kellblog.com · 2022-02-27 · 1558d

The Sales/Marketing Expense Ratio

The article introduces the sales-to-marketing expense ratio as a critical metric that reveals organizational budget priorities and operational efficiency trends in SaaS companies. It explains why this ratio tends to drift unfavorably (sales spending increases while marketing gets squeezed) due to CRO negotiating leverage and demonstrates how to surface and correct this imbalance through metrics transparency, funnel modeling scrutiny, and cross-functional alignment.

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Metrics in this report

Cost per Opportunity Generated

2700dollars

baseline

Before aggressive funnel assumption changes

Cost per Opportunity Generated

1800dollars

target

After compounded funnel improvements (33% reduction)

Revenue Growth Rate

23percent

median

SaaS companies spending 35% of revenue on S&M

Revenue Growth Rate

34percent

top-quartile

SaaS companies spending 35% of revenue on S&M

Sales & Marketing Expense as % of Revenue

35percent

median

$15M ARR SaaS companies

Sales & Marketing Expense as % of Revenue

45percent

top-quartile

$15M ARR SaaS companies

Sales & Marketing Expense as % of Revenue

15percent

minimum

$15M ARR SaaS companies (bottom quartile)