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Also known as: SaaS magic number

Magic Number

TechnicalMetricsSales

Definition

Magic Number: The Magic Number measures sales efficiency by dividing net new ARR by sales and marketing spend from the prior quarter. A magic number above 0.75 suggests efficient growth worth accelerating; below 0.5 indicates the need to optimize before scaling.

Example Usage

“Our Magic Number of 0.8 means for every $1 in S&M, we generate $0.80 in net new ARR.”

Common Misconceptions

Higher is always better. Very high numbers might mean you're under-investing in growth.
Magic number works for all business models. It's designed for SaaS with quarterly S&M cycles.
It's a standalone metric. Consider alongside CAC payback and LTV for full picture.

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