The segment you started in is getting worked through. Reps are reaching the same accounts for the third time, win rates are holding, but new pipeline is thinner every quarter. Then the board asks where next year’s growth comes from, and the honest answer is outside the market you sell to today.
That’s the TAM expansion question. It’s a different problem from sizing a market for the first time, and the companies that get it right treat it as a sales decision with an account list behind it, not a bigger number on a slide.
What TAM expansion means for a B2B company
TAM expansion means growing the total revenue you could sell into, by reaching new buyers, selling them more, or charging for more of the value you create. Your total addressable market is the outer edge of that: every company that could buy, times what one of them would pay you a year.
It isn’t the same as winning more of the market you already have. Taking a bigger share of your current segment grows your obtainable market, and that has its own math, covered in our post on how to calculate serviceable obtainable market. TAM expansion moves the edge itself.
| Growth question | What moves | Where to read |
|---|---|---|
| How big is our market today? | Nothing yet; you’re sizing it | Bottom-up market sizing |
| How much of it can we win this year? | Share of your SAM | SOM |
| Where does growth come from after that? | The size of the TAM | This post |
When is the right time to expand your TAM?
Expanding too early splits a team that hasn’t made its first segment repeatable. Expanding too late means a competitor takes the adjacent segment while you’re still re-sequencing the same list. The signals that it’s time usually show up in the CRM before they show up in a board deck.
- The list is running out. Reps are re-touching accounts they worked last quarter, and new accounts that fit your ICP are hard to find.
- Your share of the segment is high. You’ve won a large part of the accounts you can serve, and each new deal costs more than the last.
- Demand is arriving from outside the ICP. Inbound and referrals come from industries, regions or company sizes you don’t target yet.
- You keep almost winning the same kind of deal. Closed-lost reasons point at one missing integration, one region or one company size.
- The plan needs more than the segment holds. Next year’s target only works if you win an unrealistic share of the accounts you have.
Write down the point at which each signal counts before the planning cycle starts. A threshold agreed in advance is easier to act on than one argued over after growth slows.
It’s too early if your first segment still depends on one or two people to close, or if win rate and CAC still swing from quarter to quarter. Expansion copies whatever you have, including what isn’t working.
It’s rarely too early to start the research, though. Emery Waddell, writing on how to expand your opportunity (2020), suggests keeping the next one or two expansion options in research even when the current market has room, because they take time to validate.
How to increase your TAM by buyer, product or price
Waddell’s framework is the simplest way to see the options. TAM grows when at least one of three things grows: who you sell to, what you sell, and the price you charge. The first two are the product and market grid H. Igor Ansoff published in “Strategies for Diversification” (Harvard Business Review, 1957; see this summary of the Ansoff matrix). Price is the lever most teams forget.
| Lever | Move | What the sales team needs | First sign it’s working |
|---|---|---|---|
| Who you sell to | A new vertical | New list, new message, reps who know the buyer | Held meetings convert like the core |
| Who you sell to | A new region | Coverage in new hours, local proof | Cycle length close to the core |
| Who you sell to | Up or down market | A different deal size and often a different motion | Win rate holds at the new size |
| What you sell | A new product for current buyers | Account plans, an expansion motion | Attach rate in existing accounts |
| What you sell | A wider problem | New use cases, often a new persona | Deals that cite the new use case |
| What you charge | Packaging, usage pricing or payments | Pricing by company size, a finance-ready pitch | Revenue per account rises without churn |
The price lever is easy to underrate. ServiceTitan, which sells software to trades businesses, added payments and add-on products that SaaStr reports lifted its effective take from 1% to 2% of the transaction volume on its platform (SaaStr, 2025). The customers were the same and the TAM was larger. Freight and trucking software follows the same pattern when it adds payments, fuel or factoring next to the workflow.
A new vertical or region usually works first, because only the list and the message change; a new product needs the product team as much as the sales team. Run the moves one at a time. Prove one, write down how it sells, then start the next. Our post on the bowling pin strategy for sequencing market expansion goes further into the order, and land and expand covers the move into current accounts.
