B2B sales have existed for a while, but outbound has only recently matured to a level of systematization. The most sophisticated companies are leveraging robust data architecture to support their sales effort.
90% of companies are doing lead sourcing wrong
Stop relying solely on spreadsheets.
If you're spending hours manually building lists, you're losing valuable time that could be spent engaging with potential clients.
Ricky Pearl, cofounder of Pointer, recently conducted a LinkedIn poll reinforcing how roughly 70% of revenue professionals spend between 1-3 hours every day just building lists.
That's time not spent selling.
Have you ever found yourself chasing lofty revenue goals only to realize, midway, that you were chasing an unrealistic market size all along?
You're not alone.
Understanding the Total Addressable Market (TAM) is more than just estimating numbers; it's about understanding what defines of your potential clientele and how they fit into your business puzzle.
Centralizing this data ensures that every strategy, campaign, or outreach effort that you undertake measurably maximizes sales & marketing alignment. Hence, the potential for success.
The Three Questions You Should Be Asking Yourself About TAM:#
👉 A total addressable market (TAM) calculates the overall revenue opportunity for a given set of products or services. In other words, the number of total possible customers for your solution x the average annual revenue per customer.
In the B2B world, the idea of defining your TAM is to be able to scale outbound & orchestrate ABM strategies.
1. Who Is Your Target Persona?
Let's say you need 300 new logos for Q4.
At an average 15% meeting booked rate, and a 70% post-meeting conversion rate, you'll need to engage with roughly 3,000 accounts to get there.
But whom should you include in these accounts?
The first step is to know which company fits your ICP.
Step 1: Craft a Detailed Firmographic Outline of Your Ideal Customer Profile (ICP)
👉 An ideal customer profile (ICP) describes the perfect company or customer you want to target for your business. Companies that fit your ICP are the lifeblood of your business as they are more likely to buy, stay loyal to your product, and refer you to others. This comes after a pattern analysis of your closed-won customers.
Your ICP should be more than just a loose description. Stop trying to target a fictional “Boring Boris: Project manager, introvert, 2 kids, and driving a Ford."
Instead, try to capture the essence of your perfect client.
When working from a TAM perspective, I would recommend starting with a broad definition, mainly focused on firmographics.
Something like B2B SaaS & Technology companies, post-Series A, 100-500 employees, 200K ARR, located in Europe.
Step 2: Narrow your ICP definition.
Enhancing the effectiveness of your TAM can be greatly achieved by providing additional B2B data.
For this, you can use technographic (the tools commonly used by your target audience), psychographics, and demographic attributes to narrow down your choices.
For example, see the persona template from SalesIQ.
This lets you create more detailed segments on top of your TAM, ensuring more granularity and relevancy in your outreach to increase performance.
2. How to size your market?#
After refining your ICP, this is the moment to take a closer look at your market size. In other words, start tallying how many companies fit the bill, ticking off your carefully curated criteria.
Looking for a quick ballpark figure?
There are some great calculators out there.
My personal favorite is from Clearbit.
Zoominfo and Cognism also offer a good alternative.
Still, I'd recommend using the calculator that sounds more suitable for your target market. Zoominfo/Clearbit are more suitable data providers for the US, while Cognism is superior for Europe.
3. Where to centralize it?#
You've got two solid options when it comes to getting your TAM in one place. Either, use your data providers or build your own definition of your total addressable market.
👉 No matter how you create your TAM, it must be operationalized and acted upon. Enter Cargo, the control center for revenue ops that helps streamlines your sales operations on top of your TAM.
Option 1: Using Data Providers#
The market has a wealth of data providers, each offering unique insights.
Tools like Apollo, Zoominfo, Cognism, Clearbit, People Data Lab, Salesintel, or LeadGenius have already done a fair share of the heavy lifting, offering enriched data on leads and companies, complete with contact information. Clay conducted a useful benchmark analysis on a sample of data to determine the average coverage rate of emails from well-known providers.
From there, you'd search for potential prospects that closely match your dream customers.
But beware, there's a downside
These provider may often be a tad slow to update. That guy they say is still at Google? He might've jumped ship three months ago.
Think about it, they need to regularly update ~1 billion records. There's no way Linkedin is letting them do that every month. Data obsolescence is one of the reasons Zoominfo recently missed revenue targets and lost 26% of its valuation overnight.
