How many dollars of new annual recurring revenue per dollar of sales and marketing?
№ 021 · Sales efficiency (CAC ratio)
Definition
MetricS&M spend per dollar of new ARR (new-logo and blended variants)
Unit$ of S&M per $1.00 of new ARR
New ARR divided by sales-and-marketing spend in the same period. Above 0.75 is healthy. Build by pulling S&M expenses from P&L and dividing into net new ARR. Trend down means motion is breaking. Example: $1.2M S&M, $1.05M new ARR = 0.88x (healthy).
- CAC
- Customer acquisition cost. Fully loaded sales and marketing spend in a period divided by new customers won in that period.
- ARR
- Annual recurring revenue. MRR at period end multiplied by 12, or the annualised value of active contracts.
- S&M
- Sales and marketing. All go-to-market cost: salaries, commission, media spend and tooling.
- P&L
- Profit and loss statement. Revenue minus cost of goods sold minus operating expenses, down to operating profit.
Benchmarks
| Bottom 30% | Median | Top 30% |
|---|---|---|
| New CAC ratio $2.82+ (the survey's 4th quartile median) | New CAC ratio $2.00 (2024, up 14% year over year); blended CAC ratio ~$1.40 (down 10%) | New CAC ratio under ~$1.20; blended under ~$1.00 |
Private B2B SaaS, CY2024 data; new CAC ratio = total S&M over new-customer ARR; blended includes expansion ARR in the denominator · The divergence is the story: new-logo acquisition got 14% more expensive while blended improved 10%, meaning expansion is subsidizing the new-logo motion across the industry. This is the inverse presentation of the magic number (card 015): a $2.00 new CAC ratio is a 0.5x new-logo magic number. ACV correlation is non-monotonic: $25-50k deals are the most efficient to acquire; above $100k efficiency drops.
| Category | Bottom 30% | Median | Top 30% |
|---|---|---|---|
| By ACV band (new CAC ratio efficiency) | above $250k ACV without land-and-expand structure | $50-100k: mid; above $100k and above $250k: progressively less efficient | $25-50k ACV: most efficient band |
When it looks bad
The new-logo line and the blended line diverge over consecutive periods: blended stays presentable while new-logo climbs past $2.50, meaning existing-customer expansion is papering over a deteriorating acquisition engine.
Blended ratio steady at $1.35 for a year while new CAC ratio moves $1.90 to $2.70. Board sees the blended chart and approves more S&M; every incremental dollar goes into the worsening line.
What to do about it
- Report new, expansion and blended ratios as three lines, never one; the industry-wide pattern (new worsening 14%, blended improving 10%) shows how much a single blended line can hide.
- Rebuild the new-logo funnel where the ratio broke: attribute the $2.00+ to its stage (pipeline cost, win rate, or discounting) before adding spend; a 5-point win-rate recovery moves the ratio more than a 20% budget increase.
- Exploit the efficiency sweet spot: Benchmarkit shows $25-50k ACV deals acquire most efficiently; if your motion sells $150k+ first contracts, test a land configuration at mid-five-figures with contracted expansion triggers.
- Fund expansion deliberately, not accidentally: expansion CAC is tracked separately in the Benchmarkit data for a reason; put named budget and quota on it so the subsidy becomes a strategy.
Sources
- Benchmarkit New CAC ratio $2.00 median (+14% YoY); 4th quartile $2.82; blended ratio improved ~10%; >$100M ARR companies spend 33% of revenue on S&M, matching public SaaS benchmarkit.ai ↗
- Benchmarkit Blended CAC ratio, new CAC ratio and expansion CAC ratio tracked separately; acquisition efficiency declined through 2023 benchmarkit.ai ↗
- Aleph and Benchmarkit The reciprocal lens: median magic number 1.37 in CY2025 as efficiency recovered; bottom quartile 0.68 getaleph.com ↗
- SaaSrise (reporting KeyBanc and SaaS Capital data) KeyBanc: companies growing >30% invest 68% of revenue in S&M vs 31% for sub-10% growers; spend correlates with growth but the new CAC ratio worsened to $2.00 saasrise.com ↗
- ICONIQ Growth Sales efficiency (net magic number) stabilizing as part of the broader efficiency transformation iconiq.com ↗
- G-Squared CFO (reporting Benchmarkit analysis) High-NRR plus efficient-CAC companies average 71% growth and Rule of 40 of 47; low-NRR plus high-CAC companies average 10% growth and Rule of 40 of 5 gsquaredcfo.com ↗