Definition
A ratio of net new annualized revenue generated to the sales and marketing spend from the prior period, used to gauge go-to-market efficiency.
Why it matters for growth
A magic number above 0.75 typically signals it's efficient to keep investing in sales and marketing; below that, spend may be outpacing returns.
Example
A company generating $400,000 in net new ARR after spending $500,000 on sales and marketing last quarter has a magic number of 0.8.
FAQ
- What is SaaS Magic Number?
- A ratio of net new annualized revenue generated to the sales and marketing spend from the prior period, used to gauge go-to-market efficiency.
- Why does SaaS Magic Number matter for growth?
- A magic number above 0.75 typically signals it's efficient to keep investing in sales and marketing; below that, spend may be outpacing returns.
- What is an example of SaaS Magic Number?
- A company generating $400,000 in net new ARR after spending $500,000 on sales and marketing last quarter has a magic number of 0.8.