With this in mind, the choice of data provider will highly depend on your target market location or the industry your prospects operate in. For instance, if you're targeting a niche audience like Restaurants, you'd better go with a dedicated provider like CHD. If you're more into e-commerce, Store Leads or Charm.io could be interesting options to explore.
Regardless, it's crucial to benchmark to understand your TAM's depth and breadth truly.
You'll be best served by requesting a sample of data related to your particular
use case before making a purchase decision. The 2 main things you need to look
out for are the following:
- Coverage: How many contacts & companies, and the related number of data
points do they cover?
- Data quality: How accurate & fresh are the data, cross-check your requested sample to be sure.
Option 2: Using the datawarehouse as the central repository#
Successful scale-ups like Gorgias, Pigment, Paddle, Ramp, and Rippling have one strategy in common:
They centralize their TAM in a robust data warehouse.
This approach allows revenue teams to engage leads at scale, ensuring that sales teams focus on what they do best: selling.
But how can you replicate their success?
Take control and gather your entire market in your own store of data. Your data warehouse is your fortress, your stronghold of information that you will keep updated and ready for action.
The upside?
No one else has the exact same one. It's your competitive advantage.
You also have control over the freshness of your data (regularly updated via cronhooks or similar solutions). Unlike the major players, you hopefully won’t have over 500 million records to update.
Instead, your target audience will be smaller and simpler to refresh monthly. You have complete authority over how frequently you want to update your data.
On the other hand, you choose your data sources and enrichment providers and can even combine them to maximize coverage.
Common sources include LinkedIn, Crunchbase, Dealroom, and Pitchbook.
On top of that, you may choose to further enrich with more niche databases like Harmonic, Predictleads, G2, and Datanyze to have even more context on your accounts.
You can also have a hybrid strategy, where you would use B2B providers like Store Leads or People Data Lab, and maintain the entire dataset in your data warehouse, which you will complete and improve with your own ad-hoc extraction using Captain data for instance.
This is how Gorgias operates, combining data from a Public API (Shopify API) and Store Leads within the data warehouse - the heart of their revenue engine.
The downside?
This requires time, a technical quotient, and a clear knowledge of your desired data sources and attributes.
This involves leveraging the modern data stack, with the assistance of multiple data engineers (expensive!).
The Modern Data Stack:
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ETL Tool: Use platforms like Fivetran or Airbyte for data pipelines.
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Data Warehouse: Choose between BigQuery, Snowflake, or Redshift to store your data.
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Modeling Tool: Use tools like DBT for data transformation, ensuring your raw data is ready for business applications.
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rETL Tools: Push data back using Hightouch or Census.
This is the tech stack l we've been using at Spendesk. It helped us listen to B2B signals, an interesting way to auto-identify & populate ICP accounts in our PRM, segment, enrich & push back to the leads to the CRM & outreach tools.
The not-so fun part of the story?
It involves the use of numerous tools, technical knowledge, and regular maintenance which revenue leaders were unable to utilize as effectively as we did.
At first, creating a Pandora's box is OK, but if other teams cannot leverage it, then you're just painstakingly inventing an unnecessary bottleneck that limits the potential of your system.
Introducing Cargo: The best of both worlds#
When it comes to revenue topics, involving too much engineering skill sets can lead to a loss of autonomy for revenue teams.
Data engineers don't have to regularly do minor tasks like editing data models or adding new sources or attributes. Even small requests can cause operational inefficiencies due to time lags.
Armed with this experience, and seeing this problem persisting in many companies, it prodded us to build Cargo, a data warehouse-native UI that we call the "modern revenue stack." It serves as the next step after modern data stack adoption by building the bridge between the MDS and the biggest data consumers: revenue teams.
Cargo centralizes all necessary features mentioned above in a data warehouse-native UI made for modern revenue teams to leverage their data and unlock revenue growth.
TAM isn't just a number. It's a reflection of your understanding of the market and how you approach it.
By focusing on the right personas, sizing the market accurately, and leveraging modern tools, you set yourself up for scalable success.
Read the EPISODE 2 on how to orchestrate and prioritize your TAM
MaxJan 1, 2024
