Measuring SaaS sales efficiency

Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Connect on LinkedIn or email him directly at, especially founders at all stages.

There are many ways to measure SaaS sales & marketing efficiency. One of the simplest is to look at new revenue booked over a given time period divided by sales & marketing spend during the period (New Rev/S&M). While the sales & marketing expense in a period may not necessarily be attributable to a given period’s booked revenue due to long sales cycles, it’s still a good measure especially when looking at the trend.

In order to know what a good level of New Rev/S&M is, we looked at the sales & marketing efficiency of the last 36 SaaS IPO’s going back to MongoDB’s IPO in October 2017. This data comes from their S1 filing which is a prospectus issued before going public.


As you can see, on median the SaaS businesses have sales & marketing efficiency of $0.63 in the year they filed their S1 to go public. In other words, they generated $0.63 of new revenue for each $1.00 of sales & marketing spend. That’s quite good given that on median, SaaS businesses have net dollar retention of 110%+ at the time of going public meaning they keep and grow the prior year’s revenue. In other words the $0.63 grows to $0.70 next year, $0.77 in the 3rd year, etc. If that growing revenue stream only cost you $1.00, over time you’ll build an excellent, profitable business. Note that while the median may be $0.63, the average is $0.82 and indeed the last 20 IPO’s averaged $0.92 cents.

Given that the median is $0.63, shoot for that figure or get as close to it as you can and you’ll be in great company.