Are you targeting your SAM?
Monday, October 6th, 2008I received a call from a somewhat flustered friend the other day. He is with a well-run start-up that has a working product and is showing good revenue growth—All is well in the world, or should be. Unfortunately he just ended his monthly board meeting on a sour note.
After launching a very successful demand generation program that’s generating more qualified leads than Sales can address, this board meeting should have been an easy one. The program was organized and aligned with the sales department—everyone was happy, even the CEO.
In the presentation’s home stretch, after he showed qualified lead growth, a reduction in the cost per lead, and enthusiastic comments from the VP of Sales, one simple question took the wind out of his sails. “Why aren’t you marketing to your Served Available Market?” He said he took a step back, felt flushed, and knew that it was a good question that he didn’t have an answer to. “I was so focused on the success of our newly launched demand generation initiative that I didn’t even think to go back and consider if the 70K leads I have in my marketing database actually covered my market.”
Several board members chimed in on the opportunity to provide a quick tutorial. “It was more than painful; it was downright embarrassing.” And rather than just give instructions to go off and figure out his SAM, list acquisition strategy, etc., they all joined in with a chalk-talk. As it turns out, his total available market is roughly 300K businesses, which serve about one fourth of the market, or 75K businesses―not far off from the 70K leads in his database. This would be fine except marketing databases aren’t even close to 100% on target, and his sale is moderately complex—typically with three decision makers at each company. If you add to the mix that B2B databases are continually in flux with 25% of contacts changing companies, functions, emails, every year, what started out as an enthusiastic board update ground down into one simple question: “Given the effectiveness of your program, why on earth are you targeting only a small part of your market?”
Are you marketing to your SAM?
