What is a Serviceable Obtainable Market? (SOM)

Imagine you have a super yummy lemonade stand. You want to sell as much lemonade as possible, right? But you can’t sell lemonade to everyone on Earth. Some people don’t like lemonade, some live too far away, and some already have their own lemonade stands!

Thinking about your business like this – who you can realistically reach and serve – is super important. That’s where something called the Serviceable Obtainable Market (SOM) comes in. It helps businesses, especially online stores, figure out their real chances of success. Let’s explore what SOM is and why it’s a game-changer for businesses.

Understanding Market Sizes: Your Lemonade Stand’s Slice of the Pie

Before we jump into SOM, let’s quickly look at the bigger picture. Think of all the people who might want your lemonade. We can imagine this in three main sizes:

The Total Addressable Market (TAM): The Biggest Pie

The Total Addressable Market (TAM) is like everyone in the world who could possibly drink lemonade. It’s the biggest possible group of customers. If you had endless money, no competition, and could reach everyone, this is the number of people who might buy your product. It’s huge and often just a dream number, but it helps you see the grand potential of your idea.

• Example: For a lemonade stand, the TAM might be every person on Earth who drinks any kind of beverage.
• Why it matters: It shows the ultimate potential for your business idea.

The Serviceable Available Market (SAM): The Slice You Can Reach

Now, let’s get a bit more realistic. The Serviceable Available Market (SAM) is the part of that giant TAM that you can actually reach with your current type of business and where you operate. If your lemonade stand is in a park, you can only serve people in that park or nearby who can easily come to you. You probably can’t serve someone across the country, right?

• Example: For a lemonade stand in a park, the SAM might be all the people who visit that park regularly and are old enough to buy lemonade.
• Why it matters: It tells you how many people you could *possibly* serve if you were the only one and had enough resources.

The Serviceable Obtainable Market (SOM): Your Realistic, Immediate Slice

This is where SOM comes in. The Serviceable Obtainable Market (SOM) is the most important one for most businesses. It’s the part of the SAM that your specific business can realistically capture right now, or in the very near future. It considers things like how many lemons you actually have, how many cups you can afford, how many hours you can stay open, and how many other lemonade stands are in the park. It’s your current, real-world target.

• Example: For your lemonade stand, the SOM might be the 50 people who walk past your stand on a sunny Saturday afternoon and don’t already have a drink, and you have enough lemons and cups for them.
• Why it matters: This is your actual goal. It helps you make real plans and set goals you can actually reach.

Think of it like this: TAM is the ocean, SAM is your local lake, and SOM is the small pond right next to your house where you can actually fish with your current fishing rod and bait. Focusing on the pond helps you catch fish today, while still knowing there’s a big lake and ocean out there for future growth.

Why Is SOM So Important for Businesses?

Understanding your SOM isn’t just a fancy business term; it’s a super helpful tool for any company, big or small, especially online stores. Here’s why it’s such a big deal:

• Setting Realistic Goals: If you only look at the TAM, you might dream too big and get disappointed. SOM helps you set goals you can actually achieve. It’s better to aim for 50 customers and get 45 than to aim for 1,000 and get 45!
• Smart Spending: Knowing your SOM helps you decide where to put your money. Should you spend money trying to reach everyone on Earth, or focus on the people you can actually sell to? SOM guides your budget for things like advertising and making products.
• Focusing Your Efforts: It helps you understand who your perfect customer is and where to find them. This makes your marketing much more effective. If your lemonade stand is for kids, you wouldn’t advertise in a grown-up business magazine, right?
• Attracting Supporters: If you ever need money from grown-ups who invest in businesses, they want to see a clear, realistic plan. Showing them your SOM proves you know your business and have a good strategy for success.
• Beating the Competition: By understanding your SOM, you can better see who your direct competitors are and figure out how to stand out from them.

In short, SOM helps you be smart, focused, and successful in the real world.

How to Figure Out Your SOM: A Step-by-Step Guide

Figuring out your SOM takes a bit of detective work, but it’s totally worth it. Let’s break down how businesses do it.

