Defining Your Serviceable Obtainable Market: A Guide for SaaS Founders

In 2012, Slack was not a household name. It began as an internal tool for a gaming company before evolving into the popular collaboration software that we know today. Slack’s meteoric rise was due to more than just a great product; it was also due to a thorough understanding of its target market.

Identifying a precise Serviceable Obtainable Market (SOM) allowed Slack to scale efficiently, avoiding waste and maximising revenue potential.

For SaaS founders, defining a Serviceable Obtainable Market is critical for long-term growth. While the Total Addressable Market (TAM) provides an overview of industry potential, the SOM assists founders in focussing on the segments that they can realistically target.

Without a well-defined SOM, SaaS startups risk chasing an unattainable audience, resulting in high churn rates and inefficient spending.

Breaking down market segmentation

Understanding your SOM starts with segmenting your audience. The process typically includes:
Total Addressable Market (TAM) – The total demand for your product in the absence of competition or limitations.

The Serviceable Available Market (SAM) is the portion of the Total Available Market (TAM) that your company can realistically serve based on your product’s value proposition and market constraints.
Serviceable Obtainable Market (SOM) – The percentage of the SAM that you can realistically convert into customers based on your resources, sales strategies, and competitive position.

SaaS startups frequently overestimate their reach, assuming that everyone in their industry is a potential customer. However, factors such as budget constraints, brand trust, and technological readiness significantly reduce the actual available market. Defining your SOM requires you to be strategic, targeting segments where conversion is both feasible and profitable.
How to Determine Your Serviceable Market

Use data to define your SOM.

Use first-party data, industry reports, and analytics tools to calculate your SOM. A useful formula is: SOM = (Target Segment Revenue) × (% Market Penetration Feasibility).
For example, if your Serviceable Available Market is valued at $100 million and you believe you can capture 5% of it, your SOM is $5 million.

Why Serviceable Obtainable Market is Important for SaaS

Focussing on your SOM keeps your marketing and sales efforts from becoming too thin. By targeting the right audience, SaaS entrepreneurs can:

• Reduce customer acquisition costs (CAC).
• Improve conversion rates.
• Improve product-market fit.
• Allocate resources effectively for sustainable scaling.

Slack, for example, began as a tool for software development teams before expanding to a larger audience. By focussing on its SOM first, it established a strong user base before scaling.

Optimising Your SOM for HubSpot and TAYB

HubSpot is a game changer for defining and refining your Serviceable Obtainable Market. The CRM and marketing automation tools offer real-time insights into customer behaviour, enabling segmentation based on firmographics and behavioural data.

Track lead engagement and improve conversion strategies.

Automate targeted outreach campaigns to maximise reach in your SOM.

TAYB specialises in HubSpot API development and technology consulting, ensuring that your data-driven strategies are seamlessly integrated into your business expansion plans. Our team can help you fine-tune your market segmentation strategy by providing customised dashboards, automated lead scoring, and tailored integrations.

Get started with HubSpot today.

Understanding your Serviceable Obtainable Market is critical to your SaaS success. Using HubSpot’s data-driven insights and collaborating with TAYB’s experts, you can precisely define and target your ideal audience for long-term growth.

Ready to take action? Schedule a HubSpot demo with Ale, our HubSpot specialist, start refining your market strategy today!

Identify your niche customer segments.
Your SOM is about more than just potential buyers; it’s about identifying your ideal customers. Begin by analysing your existing users’ characteristics:
Industry – Are you targeting B2B, B2C, or a specific vertical?
Company Size – Do you cater to startups, mid-market companies, or enterprises?
Tech Stack Compatibility: Does your software work seamlessly with their existing tools?
Buying Power – What is your ideal customer’s budget?
Using data-driven research, you can identify patterns and adjust your SOM accordingly. If your product is a CRM integration for eCommerce, your SOM should target online retailers who already use tools compatible with your solution.

Analyse market size and competition.
Understanding competition in your market segment is critical. Even if your product fits into a specific niche, competitors may already be dominating. Conducting a competitive analysis will help you evaluate:
Total number of direct competitors
Market saturation and barriers to entry
Differentiation strategies to set you apart
Statistically, 42% of startups fail because of a lack of market demand. Long-term success depends on ensuring that your SOM is not only accessible, but also hungry for your solution.

Drop us a line here, and let’s understand how we can help you.