Measure sales efficiency by comparing new ARR generated against the sales and marketing spend behind it.
The ratio divides one figure by the other and is read against a conventional benchmark of 0.75. Both the ratio and its percentage form are shown, because different audiences expect different presentations of the same number. A efficiency ratio compresses two absolute figures into one comparable number, which is what makes it usable across companies and periods of different size.
Magic Number
Magic Number = New ARR added in the quarter, annualised ÷ Prior-quarter sales and marketing spend
Magic Number = New ARR added in the quarter, annualised ÷ Prior-quarter sales and marketing spend The ratio divides one figure by the other and is read against a conventional benchmark of 0.75. Both the ratio and its percentage form are shown, because different audiences expect different presentations of the same number.
A efficiency ratio compresses two absolute figures into one comparable number, which is what makes it usable across companies and periods of different size.
This calculator takes 2 inputs: New ARR added in the quarter, annualised, Prior-quarter sales and marketing spend. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.