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Growth Marketing vs Performance Marketing: The Differences Explained

More than just marketing buzzwords and sophisticated tactics, growth marketing and performance marketing represent two fundamentally different approaches to company growth within the marketing domain. Each has a unique set of strategies, focal points, team requirements, and budget considerations. Although some similarities exist, understanding the key differences between them helps you understand which one your brand needs.

Key Takeaways

→ While these two schools of marketing have similarities, they are very different. Growth marketing focuses on comprehensive, full-funnel strategies that go from brand awareness all the way to retention.

→ Growth marketing is multi-channel and meticulously tracks specific KPIs during every part of the customer journey. Performance marketing focuses mainly on the acquisition section of the funnel, and revenue growth is the primary KPI.

→ Performance marketing is popular with many businesses and organizations, especially with its emphasis on lead generation. Growth marketing as a practice is commonly used by larger B2B and technology companies that have the resources to invest in a full-funnel strategy and testing, but it can be used by virtually any business type or industry.

What is growth marketing? Where did it come from?

Growth marketing is a full-funnel marketing system designed to help companies rapidly grow, iterate, and scale. It combines tactics like digital advertising with brand marketing, product development, and customer feedback to adjust and ultimately produce sustainable, long-term growth.

The origins of growth marketing can be traced back to the mid-2000s and Sean Ellis who was hiring for his startup Dropbox. Instead of hiring a marketer with traditional skills and knowledge, his main concern was finding someone who could create a system of sustainable growth as quickly as possible using modern tools. In the technology world, fast growth was – and largely still is – the main concern. Out of this challenge came what we now refer to as growth marketing. 

The Growth Marketing Framework

To understand what a growth marketing strategy looks like, it’s helpful to start with the growth marketing funnel: Awareness, Acquisition, Activation, Referral, Revenue, and Retention.

Each stage requires its own marketing tactics aimed at accomplishing specific objectives.

Awareness

The first phase of growth marketing focuses on igniting interest in your brand. This crucial stage aims to establish a position, craft a message, and present a product offer that connects with your core audience. For startups, in particular, this stage carries challenges because oftentimes, they are starting from complete scratch — a product that’s introducing a new service or technology with no customers and no market awareness.

To achieve maximum awareness, a sizable effort is invested in building brand awareness. Growth marketing teams use all available marketing channels but rely heavily on social media advertisements, SEO/content marketing, and email marketing to refine and perfect the message. Each tactic is heavily tested, and messages, ads, emails, etc., go through A/B testing to find the most effective ones.

Awareness Metrics

In this stage, growth marketing is looking at high-end metrics that include impressions, clicks, mentions, website traffic, social shares, and other signals that your company is growing awareness with its target audience.

Acquisition

An effective awareness strategy should lead potential customers to meaningfully engage with your brand, a process also known as customer acquisition. Engagement can vary by brand. For some, it may involve following their social media, downloading an app, or subscribing to a newsletter. For others, acquisition might be defined by signing up for a trial or scheduling a meeting.

Acquisition Metrics

Growth marketers look at metrics like inquiries or signups/captures during the acquisition stage.

Activation

This stage is about persuading your engaged audience to take a specific, valuable action, such as signing up for a trial or making a purchase. It’s often referred to as “Sales Activation” and is a key stage that transitions a prospect from interest to actual trial or usage.

Sales teams often carry the load at this stage, so comprehensive resources and hyper-personalization are key. They can use targeted offers, personalized email campaigns, case studies, whitepapers, and other user-friendly product experiences to facilitate this transition.

Activation Metrics

The key areas tracked are related to turning the leads and interested prospects you’ve acquired into active clients, so KPIs include sales responses, demo signups, and other meaningful actions.

Revenue

This stage focuses on maximizing earnings. The aim is to turn the lead or conversion into a paying customer. It involves fine-tuning pricing, offering upgrades, upsells, landing page conversion rate optimization, and enhancing purchase processes to boost the average revenue per user and overall income.

Revenue Metrics

Tracking anything related to revenue is key here, including purchases of products, subscription signups, or invoices paid.

