Cold email requires infrastructure investment - domains, warmup time, tools. Before committing, know if your market size justifies the approach.
When Cold Email Works
Works best when you have:
- Large addressable market (thousands of prospects)
- Clear targeting criteria
- Scalable sales process
Less effective when:
- Market is small (under 500 prospects)
- Deals require extensive relationship building
- You need immediate results
Understanding TAM, SAM, SOM
TAM (Total Addressable Market): Everyone who could theoretically buy.
SAM (Serviceable Addressable Market): The portion you can actually reach.
SOM (Serviceable Obtainable Market): The realistic portion you can capture.
Example: HR software
- TAM: All companies with HR (millions)
- SAM: English-speaking, 50-500 employees (500,000)
- SOM: Tech companies in North America (50,000)
The Cold Email Math
Typical metrics:
- Reply rate: 5-15%
- Positive reply rate: 2-5%
- Meeting conversion: 30-50%
| Goal | Emails Required | Unique Prospects Needed |
|---|---|---|
| 5 deals/month | 1,500 | 1,500 |
| 10 deals/month | 3,000 | 3,000 |
| 20 deals/month | 6,000 | 6,000 |
Critical insight: You need fresh prospects continuously. Same list repeatedly damages deliverability.
The Runway Problem
5,000 company market needing 3,000 monthly:
- Month 1: 60% exhausted
- Month 2: Market depleted
Small markets exhaust quickly.
Decision Framework
Green Light (50,000+ companies)
Market sustains continuous prospecting. Economics favor investment.
Yellow Light (10,000-50,000)
Cold email as ONE channel. Combine with content, LinkedIn, paid ads.
Red Light (Under 10,000)
Account-based marketing more appropriate. Personal networking higher ROI.
The Infrastructure Investment
Minimum viable:
- 3-5 domains ($50-250/year)
- Email hosting ($18-36/month per domain)
- Tools: $200-500/month
- Time: 2-4 weeks warmup
Break-even: If your market can't sustain 1,400+ new prospects monthly, ROI becomes challenging.
Alternatives for Small Markets
Account-Based Marketing: Deep research, multi-channel personalized outreach for top 100 accounts.
Hybrid Approach:
| Tier | Accounts | Approach |
|---|---|---|
| Tier 1 | Top 100 | Full ABM |
| Tier 2 | Next 500 | Personalized cold email |
| Tier 3 | Remaining | Inbound capture |
Making the Decision
Cold email is right if:
- Market exceeds 50,000 companies
- Deal value justifies costs
- You can commit 3-6 months
Cold email isn't primary if:
- Market under 10,000
- High-touch sales required
- No budget for infrastructure
Your Next Steps
Calculate your market: Use our TAM Calculator to estimate your total addressable market.
Get strategic guidance: Our AI Business Coach can help with cold email strategy decisions.
The best programs are built on solid market analysis, not hope. Know your numbers first.