Magic Number
Magic Number: Sales efficiency metric measuring revenue generated per dollar of sales and marketing spend.
Formula
Magic Number = (QoQ ARR growth) / (Prior quarter S&M spend)Benchmarks
- Below 0.5: Inefficient, fix before scaling
- 0.5-0.75: Acceptable
- 0.75-1.0: Efficient (2024 median: 0.90)
- Above 1.0: Very efficient, invest more aggressively
What It Tells You
Whether sales and marketing investment is generating sufficient returns.
Related Metrics
Connected in the GASP relationship graph.
Upstream: what drives this
Downstream: what this drives
- Magic Number measures Subscription (Entity)