For sales efficiency metrics (S&M Expense vs New Sales ARR, CAC, Magic Number, CAC Payback Period, and LTV), Sales & Marketing expenses are compared to newly acquired customers and their associated ARR. To account for sales cycle length, new customers are sometimes compared to S&M expenses from a prior month (for example, April sales are compared to March S&M expenses). The default S&M offset varies by aggregation and metric.
S&M Offset allows you to override the default, and dictate how many months prior S&M expenses should be used. Note that S&M Offset is always dictated in months, even if Quarterly or Annual aggregation is being used. For example, if we are looking at New Sales ARR from Q2 of a Calendar Year, and the S&M Offset is set to two months, the sum of S&M expenses from November, December, and January will be used.
S&M Offset is useful for accounting sales cycle length. The longer it takes to sell a deal the long the offset should be, so that the upfront expenses are more accurately tied to the eventual ARR from the deal.