In the quickly evolving landscape of technology in the financial services industry, launching a new solution or growing your sales funnel involves a meticulous understanding of your market. Deep market understanding is critical to ensure data-driven decisions for a software company’s growth goals.
Recently, Vencora began supporting Insuresoft with its marketing and sales function, including working with the company in assessing its market in order to build and grow its sales funnel. This resulted in a more robust pipeline, as the number of marketing-generated opportunities increased by 200%.
Below, we provide a step-by-step guide on how software companies can define their core market and fuel successful growth, demonstrated through our case study of Insuresoft seeing this plan in action.
1. Estimating Total Addressable Market (TAM):
The Total Addressable Market (TAM) represents the entire revenue opportunity that exists for a particular product or service. Calculating your TAM involves assessing the entire potential customer base and determining the total revenue that could be generated if every potential customer were to purchase your software at the maximum possible price.
To estimate your new product or growth area’s TAM, it’s important to:
Define the market your solution can serve based on factors such as industry verticals, geographic regions, or specific use cases of the solution.
Determine the number of potential customers or companies within the market through research and analysis.
Estimate the average revenue that can be generated from each customer for your new solution.
Evaluate the predicted trends of the market by considering factors including the market’s maturity and size, industry disruptors, and regulatory changes.
Utilizing a combination of existing customers and market research, Insuresoft’s team had a comprehensive list available of all insurance carriers and Managing General Agents (MGAs) in the USA region. Insuresoft offers an all-in-one Policy Administration, Billing and Claims enterprise platform, so their TAM was defined to focus on carriers and MGAs within these markets.
2. Customer Segmentation and Your Serviceable Available Market (SAM):
Your Serviceable Available Market (SAM) is the portion of your TAM that you are planning to target and can realistically serve with your solution. SAM is a more focused view of the market opportunity available to your company and is calculated by focusing on the key customer segments you’re planning to reach, which should be selected and prioritized through a segmentation process.
Customer segmentation involves categorizing your target audience into distinct groups based on various factors, such as what type of business they are, the sub-verticals they operate in, and their overall size. Once you’ve created clearly defined customer segments, you can prioritize which customer types and tiers you plan to focus on winning.
For Insuresoft, their comprehensive list could be segmented into revenue buckets, as well as separating insurance carriers from the MGAs, in order to direct relevant and specific conversations and promotions to those two different types of entities. Through this process, Insuresoft had a more focused target account list they could then confidently pursue via marketing and sales initiatives specific to their product offering.
3. Competitor Analysis and Serviceable Obtainable Market (SOM):
Your Serviceable Obtainable Market (SOM) is the portion of SAM that you will realistically win. It's the portion of the market that your company can practically expect to capture and serve, and the amount of revenue that you expect to make from your new product or venture. It factors in the current and expected market share you expect your competitors to consume of the SAM.
To calculate your SOM, it’s crucial to conduct a thorough analysis of existing competitors in your addressable market. After analyzing the market and performing due diligence on its competitors, Insuresoft was able to identify how many deals per year on average they expected to close, based on their expected ability to win customers. Using calculations including win rates and average length of time to close, Insuresoft was able to determine how much pipeline revenue they anticipated to generate, and then worked with Vencora to determine annual sales goals to maximize organic growth.
4. Sales Opportunity Assessment:
Developing a Sales Opportunity Assessment enables your company to evaluate the potential for success in your chosen market. This is done through a comprehensive analysis of the competitive landscape within your industry, as well as the available opportunities for growth and includes a strategy for accomplishing your sales objectives. When conducting an assessment, consider factors such as the complexity of the sales process, the length of the sales cycle, consumer dynamics and the potential barriers to entry.
Insuresoft was able to meet their target revenue goals by reverse engineering metrics to determine the number of leads that needed to be generated in order to create opportunities. The research done to refine their customer list and determine their target audience resulted in Insuresoft efficiently developing a sizeable sales funnel by reaching the right customer segments that would be likely to purchase.
They are also now in a better position to increase their pipeline velocity moving forward by developing a data-driven approach to target their market and conduct their sales opportunity assessment. Through performing this assessment, Insuresoft calculated and fleshed out four key levers they could use to improve their pipeline velocity and success rate within their market segments, namely:
Increase the number of opportunities within the pipeline
Increase the average deal size
Improve their win rate
Reduce the length of their average sales cycle
By improving each of these levers and taking the time to research, understand and target the correct market audience for their products and services, Insuresoft has confidently elevated their organic growth.
Summary:
In the dynamic landscape of technology development, success hinges on a deep understanding of your industry. Being able to develop a strong analysis of your new solution, from estimating the TAM to understanding the revenue opportunity you can capture, will help you develop your strategic roadmap, and properly allocate resources to ensure success.
In the case of Insuresoft, they were able to grow their sales pipeline over two years, with a 200% increase in the number of opportunities generated through marketing efforts. This allows for sales teams to spend less time prospecting and cold calling and more time focusing on building relationships throughout the year. Further, Insuresoft is now seeing its highest pipeline growth since inception and is on track to setting the highest number of net new logos than ever before.
Want to learn how Vencora can support your marketing and sales function and grow your pipeline? Check out our resources below and get in touch with our team.