Not metaphorical waste. Actual commercial waste that behaves exactly like the trash pile behind a retail facility. The difference is this waste lives in your pipeline, consumes your sales capacity, and quietly bleeds millions from your P&L.
Scott Santucci, who pioneered the sales enablement discipline during his tenure as Director of Sales Research at Forrester, has developed a framework that reframes GTM inefficiency through the lens of commercial waste management. His work at Growth Enablement treats revenue operations as a system problem, not a people problem. And like all system problems, it starts with measurement.
This is a guest post exploring Scott Santucci's commercial waste framework from Growth Enablement.
Here's what most people get wrong about the Magic Number: there's no universal "good" or "bad" threshold. A Magic Number of 0.5 isn't inherently terrible, and 1.2 isn't automatically excellent. Context is everything.
The Magic Number measures how much new ARR you generate per dollar of sales and marketing spend. It's calculated by taking quarterly revenue growth divided by prior quarter S&M expense. So if you spent $1M on sales and marketing last quarter and generated $500K in new ARR this quarter, your Magic Number is 0.5.
But what does 0.5 actually mean? Nothing, until you compare it to your peers.
If your Magic Number is 0.38 and your peer group averages 0.75, you're not just less efficient. You're producing 38 cents of revenue for every dollar spent while your competitors produce 75 cents. That 37-cent gap represents pure waste. Your GTM engine is consuming twice the fuel to travel half the distance.
This is where the waste metaphor becomes precise. Every dollar that doesn't convert to durable ARR is waste. It goes into pipeline that never closes, reps who never ramp, campaigns that never hit payback, and deals that churn before CAC recovery. The Magic Number, properly contextualized against peer benchmarks, quantifies how much of your GTM spend ends up in the landfill.
What makes a good Magic Number? It depends entirely on your business model. If your customer lifetime value is enormous (think enterprise contracts with multi-year retention), you can afford higher CAC and a lower Magic Number. If you're selling low-ACV, high-churn products, you need a much higher Magic Number just to stay solvent. The key is understanding where you sit relative to companies with similar unit economics, sales cycles, and market dynamics.
PE firms running diligence understand this instinctively. They don't just look at your Magic Number in isolation. They decompose it. They compare it to category benchmarks. They stress-test whether your efficiency can scale or whether you're one bad quarter away from underwater unit economics.
Physical waste management operates on a hierarchy that every facility manager knows: measure, sort, reduce at source, then recycle what's left. The most sophisticated operations treat waste as a design problem, not an execution problem.
Revenue teams should operate the same way.
Measure: Commercial facilities start with a waste audit. They weigh the trash, sort it by category, track contamination rates, and calculate cost per ton. Revenue operations needs the same rigor. Not pipeline "health" in the CRM sense. Actual waste accounting.
Which segments produce the most pipeline that never closes? Which reps have the widest gap between theoretical capacity and actual output? Which channels consistently fail to reach CAC payback? Most teams don't measure this because the answer is uncomfortable. But you can't fix what you won't measure.
Sort: In waste management, contamination kills efficiency. One wrong item in a recycling batch ruins the entire load. In go-to-market, contaminated pipelines have the same effect. Pipeline stuffed with non-ICP leads, deals without budget, "opportunities" that will never close. They consume rep capacity, distort forecasts, and make resource allocation impossible.
The fix isn't better lead scoring algorithms. It's ruthless qualification. If your reps are working opportunities that don't meet strict ICP and qualification standards, you're not managing a pipeline. You're managing a landfill.
Reduce at source: The cheapest ton of trash is the one never produced. The cheapest dollar of CAC is the one never spent on segments that can't reach payback.
This is where most teams fail. They keep producing waste: broad campaigns to non-ICP audiences, partner programs with misaligned incentives, vanity events that generate MQLs but never produce closed revenue. Activity feels like progress. A full calendar feels productive. But a Magic Number that lags your peer group by 40% suggests you're spending most of your budget on motion that produces nothing durable.
Recycle: Smart waste operators push circular economy principles. Reuse what can't be eliminated. Revenue teams can do the same. Lost deals can be nurtured and re-engaged at a fraction of cold acquisition cost. Expansion revenue from existing customers typically delivers far better Magic Numbers than new logo hunting. Product-led growth motions harvest value from sunk marketing investments.
Most teams treat every quarter as net-new. That's like throwing away perfectly good materials because reusing them requires different processes.
This is where theory meets practice. The Sales Opportunity Cost Calculator quantifies the gap between what your team could close with current resources under healthy conditions and what they actually close.
Here's what it surfaces:
Capacity waste: The difference between theoretical capacity (reps × quota × utilization) and actual closed revenue. If you have 10 quota-carrying reps at $1M quota each with 75% utilization, your theoretical capacity is $7.5M. If you're closing $4M, you have $3.5M in capacity waste. That's not a forecast miss. That's a system failure.
Pipeline waste: The difference between pipeline generated and pipeline converted. Most teams measure win rates. Few calculate the cost of deals that sit in pipeline for months, consume hours of rep time in discovery calls and demos, generate custom proposals and pricing approvals, and then die. Every one of those deals has a fully loaded cost. Multiply that by hundreds of dead deals per year and the waste becomes staggering.
