Estimating Product Market Opportunity
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First time here? I'm John Gauch, an operating partner to founder-led companies. As a fractional COO, I provide growth and operations support to founders who want to make a big leap forward with their business and need to add capability or capacity to the team to make it happen.
TAM (Total Addressable / Available Market), SAM (Serviceable Available Market) and SOM (Service Obtainable Market) are popular conventions that we all see in investor pitch decks.
TAM can loosely categorize opportunity scale (large, medium, small), for example.
I am really interested in a figure sometimes captured in the SAM or SOM, but this is case by case depending on how people calculate them.
The market opportunity number I like to see is this:
Specifically excluded from the number:
I do not view this as a static figure. We can update it if/as our customer understanding changes. We can also handicap the number to reflect the likely prospects today, versus those experiencing barriers to purchase due to access, cost, skill or time, for instance.
I am not saying this is easy math or we can do it with absolute, scientific precision, but there is a ton of value in just trying. Calculating market opportunity in this way requires understanding:
the specific problem a product helps customers to solve
the situation when that problem arises
the better way customers are seeking
To uncover these often-hidden customer insights, we can use lean approaches, such as interviews, which go beyond what we can learn in a survey or focus group.
Read also: How to Learn Jobs to be Done
What we discover will inform a lot more than a market opportunity number. It will likely inform our strategy, product and marketing approach, helping us to build and scale our businesses.
If you're a company founder or CEO, and you feel it would be valuable to get on each other's radar, I'd love to connect for an informal conversation. Learn more about my work, or reach out directly.
This blog post appeared originally on LinkedIn.