A GTM strategy is only as good as the metrics that measure it, and a healthy revenue engine tracks the full funnel rather than just the top. CAC, Customer Acquisition Cost, is the total cost of acquiring a new customer; LTV, Lifetime Value, is the revenue or margin expected over the relationship; the LTV:CAC ratio is one of the most-watched health signals. CAC payback measures the months needed to recover CAC from gross margin contribution; good SaaS sits at twelve to eighteen months, while great PLG often runs under twelve. Some channels create demand but not efficiently enough to support sustainable growth, which is why channel efficiency matters separately from channel activity. Strong top-of-funnel numbers mean little if conversion, retention, or expansion are weak downstream, so metrics must cover the entire funnel.
Retention metrics reveal the underlying quality of the book. NRR, or Net Revenue Retention, is (Starting ARR + expansion − churn − downgrades) divided by starting ARR; above 100% means existing customers grow faster than they churn, and world-class SaaS sits at 130%+. NRR is the SaaS quality metric because with NRR above 100%, growth compounds without new logos, and investors value one point of NRR at much more than one point of new ARR. GDR, or Gross Dollar Retention, excludes expansion and is the floor metric that reveals underlying churn: SMB should run 80–90%, mid-market 85–95%, enterprise 90–98%, and below those bands usually indicates a product or fit problem. Logo retention ignores deal size while revenue retention weights it; a single large logo lost can crush revenue churn while logo churn looks fine.
A handful of composite metrics are now standard for assessing GTM efficiency. The Magic Number is (New ARR added × 4) divided by S&M spend in the prior quarter: above 1 means invest more, 0.5 to 1 means scale carefully, below 0.5 means rethink the GTM. GTM efficiency, ARR added divided by S&M spend, of $1.50 or more per $1 spent is top decile, $1 is median, and below $0.50 is unsustainable. The Rule of 40 states that growth rate percent plus EBITDA margin percent should be at least forty; above forty commands a premium valuation, below means investors discount. The burn multiple is net burn divided by net new ARR: below 1 is great, 1–2 good, 2–3 acceptable, above 3 inefficient. Sales velocity, defined as (# Opportunities × ACV × Win Rate) divided by Sales Cycle Length, captures the compounding effect of pulling one lever: pipeline, ACV, win rate, or cycle length. Sales cycle length drivers include ACV (higher means longer), buyer complexity (more stakeholders means longer), procurement maturity, urgency, and contract terms. Pipeline coverage ratio (pipeline divided by quota) should run 3–4× for typical close rates; below 2× is at risk, above 5× often signals stale pipeline. Pipeline hygiene must be audited weekly for close dates in the past, no activity for fourteen-plus days, missing next steps, missing economic buyers, and missing exit criteria. Win rate is closed-won divided by (closed-won + closed-lost), while close rate is closed-won divided by all opportunities including no-decisions; no-decision is often the real enemy. The bowtie funnel captures the full picture by adding the post-sale journey (lead → opportunity → customer → onboarded → expanded → advocate), so retention is treated as a stage rather than an afterthought. The full GTM math to know cold: CAC, LTV, LTV:CAC, CAC payback, NRR, GDR, Magic Number, Rule of 40, Burn Multiple, win rate, cycle length, ACV, and pipeline coverage.