Value-theory TAM, for a market your product creates
Sometimes the product changes how much the market spends, and a count of today’s buyers misses it. That’s where the value-theory method comes in. Instead of counting what buyers spend on current options, you estimate the value your product creates for them and how much of it you can charge for. Matrix Partners’ guide to TAM slides (2017) lists it as the third way to size a market, after top-down and bottom-up, and calls it the most speculative.
The classic argument for it is Bill Gurley’s “How to Miss By a Mile” (2014). A valuation of Uber had sized its market as the historical taxi and limousine market. Gurley argued that a materially better product, with new price points and use cases, expands the market it enters. He quoted the forecast McKinsey made for AT&T in 1980: 900,000 U.S. cell phone subscribers by 2000, against an actual 109 million.
Use value theory to explain why a TAM could grow, then back it with something you can test, such as early customers using the product more than the thing it replaced. On its own it reads as a guess.
Pick the next segment from deals you almost won
Analyst reports tell you which markets are big. Your CRM tells you which ones will buy from you. The best candidate for TAM expansion is usually sitting in closed-lost and in the inbound you turned away.
Questions to ask about each candidate segment
- Same buyer? If the title and the pain are the same, your reps and message travel with small changes.
- Same proof? A case study from your core segment either lands here or it doesn’t.
- What’s missing? Name the integration, compliance item or price point that lost the deal, and who has to build it.
- How many accounts? Count them with the same firmographic filters you used for your ICP.
- Who already sells there? Accounts locked into a competitor’s multi-year contract aren’t in play this year.
- Does it need a different motion? Waddell warns against assuming a new market or product sells through the same channel and model. A move down market often needs self-serve, a move up market needs longer cycles and more people on each deal.
A lookalike build from your best customers is a quick way to test the count. If the lookalike list in a new vertical is a few hundred companies, that’s a niche, and it won’t keep a full team busy for long.
Size the new segment before you hire for it
Treat the new segment like a first market. Count the accounts that fit, multiply by what one would pay a year, and you have its TAM. Apply the limits that are true today and you have its SAM. The full method, with a worked example, is in bottom-up market sizing.
The account count matters more than the dollar figure here. It tells you how many reps the segment can feed before they’re calling the same companies again, which is the problem that started the expansion in the first place.
Measure share against a segment you can name
Share of a vague market tells you nothing about when to expand. Share of a defined segment does. AtoB came to Phi with 77 customers and scaled to 7% of the U.S. trucking fuel card segment while we built and ran its small-business sales team inside its own Salesforce. A number like that says how much room is left in the segment, which a share of “all fleet spending” never could.
Metrics that show TAM expansion is working
Track the new segment separately from the core. Blended numbers hide a slow start in the new market behind a strong quarter in the old one.
- CAC by segment. It’ll start higher than the core. What matters is whether it comes down as the message settles.
- Win rate by segment. A new segment that converts far below the core usually has a product gap, not a sales gap.
- Cycle length. Longer cycles change how much pipeline you need, so check your pipeline coverage per segment.
- Revenue per account. For a price or product move, this is the number that should rise, alongside net revenue retention.
- Share of the new segment’s SAM. Measured against the account count you started with.
Keep an eye on the core while you do it. Waddell’s rule is that expansion shouldn’t come at the cost of what makes the product win in its first market, and a core segment whose win rate slips while the team chases the new one is the early warning.
Where to start this quarter
Pull last year’s closed-lost deals and sort them by why they didn’t fit. The biggest pile is probably your next segment, and the reason in that pile is the first thing to fix.
Haris Burney
LinkedIn ↗I’m the Partnerships & Commercial Lead at Phi Consulting, where I help B2B startups build revenue they can predict. With a background in tech and a mind wired for systems, I build go-to-market systems that align inbound, outbound, and automation into one predictable growth motion.
At Phi, I work closely with founders and sales leaders to design cold outreach systems that cut through noise, and inbound funnels that compound over time. The goal is simple: shorter sales cycles, lower CAC, and scalable revenue.