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Segment your Total Addressable Market (TAM) and build an outreach sequence structure to get feedback before you build, find your design partners, and secure those critical first customers.
Once you’ve established your Ideal Customer Profile (ICP) and created messaging to communicate the value hypothesis for your product, you can take both of those and begin your outreach. The goal is to get market feedback before you start to build product, find your early design partners, and secure those critical first paying customers.
In this module, we’ll detail how to start segmenting your sales TAM (total addressable market) — first with companies, then with personas. After that, we’ll provide an overview of the most successful outreach sequence structure we’ve seen so far with our portfolio companies, with some sample messaging you can use to get started.
Let’s start by creating three buckets that all potential prospect companies fall into: Startups, Challengers, and Champions.
Startups: early-stage companies trying to establish themselves in a market
Challengers: middle- and late-stage companies that are furiously trying to stave off new startups, take down current market champions, and fend off competitors
Champions: the top three to five companies in any given vertical and may be 40+ years old or recently crowned in the form of an IPO or major acquisition
In order to segment these companies, let's use ARR as the dividing line, layering them over a popular revenue framework for SaaS companies: the T2D3 method for getting to $100M ARR and a $1B valuation (assuming a 10x revenue multiplier). T2D3 means a company takes its baseline revenue (let’s assume it’s $2M ARR at the Seed stage), triples it twice, and then doubles it three times — all in succession:
When starting your outreach for feedback or early design partners, you’ll likely have a mixed bag with a few startups and champions, but you should aim for the majority of your design partners (60–70%) to be challengers. If we layer on those categories to the T2D3 framework, here is where they would fall:
Another way to look at this would be to categorize them like this:
Finally, you can also look at this through the lens of where these companies are in their fundraising lifecycle relative to their ARR (roughly):
When you segment companies this way, you can also get an understanding of what they prioritize at each stage of the T2D3 journey, how that changes as they grow, and where your product's value hypothesis is strongest:
(You can read more about this approach to choosing design partners in the PMF chapter.)
In order to narrow your sales TAM to focus on the Challengers within the industries you want to sell into, you’ll need to use a tool like Apollo.io, DataFox, or ZoomInfo. These tools help filter the total number of companies in their databases by detailed parameters such as geographic location, founding date, employee count, funding amount, revenue amount, tech-stack, and more.
Example
Say we want to initially target companies in North America and Europe with an employee range of 100–1,500, a minimum revenue amount of $50M (putting them in the Challenger category), that use Kubernetes, and are NOT in the government, education, or non-profit space.
We can further filter this list by searching for the Ideal Customer Profiles we want to target at these companies, some of which might not have any.
Example
We may want to filter these companies to show those that have full-time roles for application security engineers, security engineers, secOps, DevSecOps, CISOs, and security architects.
Those 966 companies and 4,018 employees now represent your initial sales TAM.
To recap, you start with the total addressable companies and personas worldwide, then apply the design partner filters listed above, coupled with your own unique identifiers. That leaves you with your initial Sales TAM, which you can start prospecting.
Other great resources to find companies that fit the Challenger profile (without having to pay for a subscription to the tools above) would be lists like:
The main benefit of using tools like Outreach is that it allows you to create multi-touch campaigns (calls, emails, LinkedIn messages, etc.)—all from one dashboard.
We’ve found that the most successful outreach campaigns include all three and alternate between them. The best sequence structure we’ve seen portfolio companies use is:
This is sequence that covers 14 days, with 7 touch points in that time frame. There is a lot of writing on the need for sequences that are 20+ touch points, spanning 20-30 days. While these can be effective as an early-stage company that potentially doesn't have a website yet, I find that if you can't get a decent engagement rate off this 14-day sequence, you need to adjust your ICP or messaging instead of doubling the number of touch points.
To dive one level deeper, below are a few notes on the components of this sequence.
When it comes to using LinkedIn for outreach, sending a connection request with an intro message has proven to be more effective than using LinkedIn InMail for our portfolio. When you connect with someone on LinkedIn, you have the option to add a note that's 300 characters (slightly more than a tweet), where you can introduce yourself and quickly get to your ask.
