Treat them as a gate, not a target. If your magic number is comfortably above one and CAC payback is under twelve months, the machine is returning more than you feed it and hiring is the obvious use of cash. Between about 0.5 and 0.75, adding reps mostly buys you a bigger, slower version of the same problem, so fix productivity first. Below 0.5, hiring makes things worse. Two adjustments people forget: measure spend in the period before the revenue it produced, since a rep hired today produces nothing for two quarters, and use fully ramped productivity rather than team average, otherwise every new hire silently drags the ratio down and you conclude the market is saturated when you have simply hired too fast.
3 hand-picked resources, 1 India-specific, 3 link-checked. Pick how you want to dig in.
Why we picked it Separates gross sales efficiency, net sales efficiency and magic number, which most people use interchangeably and should not. Also sets the 0.7 long run median you will be judged against.
From Scale Venture Partners by Dale Chang 10 min read
Open scalevp.com →Why we picked it The magic number was invented at Scale, so this is the primary source, including the Omniture story behind the name and how the benchmark has drifted since 2005.
From Scale Venture Partners by Dale Chang 8 min read
Open scalevp.com →Why we picked it Lays out Upekkha's Value SaaS argument that SaaS built from India is structurally capital efficient, which changes what a healthy CAC payback or magic number looks like for an Indian company.
From Inc42 by Team Inc42 10 min read
Open inc42.com →How forecasting and gtm metrics reads from a different seat.