Step 1: Start with Your Big Picture (TAM & SAM)

Before you can find your small pond, you need to know where the lake and ocean are. First, estimate your Total Addressable Market (TAM). This might involve looking at general industry reports or statistics about how many people buy similar products. For example, if you sell unique pet toys online, you’d look at how many households own pets and spend money on pet toys.

Next, narrow it down to your Serviceable Available Market (SAM). This is about what you can reach. If your pet toy store only ships within the United States, your SAM would be pet owners in the U.S. If you specialize in toys for small dogs, your SAM narrows even more to small dog owners in the U.S.

Step 2: Get Specific About Your Business

Now, let’s really look at your specific lemonade stand. This is where you get very honest about what you can actually do.

Your Products or Services

What exactly are you selling? Who is it for? Be super clear. If you sell organic, handmade dog toys, your target is different from someone selling mass-produced plastic toys. The more unique or niche your product, the more specific your market becomes.

Your Current Capabilities

What can your business actually handle right now? This is crucial. Ask yourself:

• How many orders can you realistically ship in a day or week?
• How many customers can your customer service team truly help without getting overwhelmed?
• How much product can you make or buy to sell?
• Do you have the right website and tools to handle lots of visitors?

For example, if you can only ship 100 packages a day, your SOM cannot be millions of customers needing immediate delivery.

Your Resources

What do you have to work with? This includes:

• Money: How much cash do you have for advertising, making products, and paying staff?
• People: How many team members do you have? Do they have the right skills?
• Time: How much time can you dedicate to growing the business right now?

Your Marketing Reach

Where can you advertise and get your message out effectively? Do you have a great website? Are you using social media? The ways you connect with potential customers play a huge role in your SOM. For online businesses, this is super important.

Think about how businesses grow trust and reach. Tools like customer reviews are incredibly powerful for helping you reach more people within your obtainable market and build trust. When new customers see what others say about your product, they are much more likely to buy. Platforms like Yotpo Reviews help businesses gather and display genuine feedback, which is key for attracting new customers within their reachable market. Seeing honest feedback makes people feel more comfortable trying something new.

Also, once you get a customer, keeping them is just as important as finding new ones! A strong loyalty program can turn first-time buyers into repeat customers, maximizing the value of your SOM. Imagine if every customer you gained bought from you five times instead of just once. That makes your SOM much more valuable. A Yotpo Loyalty program can help you do exactly that by rewarding customers for their continued support.

Step 3: Analyze Your Competition

Who else is selling similar products or services to your SAM? You’re not the only lemonade stand in the park. Look at what your competitors offer, how they price their products, and how they reach customers. What makes your business special? How can you stand out? This will affect how big a slice of the SAM you can realistically get.

Step 4: Consider External Factors

Sometimes things outside your control can affect your SOM:

• Market Trends: Is your product becoming more or less popular?
• New Technologies: Is there a new way to do things that could help or hurt your business?
• Economic Changes: Are people spending more or less money right now?

Step 5: Put It All Together and Calculate Your SOM

After considering all these points, you can make an educated guess about your SOM. It’s often a percentage of your SAM. For example, if your SAM is 10,000 people, and you think you can realistically capture 5% of them in the next year with your current resources, then your SOM is 500 customers.

It’s not an exact science, but it helps you create a roadmap. You might use market research, your own sales data, or even surveys to refine these numbers.

Why SOM Matters for Online Businesses (eCommerce)

For online stores, understanding SOM is super important because the internet makes it seem like you can reach everyone. But that’s not true! Even online, you need to be focused.

Targeting Specific Audiences

An online store might have the whole world as its TAM, but its SAM is usually much smaller (e.g., people in countries you ship to). Your SOM will be even more specific. You need to focus on the people most likely to buy from you, who you can reach with your current marketing budget and efforts.

This is where things like user-generated content (UGC) come in handy. UGC is content like photos, videos, and reviews created by your customers, not by your brand. It’s like digital word-of-mouth. When potential customers see real people using and loving your products, it helps build trust and brings in more people from your target audience. It helps you reach the right people and convince them you’re the real deal.

Another crucial part of making the most of your SOM is focusing on improving customer retention. It’s often easier and cheaper to get an existing customer to buy again than to find a brand new one. Happy, returning customers are the most valuable part of your SOM.

