TAM requires a thorough understanding of a business’s market and customer base. In addition to serving as a guideline for a business’s overall vision, TAM plays an important role in forecasting and budgeting and provides the foundation of a successful go-to-market (GTM) strategy.
To this end, if you’ve calculated your TAM accurately, you will have determined key customer segmentation data crucial to a successful GTM strategy, such as definitions of ideal customer profiles and buyer personas, and gathered insights on the current competitive landscape, including market saturation and competitor offerings. With this market intelligence in hand, it is simpler to craft a viable GTM strategy based on concrete, verifiable information.
The role of market sizing in your GTM Plan
Well-developed GTM strategies generally take into account four key considerations: product-market fit, target audience, channels of distribution and competition and demand. A TAM analysis will be comprised of these factors to assess the overall revenue opportunity for a business.
In fact, the in-depth market and customer knowledge gained through TAM analyses should illuminate the best method of distribution and most effective channels of sale based on the product, customer needs, and market offerings. Analysis of the SAM (Serviceable Available Market) and SOM (Serviceable Obtainable Market), for example, can narrow that focus based on the competitive environment and conditions of market saturation that further inform growth strategies, suc...