When prospects get LinkedIn InMail messages, they tend to view them as spam since that’s the vast majority of message they’ve received in that format (this is probably true for you as well!). I liken these to ad links for websites on Google; most people will scroll down and click the same website link below it simply because it's not an ad.
Example LinkedIn connection message:
“{{first_name}} - Hope you don't mind the cold outreach. We came across your profile looking for experts in the {{blank}} industry and feel you might be the right person to give us feedback on what we’re building. The product provides {{blank}} and takes out the need for {{blank}} - would love to get your take.
It’s important to point out that, while tools like Outreach can automate aspects like pulling up prospects LinkedIn profiles, you still need to type or copy/paste the message into the connection note box and hit send manually. This takes time but its well worth the investment!
When it comes to emailing prospects, no matter what stage your company is at, a guiding principle is to think about the type of outreach you get (for work or personal) and what makes a message good vs. what is irritating, unthoughtful spam.
Personally, I find there is a misconception that prospect emails have to read like doctoral thesis—they don’t! Think about what a “formal” text message would read like and then convert that to an email layout. Make it genuine, put thought into why you’re reaching out to them, and get to the ask quickly.
When it comes to subject lines, you’re not trying to selling your product here. The majority of your prospects will first see this subject line on their phone's lock screen, smart watch message preview, or as a sidebar notification on their laptop/monitor. Therefore, the only goal of subject lines is not to get instantly deleted.
The current reigning champion for subject lines we use is simply:
Your next goal after not getting immediately deleted on an Apple Watch is to break through with a personalized first sentence in the email body.
Again, have a real reason to reach out to prospects, either based on their position, background, current company, something they call out in their LinkedIn profile, a talk they did, a piece they posted to an engineering blog, etc. Then, lead with that.
Which of these do you think is more impactful lead sentence?
Start with what’s interesting about them, not what’s interesting about you/your company.
After you tell them why you’re reaching out, get to your ask quickly. People don't have patience to read through an entire email to find out what you want at the bottom. Prospects will read or scan emails trying to answer three questions: “Who is this?”, “What is this about?”, and “What's in this for me?”. Use those questions to structure the rest of your body copy. If you want to describe what your product does, do so with 2-3 short bullet points or use a Loom to give them a 30-second overview.
To wrap up the email, restate your ask and what’s in it for them before ending with your call to action. Avoid the assumptive call to action (“How does next Tuesday at 3PM work?”), and the lazy call to action (“Here is my Calendly link, pick a time that works best for you”) and instead use one that’s easy to respond to that doesn't require a firm commitment yet or the need to reference calendars before they’ve even shown interest.
When it comes to email follow up, make sure you’re always adding value to the prospect in each message.
This can be highlighting a feature/use case you think is relevant to them or an article on the space you find interesting. It’s ok to reiterate your ask, but it’s not ok to just send multiple follow up emails checking to see if they got your last note and wondering if next Tuesday at 4PM works.
We can (and will) do an entire section on cold calls, but two quick guiding principles here:
We could get into philosophical debates on what good metrics are, but to make this approachable for founders or sales reps at early stage companies, here is what we use as benchmarks based on our own outreach:
If you’re attaining these metrics in outreach campaigns with over 100 contacts, then you’re nailing your ICP, messaging, value hypothesis, and call to action. For most early-stage companies, these will be aspirational metrics to hit, especially at scale (1000+ prospects), but it's not impossible from what we've seen.
You can use this Sales Outreach Calculator to get a rough estimate for how much outreach you'll need to do in order to hit your desired number of Beta installs and/or paying customers by the end of the quarter. Note that if you're going after Beta customers with no cost associated, just set the average sales price (ASP) in the calculator to $50,000. Again, these numbers will vary for each company given how the product is installed, tested, etc. but you can assume a roughly 0.5% overall conversion rate from total outreach (all prospects contacted) to installed betas/paying customers (500 emails).
You can read more here about the Math of Sales.
