Expanding into international markets is a bold move for any innovative B2B tech company. You’ve developed a cutting-edge product or service, but entering new territories raises complex questions:
- Which markets should we prioritize?
- Where can we achieve the fastest ROI?
- How do we avoid wasting resources on opportunities that don’t align with our strengths?
This is where TAM (Total Addressable Market), SAM (Serviceable Addressable Market), and SOM (Serviceable Obtainable Market) come into play. These metrics aren’t just theoretical—they’re essential tools for creating a focused and actionable Go-to-Market (GTM) strategy. When combined with local expertise and strong execution, they help you prioritize markets, allocate resources effectively, and scale sustainably.
Here’s an in-depth look at why TAM, SAM, and SOM are critical to your international GTM strategy and how to leverage them for measurable results.
What are TAM, SAM, and SOM?
1. TAM: Total addressable market
TAM is the total potential market for your product or service if you had no limitations—geographical, competitive, or otherwise. It’s your opportunity at its largest scale.
- Why TAM matters:
TAM helps you assess whether the market is large enough to support your growth ambitions. For example, if your solution serves the MedTech industry, your TAM might include every hospital worldwide that could use your technology. - How to calculate TAM:
Use industry reports, publicly available data, and competitor benchmarks. For instance, you could multiply the total number of potential customers by the average revenue per customer to get an approximate figure.
2. SAM: Serviceable addressable market
SAM is a smaller subset of TAM, representing the portion of the market your product can realistically serve based on factors like geography, customer needs, and product fit.
- Why SAM matters:
SAM narrows your focus to markets where your solution has the best chance of success. For example, your SaaS platform might have a TAM of $10 billion globally, but your SAM might be $1 billion when focusing on mid-sized European businesses. - How to calculate SAM:
Segment your TAM by filtering out regions or customer segments that don’t align with your strengths. Use factors like market readiness, competition, and product relevance.
3. SOM: Serviceable Obtainable Market
SOM is the most actionable of the three metrics. It’s the share of SAM that you can realistically capture in the short term, given your resources, competition, and sales capacity.
- Why SOM ,atters:
SOM is where your GTM strategy comes to life. It helps you set realistic revenue targets and prioritize immediate actions. For example, your SOM could be $100 million, targeting mid-sized logistics companies in Germany. - How to calculate SOM:
Look at your sales capacity, competitive landscape, and resource availability. SOM often requires local validation to ensure your assumptions align with market realities.
Why TAM, SAM, and SOM are essential for international expansion
1. They prevent wasted resources
Expanding into international markets can be costly, especially if you lack focus. TAM, SAM, and SOM guide your efforts, ensuring you prioritize the most promising opportunities and avoid spreading your resources too thin.
- Example: A MedTech company targeting hospitals in Europe might identify a TAM of $5 billion. By refining their SAM to focus on mid-sized hospitals in Western Europe, they avoided wasting resources on markets with low adoption rates.
2. They align your teams on achievable goals
One of the biggest challenges in international expansion is aligning sales, marketing, and leadership on where to focus. SOM provides a clear, actionable target that unifies your team’s efforts.
- How it helps:
SOM ensures everyone is working toward the same goals—whether it’s securing a specific number of customers in a region or hitting a revenue target.
3. They create a scalable roadmap
TAM, SAM, and SOM aren’t static—they evolve as your company grows. Starting with SOM ensures you capture immediate opportunities, while TAM and SAM provide a roadmap for scaling your efforts over time.
- Example: A SaaS provider began by targeting logistics companies in Germany (SOM). After capturing this market, they expanded their focus to logistics companies across Europe (SAM) and are now exploring global opportunities (TAM).
How to use TAM, SAM, and SOM in your GTM strategy
1. Validate your assumptions with local expertise
Your initial TAM, SAM, and SOM estimates are just that—estimates. Local validation is crucial to ensure these metrics reflect real-world opportunities.
- Tip: Work with local sales teams or partners who understand the regional market dynamics and buyer behavior.
2. Focus on SOM for immediate impact
TAM and SAM provide strategic direction, but SOM is where you take action. By focusing on SOM, you can achieve quick wins that build momentum for future growth.
- Tip: Prioritize markets with high readiness for your product and manageable competition.
3. Use data to refine and scale
As you capture your SOM, revisit your TAM and SAM to identify new opportunities. Use data from your initial market entry to refine your GTM strategy and scale effectively.
- Tip: Monitor KPIs like conversion rates, deal cycles, and customer feedback to adjust your approach.
How we help you define and act on TAM, SAM, and SOM
At Aexus, we specialize in turning TAM, SAM, and SOM into actionable GTM strategies. These metrics are only valuable when paired with strong execution, and that’s where we come in.
1. Market validation with local expertise
Our regional teams validate your TAM, SAM, and SOM assumptions, ensuring they align with local realities.
- Example: For a SaaS provider, we identified untapped SOM opportunities in Scandinavia by leveraging local market insights.
2. Targeted execution
From setting up meetings with decision-makers to closing deals, we work as an extension of your team to capture your SOM.
- Example: Our team helped a MedTech company penetrate the German market by focusing on mid-sized hospitals, achieving 15% market penetration within the first year.
3. Scalable growth strategies
As you capture your SOM, we help you scale into broader portions of your SAM and TAM, creating a sustainable growth roadmap.
- Example: After helping a logistics SaaS provider capture their SOM in Western Europe, we expanded their GTM efforts to the U.S., doubling their revenue within 18 months.
TAM, SAM, and SOM aren’t just theoretical—they’re tools for driving focus, aligning teams, and achieving measurable results. By prioritizing SOM in your GTM strategy, you can enter new markets with confidence, capture immediate opportunities, and lay the groundwork for long-term growth.
Ready to refine your GTM strategy and unlock new markets? Let’s work together to turn insights into action and make your international expansion a success. Contact us today to get started.