The subject of the total addressable market (TAM) is hot in federal contracting — and for a good reason. So, we sat down with GovTribe Customer Success Director Paige Elmore to break down what you need to know.
Q: What is a total addressable market?
A: A total addressable market for a government contractor is the potential market for their industries or capabilities within the federal space.
Q: Why is a total addressable market important?
A: Understanding your total addressable market is essential to defining your strategy because it answers questions like — what agencies predominantly purchase in your industry? What is the potential of expanding your business? What vehicles do you need to join? Defining your TAM can answer those questions and help you win the most business possible.
For example, if you find out that most contracts aren’t competed in your market, that means that few opportunities are likely to be posted and you will need to focus on marketing and strategic relationships to succeed.
Q: How do you calculate your total addressable market?
A: This is unique to every vendor. You can define your market by finding the NAICS, PSCs, and contract keywords aligned with your capabilities and industry. In the federal space, you can see your total addressable market by searching for a combination of NAICS, PSCs, keywords, and agencies to see the historic spend or overall market spend for the last year.
For example, if your business is in facilities management in Arizona and you want to define your total addressable market, you would build a report that looks like this one.
Q: What results should I expect by identifying my total addressable market?
A: If your current tactics are causing you to lose business, your total addressable market can help you figure out why that is. You can also learn where you stand with competitors and where you have room to grow. You can also discover vehicles you aren’t on. For every question a total addressable market report answers, you can see all of that in the GovTribe User Guide.
Q: How can GovTribe help me identify my total addressable market?
A: GovTribe gives you access to all public opportunities and awards dating back to 1949, which allows you to understand spend by seeing every contract your competition has won and how agencies have historically purchased what you sell. You can use that information to define your total addressable market and build a report in GovTribe to give you those insights.
Q: Is there anything else people should know about total addressable markets?
A: Total addressable market research is extremely important, but it’s also just the tip of the iceberg. GovTribe allows you to see the bird’s eye view of a total addressable market, but also the low-level market for a specific market you are pursuing, which is also important.
Where can you find more federal contracting opportunities and data?