Outbound

Why TAM / SAM MUST Always Come First!

Joseph Wheatley
September 27, 2025
•
2
min read

Outreach is your lever for building consistent, predictable pipeline.

But outreach without strategy is just noise.

If you want to become the signal, the first step is to calculate your TAM and SAM.

Why?

Because your outreach approach depends on the size of your SAM. With a large SAM, you can focus on the in-market 5% using volume-based, bottom-of-funnel outreach. With a small SAM, the in-market pool is too small, so you need personalized, long-term outreach that nurtures the 95% who are not ready to buy yet while converting those who are.

So as you can see, outbound strategy is downstream from knowing your TAM / SAM.

But before we explore this further, let's first clarify some definitions.

Definitions

  • TAM: The total revenue opportunity if you captured 100% market share.
  • SAM: The slice of the TAM you can realistically serve, given limitations like geography and further ICP constraints.

How to Calculate TAM & SAM (+ Examples)

TAM
  1. Define the broad market. E.g. All businesses worldwide that could use contract management software.
  2. Estimate the total number of potential customers in that market. E.g., 1,000,000 businesses
  3. Estimate the average revenue per customer (ACV/ARPU). E.g., $10,000 per year
  4. Multiply average revenue per customer by number of potential customers. E.g. 1,000,000 × $10,000 = $10B TAM
SAM
  1. Start with your TAM. E.g., TAM = $10B (1,000,000 businesses × $10,000 ACV).
  2. Filter by your ICP / constraints. E.g., Only mid-market companies (100–1,000 employees) in North America.
  3. Estimate the number of potential customers in that subset. E.g., 50,000 companies.
  4. Estimate the average revenue per customer in that subset. E.g., $15,000 per year (mid-market pays more).
  5. Multiply average revenue per customer by number of potential customers. E.g. 50,000 × $15,000 = $750M SAM

TAM vs SAM - Which do we use in GTM?

  • TAM is for long-term ambitions e.g. vision, investor conversations, etc.
  • SAM is for outbound and GTM strategy.

Why do we calculate SAM before doing outreach?

If your SAM has 1M accounts, about 50,000 will be in-market at any given time (95–5 rule). With these numbers, it makes sense to focus on the in-market 5% using volume-based outreach, automation, and bottom-of-funnel messaging. Because the 5% in-market is dynamic, with accounts constantly moving in and out of that group, the same approach will continue to work as new buyers enter the market. Why target out-of-market when you can get all the customers you need from in-market?

If your SAM has only 5,000 accounts, with only ~250 in-market at any given time, you need a different strategy. Instead of pushing in-market messaging onto the entire pool, focus on manual, personalized outreach that adapts to where each account is in the buyer’s journey. This lets you build long-term relationships with the 95% out-of-market while still converting the few who are ready to buy now.

Takeaways

  • TAM = total revenue opportunity if you captured 100% market share (used for long-term vision and investor context).
  • SAM = the slice of the TAM you can realistically serve, given constraints like geography and ICP constraints (used for GTM and outbound).
  • Outbound strategy depends on SAM size
  • Large SAM → focus on the 5% in-market with volume-based, bottom-of-funnel outreach.
  • Small SAM → use manual, personalized outreach to build relationships with the 95% out-of-market while converting the 5% who are ready now.