3. Sales Efficiency / Unit Economics
- New Sales ARR vs S&M Expense: How much did S&M departments (all programs and personnel) spend vs how much New Sales ARR was added in the same period.
- CAC: divides S&M expense in the preceding period (month or quarter) by the number of new customers in the current period.
- New ACV vs CAC: It’s useful to compare Annual Contract Value (ACV) of new customers to their CAC. Ideally, ACV is greater than CAC.
- CAC Payback: divide S&M spend by MRR x Gross Margin.
- Magic Number: the Net New ARR in a period divided by S&M expense from the prior period. Ideally, the ratio is > 1.
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