Performing a Market Sizing Analysis for a Rapidly Growing Business
A young and growing technology company was looking into strategic growth to capture untapped market share in a rapidly evolving industry. The client engaged Clarkston to better understand the revenue opportunity and asked Clarkston to provide a view into its Total Addressable Market (TAM), Serviceable Addressable Market (SAM), and Serviceable Obtainable Market (SOM) for its main product and service, as well as generate a comprehensive listing of targets (potential customers) the client should prioritize to capture in the short term. Clarkston first analyzed different aspects of the client’s business that would support the market sizing calculations for its main product and service. The goal of this market sizing analysis was to understand the client’s target markets, existing and ideal customer base, historical revenues, sales team win and conversion rates, sales team constraints, and other key metrics to be able to arrive at reasonable estimates for each of the market sizes.
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Next, using extensive market research, Clarkston performed a market sizing analysis to determine the client’s total addressable market. Further analysis considered the exclusion of the client’s non-target sectors and industries as well as other factors to estimate its serviceable addressable market. The team then considered other organizational constraints to determine the realistic portion of the market that the client could obtain in the next few years (serviceable obtainable market). This analysis will help justify future resources and the needed capital to support their anticipated growth.
As an added benefit, Clarkston was able to leverage several different inputs used for the market sizing analysis and use them as search criteria to develop a list of target companies that fell within the client’s markets. Clarkston worked with the client to select a set of attributes and other strategic qualifiers to filter the target list down to a subset of companies that can be prioritized immediately, providing valuable insights into where sales efforts should be focused and begin driving the execution of securing new business.
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Contributions from Zach McClughen
