Breaking into GTM

What is the magic number and should I care about it at my stage?

The short answer

The magic number is how many dollars of annualised new revenue you generated for each dollar of sales and marketing you spent in the previous period. It was coined at Scale Venture Partners in 2005 when Rory O'Driscoll saw Omniture producing more than two dollars of first year revenue per dollar of go to market spend and said it was magic. The long run median for SaaS sits around 0.7, roughly one is good, and above one is usually a signal to spend more. Should you care yet? Not much below a million dollars ARR, because the numbers are too small and lumpy for the ratio to mean anything. Track it once you have a repeatable motion and a few quarters of comparable spend.

Go deeper, your way

3 hand-picked resources, 3 link-checked. Pick how you want to dig in.

The same ground, at another level

How forecasting and gtm metrics reads from a different seat.

How do I calculate conversion rates by stage, and what do I actually do once I have them? Calculate them on a cohort, not on a snapshot. Take every opportunity created in a month, follow that same set forward, and measure what share reac... Doing the work 3 resources → How do I call a quarterly number I can actually defend to my CEO and my board? Build it three ways and show the range, not a single figure: bottom up from deal level commits with entry criteria applied strictly, top down from ... Leading a GTM team 3 resources → How do the very best forecasting teams actually run their week? They separate three meetings that most teams collapse into one. A deal review, where the conversation is about strategy on named opportunities and ... How the best do it 3 resources →

Terms in this answer

MRR

People also ask

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