As a CFO, the balance between sales and marketing spend and new ARR or MRR creation is critically important to measure and monitor. Over invest in sales and marketing relative to your new SaaS bookings and will you not the see the expected margin expansion or cash creation. Conversely, under investing in sales and marketing when you have achieved the correct product/market fit and you will miss out on opportunities for growth. Therefore, it’s important to calculate the SaaS Magic Number and other sales efficiency metrics to determine your sales health.
Ben Murray writes exclusively on SaaS Metrics and Forecasting and also offers free SaaS excel models on his site. In How to Calculate the SaaS Magic Number Ben outlines three sales efficiency metric every SaaS CFO should know. Alan