Forecast waste: The recurring cost of deals that slip, push, or die after being forecasted as closed-won. Every point of forecast error represents wasted capacity. Reps stopped prospecting because the deal was "in." Leadership made hiring decisions based on revenue that never materialized. That's opportunity cost compounding into real financial damage.
The calculator translates these into dollar figures. Suddenly a "bad Magic Number" isn't an abstract ratio you discuss in board meetings. It's a specific, quantifiable amount of money your GTM system is lighting on fire every quarter.
When PE firms evaluate SaaS companies, they don't just look at your Magic Number. They look at your Magic Number relative to your category, your stage, your go-to-market motion, and your unit economics.
Recent market data shows interesting patterns. PE-backed companies typically show higher Magic Numbers than VC-backed growth-stage companies. Why? PE operators can't afford waste. They optimize from day one. VC-backed companies, flush with capital, often mask profound GTM inefficiency with aggressive top-of-funnel spend. The waste is hidden until someone runs the numbers.
But raw Magic Number comparisons miss the story. Two companies can have identical Magic Numbers with radically different waste profiles:
Company A: Magic Number of 0.6, low churn, focused ICP, high win rates, predictable sales cycles. Company B: Magic Number of 0.6, high churn masked by new bookings, contaminated pipeline, low win rates, long and variable sales cycles
Company A has a system. Company B has a landfill with good marketing.
Diligence decomposes the waste:
The companies that pass diligence aren't necessarily the ones with the highest growth rates. They're the ones with the least waste in their GTM engine. They're the ones where every dollar spent has a clear path to payback, where pipeline converts at predictable rates, where churn stays below replacement cost, and where the Magic Number, in the context of their peer group, signals a business that can scale efficiently.
At TPG, we've seen this pattern repeatedly in portfolio company value creation. One software business came to us with a Magic Number 40% below category peers. The executive team assumed they needed more reps and bigger marketing budgets. The waste audit told a different story.
We started with a propensity model, analyzing win rates across their entire closed pipeline. The pattern was striking: when prospects had Workday installed, win rates were 3.5x higher than baseline. Conversely, certain other technology installations correlated with near-zero win rates. The team had been treating all pipeline equally, burning capacity on deals they would almost never close.
The fix was surgical: ruthlessly focus on high-propensity accounts, rebalance territories around these concentrations, redirect marketing spend to target these profiles exclusively, and build sales plays specifically for the Workday-installed segment where they had proven advantage. No new headcount. No bigger budget. Just stop working deals you're not going to win.
These steps alone moved the Magic Number 8 cents on average across similar interventions. That's not incremental improvement. That's waste elimination creating the financial headroom to actually scale. The reps were just as talented before. The difference was the system stopped feeding them contaminated pipeline.
The market shows wide variation in GTM efficiency. Some sectors and business models have systematically better waste profiles than others:
But these are generalizations. Your peer group is what matters. If you're in vertical SaaS selling to healthcare at $50K ACV with 18-month sales cycles, your relevant comparables aren't horizontal PLG companies with 30-day cycles and $500/month ACVs.
This is why the calculator is valuable. It doesn't just give you a number. It gives you the components of waste that drive that number. You can see exactly where your system is breaking down: capacity utilization, win rates, cycle time, pipeline conversion, or some combination.
Once you know where the waste concentrates, you can compare that specific metric to your peer group. Are your win rates the problem? Compare them to similar companies. Is it capacity utilization? Benchmark your ramp times and quota attainment distribution. Is it pipeline velocity? Look at stage conversion rates and deal aging in your category.
The point isn't to hit some arbitrary universal benchmark. The point is to understand where you're leaking relative to companies playing the same game you are.
This post is about diagnosis. Once you calculate your waste, once you see the dollar-denominated opportunity cost sitting in your GTM system, the obvious question becomes: which levers do I pull?
Future posts in this series will unpack specific interventions:
Each lever has different implementation costs, time horizons, and organizational friction. The art is sequencing interventions based on your specific waste profile. But you can't sequence what you haven't measured.
The Sales Opportunity Cost Calculator is live at salespportunitycost.replit.app. It takes less than five minutes.
You'll get:
Most teams discover they have millions of dollars of waste sitting in their GTM system. Not because their people are lazy or their product is bad. Because their system produces waste by design. Misaligned ICP targeting. Weak qualification standards. Bloated, contaminated pipelines. Insufficient rep capacity utilization.
The question isn't whether the waste exists. It's whether you're ready to measure it, face it, and systematically eliminate it.
Because the alternative is continuing to pour budget into channels, headcount, and motions that produce nothing durable. And at some point, usually during diligence or when the board asks why cash burn isn't converting to ARR, that waste becomes everyone's problem.
Better to audit your own landfill before someone else does it for you.
This post explores concepts from Scott Santucci's work at Growth Enablement, where he helps revenue leaders eliminate GTM waste and build capital-efficient growth engines. Scott pioneered the sales enablement discipline as Director of Sales Research at Forrester, where he published foundational research defining sales enablement as a strategic cross-functional discipline. This article will be featured on the TPG website.