Chapter 3List Building: Part 2Defining Your Total Addressable Market (TAM)

Author's note: The following section is written with help from my friend and colleague, Daniel Barber, vice president of revenue at

Figure depicting a big circle containing a smaller circle that further contains another small circle inside it, such that all circles contact at a single point. The outer circle denotes total available market (TAM - highest potential of people who could possibly buy), the middle circle denotes served available markets (SAM - people reached via current and standard sales channels), and the innermost circle denotes target market (TM - low-hanging fruit; most easily and likely to buy).

Figure 3.1 Total Addressable Market (TAM), Served Available Market (SAM), and Target Market (TM)

Whether you're selling for a start-up or an enterprise, you need a realistic and specific idea of your true revenue opportunity. Once you understand the profile of your customer, you should determine your total addressable market (TAM), which measures the total of potential customers you can sell to.

If you sell point-of-sales systems or digital cash registers that work with American banks, your TAM is every small business in the United States of America.

If you sell sales e-mail automation software, your TAM is everyone who uses e-mail in his or her sales process. You can cross-reference customer relationship management (CRM) users with Outlook or Gmail users to find a massive audience of potential customers.

Enrich Your Customers

To find your company's TAM, you want to determine how deep the market is for companies with a similar background. Taking a step back and looking at their customer base will inform you of outlying trends that could support a move into a new industry or market segment.

Tapping into the commonalities across your customer base will leverage enormous ...

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