Revenue scale and revenue efficiency are not the same thing. Customer acquisition cost (CAC) is total sales and marketing spend over a period divided by the number of new customers acquired in that period. CAC payback is the number of months of gross margin it takes to recover that acquisition cost, with lower numbers preferred. Customer lifetime value (LTV) is the total gross-margin revenue a customer is expected to generate over their lifetime. The LTV:CAC ratio compares lifetime value to acquisition cost; ratios around 3:1 are commonly cited as healthy, while ratios below 1:1 are typically destructive.
Sales velocity captures throughput. The formula is \[ \text{Sales velocity} = \frac{\text{Number of opportunities} \times \text{Average deal size} \times \text{Win rate}}{\text{Sales cycle length}} \] and produces a revenue-per-day figure. To increase sales velocity, a team can increase the number of opportunities, raise average deal size, raise win rate, or shorten the sales cycle, and each lever carries trade-offs. Sales cycle length is the average time from first qualified opportunity to closed-won, often segmented by segment or product. Time to revenue extends further, including onboarding, implementation, and billing before cash is actually collected.
Pipeline coverage is the ratio of open pipeline value to the remaining quota for a period, and a commonly cited target is 3x to 4x open pipeline per dollar of remaining quota, though the right number depends on win rate and sales cycle length. Win rate, the percentage of opportunities that close-won out of those closed, is usually measured over a defined period and should be reviewed alongside coverage, not in isolation. A funnel efficiency ratio compares output (closed revenue) to input (raw leads or spend), with a higher ratio meaning the funnel converts more efficiently.
The magic number is a unit-economics shortcut for SaaS, defined as net new ARR added in a period divided by the sales and marketing spend of the prior period, where values above roughly 0.75 typically justify further S&M investment. Pipeline velocity is a narrower cousin of sales velocity, focused specifically on movement through stages rather than overall throughput. Together, these metrics help RevOps teams see whether growth is being bought efficiently or whether spend is outrunning returns.