What is HVM and why does it make TAM, SAM, and SOM obsolete?

Breaking down what your highest value market is and how it should guide your strategy.

Social IconSocial IconSocial Icon

Don't let TAM, SAM, and SOM mislead you and fall short of your B2B business objectives

Over the past decade, we haven’t encountered a single B2B business where realized growth was achieved using TAM (Total Available Market) sizing projections. Yet, the reference to TAM as a guiding force to set revenue targets and business strategy persists.    

Frequently this has resulted in companies falling short of growth targets internally or scrambling to meet unexpected demand. A great example was with a global B2B technology company that quoted multiple TAM growth estimates from industry analysts in an annual investor meeting several years ago as the validation for hitting their multi-year growth targets. Instead, their revenue was flat or declining each subsequent year, and they were scrambling to find growth while their share price severely underperformed the market and competition. Assuming their growth would match the expected TAM growth without validating if their own company could achieve these projections has cost that company billions of dollars in market capitalization.

As a business leader, you may have experienced something similar. What has it been like when revenue targets fell short, the prize size was substantive, or the category grew? Your company may also rely on outdated metrics like TAM, SAM, and SOM to set your business performance targets and corresponding strategy. While these metrics were initially designed for consumer markets, they are unsuitable for B2B companies.

TAM, or Total Addressable Market, is a rough estimate of the total market spending based on some multiplication of the average spend per customer and the estimated number of customers. Companies often use it when they try to project how much sales they should expect and allocate their budgets accordingly. However, this approach has several things that could be improved when applied to B2B markets.  

First, averages can be misleading, especially in B2B. An average marketing or sales spend of $20 is the same whether the lowest spend is $18 and the highest is $22, or the lowest is $0.05 and the highest is $1,000,000. It is the mix that matters. Average growth expectations are even worse; some companies in your sector will decline in revenue while others will grow at significant multiples of average growth rates.

Second, the number of customers needed to be successful in B2B is very different from consumer markets. When you have tens of millions of potential consumers and only need tens of thousands to be successful, it’s much different than when you have 4,000 potential companies that can buy your product and 4,000 are already buying something they think is similar.  

Third, TAM assumes that the obtainable share of the market is aware of you and demands your specific product or service. However, the cost of sufficient awareness is rarely considered when calculating TAM, SAM, and SOM, especially for B2B companies that rely on salespeople to raise awareness directly. Also, many interested companies may not be able to buy what you’re offering in the near term due to contractual constraints or associated change management costs that are not reflected in the cost of your company’s product and services.  

Finally, the number of people involved in purchasing can be significant in B2B. Unlike B2C, where a single person often makes the purchasing decision, in B2B, you can have 4-20 people involved in the buying process – TAM, SAM, and SOM do not apply to groups.

Instead of relying on these outdated metrics, a new measure has emerged – Highest Value Market: identifying your valuable and winnable customers. Valuable customers drive profitability, long-term growth, and network effects. Winnable customers are those seeking a solution like yours – the illusion of SOM is that valuable and winnable are the same customer.  

Answering these questions by measuring systematically and repeatably accelerates the growth of your company by identifying the highest value market (HVM) for your product or service – the intersection of valuable and winnable. This market is often much smaller than SOM and demonstrative of your business prospects if substantially higher than revenue growth in the previous two to five years combined. On the other hand, if you discover that your valuable and winnable customers don’t overlap, it is an advanced notice to adjust your business strategy before the results impair your corporate value and prospects.

In conclusion, if you're using TAM, SAM, SOM, or something similar to set your revenue forecast and business strategy, you often miss out on critical information essential to your company's success – distinct from any success in your industry. Don't let outdated metrics mislead you. Instead, focus on identifying your valuable and winnable customers – your HVM, gain unprecedented customer clarity, and align your business objectives accordingly.  

Discover how relying on outdated metrics like TAM, SAM, and SOM can prevent businesses from missing their highest-value market through a real-life example. Our case study will give you unprecedented customer clarity and align your business objectives accordingly.


Total Addressable Market (TAM): the total size of the market or industry for a particular product or service. It represents the maximum amount of revenue a company can potentially generate by selling its product or service to every single customer or business that could benefit from it.

Serviceable Available Market (SAM): the part of the TAM that a company can realistically target and reach with its products or services. It represents the portion of the TAM that a company has the resources and capability to serve.

Share of Market (SOM): the percentage of the SAM that a company is currently serving or has the potential to serve in the future. Also known as Serviceable Obtainable Market.

Highest Value Market (HVM): the intersection of valuable and winnable customers. Valuable customers are those who drive profitability, long-term growth, and network effects. Winnable customers are those seeking a solution like yours. HVM is therefore the market segment that represents the highest potential for revenue growth and aligns with a company's overall business objectives. It may be much smaller than SOM, but it represents the most lucrative segment for a company to focus its resources and efforts.

Here to help

Discover your most valuable customers and use their perspective to optimize your strategy. Learn about the Avasta team and our dedication to fostering clarity for companies around the world.

Team Image

Continue reading


Four Traps that prevent marketers from generating accurate insights

“I talked with Edgar Baum, brand economist and Founder and CEO of Avasta Incorporated, about the CMO Knowledge Gaps.”

Avasta Define

Big Data vs. Thick Data

The definition, application, and examples for big data and thick data

Brand Global Summit

Brand Global Summit 2022 "In Brands We Trust"

Companies are Brands, Intangibles are Tangible, Expenses are Assets. By Edgar Baum. Page 90 and 91…

Edgar Baum: Avasta Empowering Leaders To Grow Their Businesses

Avasta CEO and Founder, Edgar Baum, gets interviewed by Made In CA to explain how Avasta helps leaders grow their business.

The Champagne Strategy Podcast

Brand Strategy and Evaluation

Edgar Baum on Measuring Brands’ Contribution to Revenue with Mathematical Accuracy – The Evaluation of Intangibles…


The Financial Value of a Brand Only Exists with Good Measurement and Management

From the metaverse’s impact on business management to how our CEO has become an eminent speaker at globally leading events - read Edgar Baum's interview with InnoKOL Group.


The CMO Knowledge Gap

“I’ve recently come in contact with a number of ex-blue-chip CPGers who lament the decline of the big companies.”

Avasta Define

Buyer Profiles

The definition, application, and examples for buyer profiles, from the perspective of Avasta.

Avasta Insights

Executive Sentiment on Revenue Recovery from the Impact of COVID-19

Companies are operating in a fragile environment but often miss capabilities, data and pace….