Definition
A ratio comparing new revenue generated to the total sales and marketing spend required to generate it, similar to the magic number but often computed over a trailing year.
Formula
Net new revenue / Trailing sales & marketing spend
How to measure
Divide net new revenue generated over a trailing period by the total sales and marketing spend across that same trailing period.
Why track it
This ratio gives a smoothed, longer-window view of go-to-market efficiency, useful for spotting structural trends beneath quarter-to-quarter noise.
Example
A company generating $2 million in net new revenue against $2.5 million in trailing 12-month sales and marketing spend reports a 0.8 efficiency ratio.
FAQ
- What is Sales & Marketing Efficiency (CAC Ratio)?
- A ratio comparing new revenue generated to the total sales and marketing spend required to generate it, similar to the magic number but often computed over a trailing year.
- How do you calculate Sales & Marketing Efficiency (CAC Ratio)?
- Net new revenue / Trailing sales & marketing spend
- Why track Sales & Marketing Efficiency (CAC Ratio)?
- This ratio gives a smoothed, longer-window view of go-to-market efficiency, useful for spotting structural trends beneath quarter-to-quarter noise.