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I’m trying to size up the total addressable market for a niche B2B software tool, but I’m stuck on how to accurately define the customer segments. My initial estimate feels way off after looking at some industry reports, and I’m worried my serviceable available market calculation is based on flawed assumptions. How have you all approached validating the core demographics for your SAM?

First I tried a top down TAM and kept redrawing the line around a few ICPs. The moment I wrote SAM down I realized I was counting a lot of non buyers. I carved out a narrow set including industries with a known data problem firms of a certain size and buyers with budget authority. Then I sanity checked against a handful of actual customers and deals in flight. If I could not point to at least one paying account per segment I dropped it. The exercise helped me spot where my assumptions were failing but it also made the SAM smaller than I expected.

Sounds familiar. I segmented by verticals and by team roles but realized the usage pattern varied a lot by deployment type. I did a quick bottom up build counting potential buyers per account but only those who had a need my tool could solve and who had budget alignment. Then I cross checked with historical booking data and saw big gaps. Some segments never closed others had tiny deal sizes but longer run rate. It helped to re assign weighting to those segments and drop the ones with low close rates.

Do you have a real problem or are you chasing the number you want to see?

One thing that helped me was drifting into a different thought for a while. I started comparing against a friend's analytics SaaS in a different industry and realized some of the numbers were noise. It reminded me to test the segments with real pilots for a quarter before committing. I tried a three month pilot with three segments and tracked win rate and time to close. Results were messy but gave me a feel for which segments moved the needle.

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