Total Addressable Market (TAM) is a vanity number like “hits” were back in the early days of website
metrics. Service Obtainable Market (SOM) is better but is an aspirational number that we might not live to realize. Service Addressable Market (SAM) is better still yet it has the same issue as SOM, cash may run out long before that market is addressed by our product.
Whether we’re at the “seeking first (paid) users” stage of our life as an organization or we are in the “seeking to scale sustainably” stage our Total Immediate Market (TIM) needs to be our focus.TIM is what opportunities can be converted
a) in the next six months or
b) before cash runs out whichever happens first.
If we are in an enterprise selling environment with cycles lasting 12 months or more there are still opportunities like (paid) trials that we can get our team to focus on and close while they are still inching the large opportunities down our funnel.
If we are in a more mature organization that still seeks sustainable scaling of revenues, focusing on TIM creates a safety net around our funnel shrinking because the TIM window is always rolling forward so opportunities that aren’t in our TIM because they are expected to close seven months from now will show up on our TIM the following month.
A six-month window forward is far enough in the future that our sellers won’t feel pressured to close,
which translates to aggressive posture with buyers, but near enough that we are able to get an early
warning sign that our funnel is starting to shrink so we can course correct well before our funnel fails. Like Paul Graham’s idea of “default alive or default dead,” TIM is an acid test for the health of our near term funnel and what our story to our investors and/or Board will be at our next update.
Until next time… go lead.
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