January 27, 2025

The (not so) hidden link between customer strategy and sustainable growth

I recently read a McKinsey article from 2021 that analysed how SaaS companies fared when evaluated against the rule of 40. While the article is a few years old, its findings remain relevant in 2025.

For those unfamiliar with this metric, the rule of 40 is a significant benchmark. It states that the sum of a company's growth rate and profit margin should be at least 40%. If you’d like to find out more information about this metric, I recommend reviewing this article. Achieving this metric is a feat that investors reward with higher valuations (see McKinsey article). In addition, scaling companies (series B and up) that meet this rule will find scarce capital more readily available at better terms. You can find more information about investment criteria for Series B companies here.

However, the article points out that this is a rare achievement, with fewer than 30% of software companies surveyed meeting the rule of 40 and even fewer maintaining this performance level over time. It also outlines four pitfalls that companies should overcome to improve their financial performance:

• Over-estimating growth expectations
• Under-investing in existing customers
• Misallocating go-to-market spend
• Failing to build out the next innovation that will sustain early (higher) growth rates

As a customer-focused professional, my attention immediately landed on the second point. Since retaining and developing existing customers is a highly effective driver of sustainable growth, why aren't more companies investing as intentionally in their customer strategy as in their customer acquisition strategy?

Over the next few weeks, I will break down my hypotheses on potential obstacles to an effective customer strategy. I will also share ideas and solutions that finance, and commercial leadership teams can implement to scale B2B SaaS companies and deliver better results.

​What challenges do you need to overcome to help your customer strategy become a pillar of sustainable growth?