TAM (volume)
Many founders focus on the total addressable market (TAM) in value or $ terms but not on TAM (volume). I like it when founders include this info in their presentations.
Volume = the number of customers in a market or personas in an organization across an industry.
In B2B, closing a sale with a customer would depend on many things (budget, sales cycle, product-market fit, competition, etc). A high volume of target personas or customers to work with won’t hurt.
With volume, your first 1-5+% of your customers will be your learning curve. The largest 5-15% of the customers you can assume to be unattainable in the short term.
Which leads to the middle 80%+ of the market you could realistically go after. A higher TAM (volume) means more opportunities to course-correct and learn from your GTM mistakes.
In low TAM (volume) markets, you only have so many shots on goal. Every sale matters and you don’t have any room to navigate.
I’d love your feedback and comments. Please give the article some ❤️ if you liked the post.
I often see pie in the sky TAM numbers that are sometimes really difficult to put in context. Do you think Founders should be obligated to provided SAM and SOM numbers as well as a reality check on what is actually possible?
It would be a honor to get 10-15 mins of your valuable time for a quick catchup and your advice for us at Veehive.ai and cBee.ai ( sathish@veehive.ai )