What are good GTM Efficiency benchmarks?

Efficient SaaS companies typically maintain GTM Efficiency below 200% (≤2.0). A score of ≤100% (≤1.0) indicates excellent efficiency and profitable scaling. Scores between 100%–200% (1.0–2.0) represent healthy growth with manageable costs. If GTM Efficiency exceeds 200% (>2.0), it's a warning sign that you're spending too much to acquire too little revenue.

How do you calculate GTM Efficiency?

GTM Efficiency is calculated using this formula: (GTM Spend / New ARR) × 100. For example, if your GTM spend is €250,000 and your new ARR is €400,000, your GTM Efficiency is (€250,000 / €400,000) × 100 = 62.5%. This means you're spending €0.63 to generate €1 in ARR, which is excellent.

What components should be included in GTM spend calculation?

GTM spend should include: Sales team costs (salaries, commissions, bonuses, training), Marketing costs (team salaries, agency fees, consultants), Advertising (paid search, social, display), Events & Sponsorships (trade shows, webinars), Technology (CRM, marketing automation tools), and Content Production (blog posts, whitepapers, case studies, videos).

GTM Efficiency: The Key Metric for Sustainable Growth

What is GTM Efficiency?

GTM Efficiency is a key metric for SaaS and subscription-based businesses that want to scale efficiently. It measures how effectively you convert sales & marketing spend into new Annual Recurring Revenue (ARR).

A GTM Efficiency of 1.0 (100%) means you generate €1 in new ARR for every €1 spent on GTM.
Efficient SaaS companies typically aim for 1.5–2.0 (150–200%) for sustainable growth.
If GTM Efficiency falls below 1.0 (100%), you're spending more than you're earning, signaling inefficiency.

Why GTM Efficiency Matters

In the current economic climate, investors and board members are increasingly focused on efficient growth rather than growth at all costs. GTM Efficiency provides a clear metric for evaluating the sustainability of your business model.

When your GTM Efficiency is too high (above 200%), it indicates that:

Your customer acquisition costs may be unsustainable
Your marketing and sales investments aren't generating sufficient returns
Your business model may need refinement to achieve profitable growth
You might be over-relying on paid acquisition channels

The Bowtie Model & GTM Efficiency

Traditional GTM metrics often focus only on acquisition, but true efficiency spans the entire customer journey. The Bowtie Model provides a structured way to break down GTM Efficiency into three key areas:

GTM Efficiency Type	Formula	Example Calculation	What It Measures
Front-End Efficiency (Pre-Purchase)	New ARR / GTM Spend	€400,000 / €250,000 = 160%	How efficiently you acquire new customers
Back-End Efficiency (Post-Purchase)	Expansion ARR / Customer Success & Expansion Spend	€200,000 / €100,000 = 50%	How efficiently you grow existing accounts
Total GTM Efficiency	Total ARR Growth / Total GTM Spend	€600,000 / €350,000 = 171% (1.71)	Full-cycle efficiency of your GTM strategy

By analyzing GTM efficiency at each stage of the Bowtie, businesses can pinpoint where inefficiencies lie—whether in customer acquisition, retention, or expansion—and optimize their strategy accordingly.

Simple GTM Efficiency Calculation – B2B Example

Company Profile

Annual Contract Value (ACV): €20,000
GTM Spend (Sales & Marketing Costs): €250,000
New Customers Acquired: 20

Step 1: Calculate New ARR

New ARR = New Customers × ACV

20 × €20,000 = €400,000

Step 2: Calculate GTM Efficiency

GTM Efficiency = New ARR / GTM Spend

€400,000 / €250,000 = 1.6 (160%)

This company has a GTM Efficiency of 1.6 (160%), meaning it generates €1.60 in new ARR for every €1 spent on GTM.

Alternatively, the company spends €0.63 to generate €1 in ARR, calculated as:

GTM Spend per €1 ARR = GTM Spend / New ARR = (€250,000 / €400,000) = €0.63

Step 3: Calculate Back-End GTM Efficiency (Retention & Expansion)

Back-End GTM Efficiency = Expansion ARR / Customer Success & Expansion Spend

€200,000 / €100,000 = 50%

This company has a Back-End GTM Efficiency of 50%, meaning it spends €0.50 to generate €1 in expansion ARR.

Step 4: Calculate Total GTM Efficiency

Total GTM Efficiency = Total ARR Growth / Total GTM Spend

€600,000 / €350,000 = 171% (1.71)

This company has a Total GTM Efficiency of 171% (1.71), meaning for every €1 spent on GTM, it generates €1.71 in total ARR.

GTM Efficiency Benchmarks

GTM Efficiency	Performance
≥1.0 (100% or higher)	Healthy Growth (Efficient scaling, profitable acquisition)
1.5–2.0 (150–200%)	Good Efficiency (Spending is balanced with growth)
<1.0 (Below 100%)	Inefficient Growth (Spending more than you earn)

How to Improve Your GTM Efficiency

If your GTM Efficiency is below 1.0 or higher than 2.0 (meaning high spend but weak returns), consider:

Investing in organic growth (SEO, content, podcast, community)
Optimizing sales conversion rates (shortening sales cycles)
Increasing ACV (upselling, better pricing models)
Targeting better-fit customers (higher retention, better LTV)
Improving product-market fit (reducing churn & sales friction)
Optimizing Retention & Expansion (If Back-End GTM Efficiency is low, focus on reducing churn and driving upsells)

GTM Efficiency isn't a one-time fix—it requires continuous tracking and improvement.

Want to make sure your GTM Efficiency is optimal?

Work with me