Serviceable Available Market (SAM)

A firm's current core capabilities and/or historical performance are more precisely characterized as the serviced available market or served addressable market. The primary factor to take into account while calculating SAM is the likelihood that a company can only provide services to markets that are core to or immediately adjacent to its current client base.

Understanding TAM & SOM

By defining TAM and SOM, it is simpler to comprehend SAM:

**TAM: Total Addressable Market **– It is the overall amount of interest in your product or service. It is the biggest indicator you may use as a starting point because it represents the entire global market for your sector. TAM alone makes the assumption that you are a monopoly with no rivals in your market.

**SOM: Service Obtainable Market **– It is the market to which you can offer value most quickly. It's the area of the market where you can most likely make money given your existing situation.

While TAM relates to the overall sector size, SAM provides a precise sense of the industry segment you may effectively target. The last level places you at the currently accessible subset of your target population, which is your SOM market.

These well-established sales terminology can be used to calculate short- or medium-term realistic revenue forecasts.

Why Is SAM Important?

SAM aids in communicating your projected business trajectory and understanding it. Your available market is identified, and base judgements are then informed.

Let's say you want to introduce an e-signature app. The global market of persons who must sign contracts and other legal papers would be your TAM figure (e.g., law firms, agencies, freelancers, etc.)

That amount will be reduced to your SAM by elements like the functionality you provide, the languages your app is available in, and acquisition channels. In that situation, a well computed SAM will allow a company to adjust its strategy and better target its niche.

How To Expand SAM?

Many strategies exist for growing SAM. Here are a few that you can use:

Look at what’s working already

Dig into your marketing and sales data to determine which channels are working and identify strategies to more effectively reach your target demographics. Here are some ways you can leverage your Serviceable Available Market (SAM) to drive growth for your business:

• Keep track of important growth indicators including recurring revenue, churn rates, upsells, and cross-sells.
• Create a plan to reach your ideal client by identifying them.
• Look for strategies to increase your reach through scalable acquisition channels including social media, SEO, and referral marketing.

Offer more products and services

Depending on the industry you're in, this could be easier said than done, but if you can pull it off, it can greatly broaden your SAM. You can, in particular:

• Introduce new products that are aimed at various market niches. For instance, the development roadmap for online video editor VEED was based on the most popular online searches for video editing tasks.
• Adjust your messaging and positioning to appeal to a wider audience. Be careful not to alienate your present customers at the same time.
• Examine your rivals to discover how they are extending their market reach with various products.

Prioritize quick wins

You have a more practical possibility to start developing SAM by first utilizing untapped possibilities in smaller segments. You can, for instance:

• Automated messages should be sent asking satisfied consumers to tell their friends and family about your product.
• Look for ways to keep more customers and lower churn.
• Increasing the average revenue generated by each customer.

Conclusion

As we've previously discussed, following the appropriate growth KPIs can assist you in determining how to grow your SAM. Yet, measuring "soft metrics" can prove to be an expensive oversight that prevents you from connecting with your target client segments.

For expansion plans, relying on "soft measures" is not as reliable as solid facts. Metrics like revenue growth, cost of acquisition, attrition, and recurring revenue should take precedence over statistics like impression levels and registered users.

You may boost your chances of growing your SAM by adopting measures that have already proven effective and putting them to use in clever market possibilities.