Market penetration metrics

Market penetration shows what percentage of your potential market currently uses your product. This metric helps teams understand their growth potential and market position. For example, if 5,000 companies in your target market use project management tools, and your product has 500 users, your market penetration is 10%.

Calculating market penetration starts with defining your total addressable market (TAM). Define your market specifically — "all businesses" is too broad, but "independent coffee shops in urban areas" gives clearer growth targets. Then compare your current user base to this total to find your penetration rate. Breaking this down by segments like geography or user type shows where you're strong and where you can grow.

Teams can use market penetration data to spot growth opportunities. Low penetration in certain segments might mean untapped potential, while high penetration suggests looking for new markets.