Building Trust and Community

Online, customers can’t physically touch or see your products before buying. Trust becomes a huge factor. This is where product reviews shine. Real ecommerce product reviews from other buyers are incredibly influential. They act like recommendations from a friend, helping people in your SOM decide to buy. Reviews make your business seem more reliable and trustworthy.

Likewise, loyalty programs help build a community around your brand. When customers feel rewarded for sticking with you, they become your biggest fans and often tell their friends. These best loyalty programs not only keep existing customers happy but also help expand your SOM through positive word-of-mouth.

Measuring Success

Knowing your SOM helps you set realistic goals for how many website visitors you expect to turn into customers. This is called your ecommerce conversion rate. If you have a clear SOM, you can better understand if your marketing efforts are working and if you’re converting enough of your target audience into buyers.

The Difference Between SOM and Other Market Sizes

To recap, here’s a quick table to help you remember the differences between TAM, SAM, and SOM:

Common Mistakes When Defining Your SOM

Even though figuring out your SOM is helpful, some businesses can make mistakes that lead them off track. Here are a few common pitfalls to avoid:

• Being Too Optimistic: It’s easy to get excited and think you can capture a huge part of the market right away. But being too hopeful without a solid plan can lead to disappointment. Always be realistic about your capabilities.
• Not Considering Competition Enough: Forgetting about other businesses trying to sell to the same customers is a big mistake. Your SOM needs to account for the fact that other lemonade stands are also trying to sell their lemonade.
• Not Understanding Your Own Limitations: Every business has limits – whether it’s how much product they can make, how many people they can hire, or how much money they have. Ignoring these limits will lead to an unrealistic SOM.
• Forgetting About Customer Retention: Some businesses focus only on getting new customers. But keeping the customers you already have is key to making the most of your SOM. If customers buy once and never return, you’re constantly fighting to replace them, which isn’t efficient.

By avoiding these mistakes, you can build a more accurate and useful SOM for your business.

Growing Your SOM Over Time

Your SOM isn’t set in stone forever. As your business grows and changes, your SOM can grow too! Think of it like making your lemonade stand bigger and better.

Expand Your Products or Services

Once you’ve successfully served your current SOM with lemonade, maybe you can add cookies, or even different flavors of lemonade. Offering more items that your existing customers might like can naturally expand the group of people you can serve.

Improve Your Marketing Reach

As you gain more resources, you can invest more in marketing. Perhaps you can start advertising in new online spaces or reach customers in different towns. Better ecommerce advertising strategies can help you connect with people you couldn’t reach before, expanding your measurable market.

Invest in Customer Experience and Retention

Happy customers are your best advertisement. When you provide an excellent ecommerce customer experience, they tell their friends and family. This “word-of-mouth” marketing is incredibly powerful and cost-effective. Word-of-mouth marketing generated through satisfied customers and strong loyalty programs can naturally expand your obtainable market without you having to spend a fortune on advertising.

Also, don’t forget to keep those happy customers coming back! Knowing how to ask customers for reviews and using their feedback not only helps new customers trust you but also helps you improve your products and services, making existing customers even happier.

Gather More Customer Feedback

Listening to your customers is a superpower. When you get feedback, you learn what they love and what could be better. Using this information to improve your products or services makes your business more attractive to a wider audience within your SAM, slowly growing your SOM.

By continually improving and expanding your capabilities, you can steadily increase the size of your SOM, setting new, exciting goals for your business!

Conclusion

So, what is a Serviceable Obtainable Market (SOM)? It’s your business’s most realistic, achievable target customer group. It’s not about dreaming about selling to everyone in the world, but about setting smart, practical goals based on what your business can actually do right now.

Understanding your SOM helps you spend your money wisely, focus your efforts, and build a strong, successful business. It helps you stay grounded while still allowing you to dream big for the future. By focusing on your SOM and continually working to grow it through great products, smart marketing, and excellent customer experiences – perhaps with the help of powerful tools like Yotpo Reviews and Yotpo Loyalty – your business can thrive and achieve its goals, one customer at a time.