Embarking on a B2B business journey requires a strategic approach, and defining your Total Addressable Market (TAM) and Target Account List (TAL) is crucial for success. These two elements serve as the compass guiding your business toward the right audience. In this article, we'll explore the importance of TAM and TAL, along with the steps required to create them.

Total Addressable Market Defined

Your Total Addressable Market (TAM) is the comprehensive list of all individuals that align with your ideal customer profile (ICP). We don’t want to leave anyone out when calculating your total addressable market.  Identifying your TAM sets the stage for a comprehensive understanding of the market landscape and ensures that your business is positioned to address a broad spectrum of potential customers. In addition to creating an understanding of the market landscape, it ensures that your marketing, sales, customer success, and even product efforts are aligned with where to put their efforts. Ultimately, this is your guide post into where your company's opportunities for growth are and where to put your company's efforts. 

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Difference Between Total Addressable Market and Target Account List

While both TAM and TAL are integral to B2B success, they serve different purposes. The main distinction lies in their scope and strategic focus. A Total Addressable Market encompasses the entire market that fits your ideal customer profile, providing a holistic view. In contrast, a Target Account List is a more refined and strategic subset of the TAM, representing the companies you specifically target for short-term goals. It’s easy to stretch yourself, and your budget thin across a large list of companies- narrowing your focus will allow you to create a more efficient use of your resources. 

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Target Account List Defined

A Target Account List (TAL) is a carefully curated segment of your Total Addressable Market that becomes the focus of your immediate efforts. This selection is based on your buyer persona (check out our blog on Buyer Persona’s here. Here are some factors (but not all) that you can use to narrow down your audience

Geography: Where does your customer live? In your total addressable market, we can sometimes argue that your customer could live anywhere, but here we should be more specific as to their location compared to your business. Does it make more sense to target users close by? Or maybe within a national scope? 

Economic Factors: Considering the household income of your buyer. For example, if you’re selling a luxury good, we would assume that your average household income needs to be fairly high. Vice Versa, if you’re an economic solution, that doesn’t want to compete with high-priced products, we may target users with lower household incomes. 

Gender: Gender is another common demographic used to segment audiences. Are men or women more likely to buy your product or service? Although gender breakdowns are never 100%, all people have different purchasing behaviors, doing research into these industry statistics can help you understand the makeup of buyers in your industry. If you’re in an industry that is dominated by 80% of women as purchasers, then you should cull down your target account list to focus on women. 

By narrowing your focus to a TAL, you can allocate resources efficiently and tailor your approach to meet the specific needs of this subset, increasing the likelihood of successful engagement. Understanding your TAL means you can spend your time and resources advertising to high-income women with kids in the Southeast vs. low-income single men in the Midwest. Making these specific differentiations will yield a higher return in your marketing and sales tactics.

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