your data current. Remember that every target account’s data changes (up to 70% per year!) as contacts
transition roles, organizations adjust strategies, and overall markets shift.
Use TAM to get sales and marketing aligned around the markets and customers you’re pursuing. Get your
teams working together early in the TAM project.
Knowing your TAM is a critical step in kicking off an account-based sales or marketing (ABM) program.
Take this foundational step to be better equipped for ABM success.
At InsideView, many of our customers
discovered they were targeting as little as
10% of their total addressable market!
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Step 3: Use ABM to Engage and Win
Knowing your TAM opens up new avenues of growth by focusing on account-based
techniques. In traditional sales and marketing, you’re targeting a broad swath of
accounts with the same message. But with ABM, you’re targeting a company with
a message specifically tailored to it, and you’re looking collectively at how every
contact from that company engages with you.
ABM Needs Great Data
Clean, accurate account and contact data
is required to make ABM work at all, let alone
work well. Think of it step by step:
ABM takes your sales and marketing efforts to a deeper level, and having
accurate and complete data makes it possible.
HERE’S HOW IT WORKS:
Select the accounts to target based on recent events or other
purchasing drivers identified in your ICP.
1
If you don’t have good account data,
you won’t know which accounts to target.
2
If you don’t have good contact data,
you won’t know which people work at the
same accounts, if they’re the right personas,
or how to contact them.
3
If you don’t have timely intelligence and
insights, you won’t be able to engage with
relevancy and urgency.
Analyze each account individually to hone in on the specific
challenges or business events relevant to it.
Measure success at the account level based on awareness,
engagement, and influence.
TAM helps in the account selection process, pinpointing which accounts are ripe
for targeting. Then, based on business events or changing firmographics, you can
focus on which accounts are the best targets right now.
Once the accounts are selected, you can get to work identifying the right
contacts and develop your messaging and engagement methods. Using current,
relevant business insights on accounts—such as the new partnership or recent
acquisition—is the best way to engage.
PRO TIP:
This is where data providers and other data
technologies can help by enriching your
existing data, increasing its accuracy, and
alerting you to important business events.1
ABM is about finding those companies, the right ones that fit your Ideal Customer
Profile (ICP) in your total addressable market. ICP tells you what’s important to potential
customers. TAM tells you who to target. ABM tells you when they’re ready.
Source: 1 chiefmarketer.com
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Your Data Will Make or Break Your Go-to-Market Success
With ICP, TAM, and ABM, the whole is vastly more valuable than the sum of its parts. Determining your ideal
customer is enlightening, but not if you don’t figure out who he or she is. Getting clarity on your total addressable
market opens new opportunities, but not if you’re using ineffective methods to engage with them. And trying to target
individual accounts won’t be effective if you’re not targeting the right accounts at the right time.
Laura Ramos, Vice President, Principal Analyst at Forrester Research, authored a September 2016 report titled,
“Retro Yet Revolutionary: Demystifying Account-Based Marketing.” In it, she presented “four key steps to setting up
ABM for success,” which are shown in the image below.
ICP and TAM, while important and valuable on their own, are critical prerequisites for a successful ABM program,
according to Ramos. ICP defines your target selection, while TAM pinpoints who those targets are and gives you
the detailed insights required to engage effectively.
1
SELECT AND TARGET
Set strategy, prioritize accounts,
and identify and target contacts.
2
3
DESIGN ENGAGEMENT
Create assets, messages, or plays to
engage accounts.
GATHER INSIGHTS
Identify key issues, develop insights,
and set the communication plan.
4
ASSESS, REVISE, REPEAT
ORCHESTRATE INTERACTION
Execute aligned activity, capture
interactions, and track progress.
Source: Forrester Research, 2016
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Bad Data = Bad Results
While truly game-changing results can be achieved when combining all three steps in this eBook, it can only happen
if your underlying data is clean, current, and complete.
SiriusDecisions’ Consulting Director Mike Raimondi, recently wrote that, when it comes to market size and segmentation,
“using the correct data to gauge and prioritize each segment and each prospective account is critical.”
“
“With a little effort, you can combine external market data with your company’s internal data
to yield comprehensive, consistent and detailed market metrics by industry, company size,
function and geographic area. This type of analysis brings market characteristics into focus
and supports successful go-to-market activities and resource management.”
~ Mike Raimondi, Consulting Director, SiriusDecisions
Want to learn more about how ICP, TAM, and clean data can impact your business?
Visit www.insideview.com/total-addressable-market-tam to find, target, and engage with your
total addressable market. Contact Sales at (415) 728-9340, or email [email protected].
insideview.com
@insideview
About InsideView
InsideView powers the world’s business conversations. Its leading targeting intelligence platform helps sales and marketing teams
quickly identify new opportunities, and effectively connect with prospects and customers. InsideView is the only company that
begins with the industry’s most accurate company and contact data, and enhances it with relevant, real-time business insights
and authentic connections. More than 20,000 companies use InsideView data to find and qualify the best targets, engage
with more relevancy, close more deals, and retain and expand accounts. InsideView’s headquarters are in San Francisco.
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