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Magic Number

Quarterly sales efficiency metric. >1.0 = invest more in S&M; <0.5 = pull back.

Also known as: SaaS Magic Number, Sales Efficiency

Definition

The Magic Number measures the dollar of new ARR generated per dollar of S&M spend, annualized. Calculation: 4 × (Net New ARR this quarter) / (S&M spend this quarter). >1.0 means S&M is paying back fast - accelerate. 0.5-1.0 = healthy steady-state. <0.5 = sales engine is broken or saturating; cut spend.

Formula

4 × Net New ARR (quarterly) / Sales + Marketing spend (quarterly)

Related terms

Customer Acquisition Cost (CAC) →Rule of 40 →SaaS Quick Ratio →

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