What ratio of sales to marketing spend should you target?

The two questions in one ratio

"What ratio of sales to marketing spend?" can mean two related things:

1. Total S+M spend efficiency — Magic Number (net new ARR / S+M spend) — does our combined acquisition machine work?
2. Sales vs Marketing allocation — how much of S+M budget goes to sales team vs marketing team — depends on go-to-market motion

Both matter; they're measured differently.

Magic Number (Bessemer canonical metric)

Created by Scott Sage at Bessemer Venture Partners:

``` Magic Number = (Net New ARR added in a quarter × 4) / (S+M spend in prior quarter)

= Annualized new ARR / Annualized S+M spend ```

Example: $250k Net New ARR in Q2, $1M S+M spend in Q1 → ($250k × 4) / $1M = 1.0 Magic Number.

Magic Number benchmarks

Magic Number > 1 typically signals "you should be spending more on growth" because each S+M dollar is producing more than $1 of new ARR.

The Sales vs Marketing budget split

Within S+M, allocation depends on go-to-market motion:

Examples by company type: - Notion (PLG): heavy marketing, light sales - Salesforce (enterprise): heavy sales, marketing as demand-gen - Slack (PLG → Enterprise): started 90/10 marketing/sales, evolved to 60/40 - Snowflake (enterprise PLG hybrid): roughly 50/50

Why "1 unicorn rep" isn't a target

Sales team productivity benchmarks:

If your sales reps consistently hit 100-150% quota, you have an outlier team OR your quotas are too low. Healthy companies set quotas where 60-75% of reps hit at-or-near quota; 25-30% exceed; 10-15% miss.

Common S+M ratio mistakes

• Over-investing in sales pre-PMF — hiring sales reps before product converts trials is expensive: reps need real demos, not hopeful pitches
• Under-investing in marketing post-PMF — relying on cold sales while content + brand are starved limits TOFU pipeline
• Comparing Magic Number across stages — pre-PMF Magic Number is meaningless; only meaningful at $1M+ ARR
• Mixing in customer success costs — CS is retention, not acquisition; keep it out of S+M for clean Magic Number calculation
• Not segmenting by channel — paid ads vs content vs SDR outbound have different efficiency; aggregate Magic Number hides this

The relationship to other ratios

Magic Number is the highest-level efficiency metric; the others diagnose where to fix problems.

When to shift the budget

Shift more toward MARKETING when: - Net New ARR per sales rep is healthy (reps aren't the constraint) - Pipeline coverage is low (need more leads) - Inbound conversion rates are high (marketing is working) - Product is self-serve-friendly

Shift more toward SALES when: - Marketing produces lots of leads but conversion is poor - High-ACV deals require sales engineering - Long sales cycles (>90d) need persistent follow-up - Product complexity demands explanation

Most SaaS shifts allocation 2-3 times in its lifecycle. Pure PLG starts marketing-heavy → adds sales as enterprise → optimizes mix.

Cross-reference: see /pages/what-is/customer-acquisition-cost + /pages/what-is/annual-recurring-revenue + /pages/what-is-the-difference-between/cac-and-ltv.