Retention

Retention focuses on keeping your activated users engaged and satisfied, turning them from one-time users into long-term advocates. This involves analyzing customer feedback, providing exceptional customer service, implementing loyalty programs, and continuously improving the product or service based on user insights. The goal is to lower the churn rate, or the amount of customers who drop off or cancel services.

Retention Metrics

KPIs related to keeping customers and maximizing their value include customer lifetime value (CLV), churn rate, and length of contract or renewal success.

Referral

Once a customer is a user, the next step is to boost your growth using their network. Encouraging referrals involves creating affiliate marketing programs, shareable content, and social proof mechanisms that make it easy and rewarding for users to refer others to your brand. This not only helps in acquiring new customers at a lower cost but strengthens the loyalty of existing users.

Referral Metrics

Measuring referrals often requires an affiliate-type program to incentivize current customers to advocate on your behalf to their network and track their referrals. It also measures online customer reviews, brand sentiment, and platform reviews

Additional Growth Marketing Metrics

Growth marketing is very data and KPI-focused. While it measures many of the same metrics that performance marketing does, growth marketing has a few unique KPIs it tracks:

  1. CAC (Customer Acquisition Cost): The total cost of acquiring a new customer. This includes all marketing and sales expenses over a specific period divided by the number of new customers acquired.
  2. LTV (Lifetime Value): The total revenue a business can expect from a single customer account throughout its relationship with the company. This metric helps in understanding the long-term value of investing in customer relationships.
  3. Churn Rate: The percentage of customers who stop using a company’s product or service during a certain timeframe. A low churn rate is critical for long-term growth as it indicates higher customer retention.
  4. Engagement Rate: This measures how actively involved your customers are with your product or service. High engagement rates often correlate with higher customer satisfaction and retention.
  5. Net Promoter Score (NPS): A metric that assesses customer satisfaction and loyalty involves asking customers how likely they are to recommend your product or service to others. NPS can be a strong indicator of potential growth through word-of-mouth.
  6. Revenue Expansion: Measures the increase in revenue from existing customers through upselling, cross-selling, or other methods that increase their lifetime value.

Growth Marketing Tactics

Growth marketing leverages a variety of channels to achieve its goals, including but not limited to content marketing, social media marketing, email marketing, SEO, and event marketing. The key is to use a mix of channels that best reach and resonate with your target audience while constantly testing and iterating based on performance data.

Growth Marketing vs. Growth Hacking

It's not uncommon for growth marketers to employ growth hacking strategies. Growth hacking is about fast growth and expansion through creative, unconventional experiments. This approach is known for its focus on quick wins and leveraging platforms outside the traditional marketing spectrum, such as social media and influencer campaigns, to cast a wide net over prospective customers. Growth marketing is an evolution of these tactics into a long-term sustainable marketing framework.

What is performance marketing? And when is it used?

Performance marketing is a marketing strategy that primarily focuses on increasing customer acquisition and revenue in the short term.

It could be argued that performance marketing is a subset of growth marketing, but it’s actually an entirely separate practice because it does not focus on the entire funnel. Many companies use performance marketing because they’re hyper-focused on acquiring customers. They don’t have a marketing strategy for going beyond the acquisition stage of the funnel.

In a performance marketing campaign, actions that lead directly to revenue matter most. Performance marketing comes from the digital marketing world and includes tactics like:

  • SEO (search engine optimization) to enhance visibility in search engine results
  • PPC (pay-per-click advertising), like Google Ads/Bing Ads, to drive traffic and immediate conversions
  • Social media advertising (Facebook, Instagram, LinkedIn, TikTok, etc.) for targeted ads to specific demographics
  • Email marketing to reach customers directly with personalized offers and content
  • TV and other mediums

a chart showing the differences between a growth marketing funnel and a performance marketing funnel
Performance Marketing Framework

The performance marketing framework is more linear and metric-focused compared to the holistic approach of growth marketing. It involves setting clear, measurable objectives (like clicks, impressions, ad spend, conversion rate, and leads), selecting the appropriate channels to achieve these objectives, creating and executing campaigns, and then measuring success rigorously with a focus on ROI (return on investment). It doesn’t have the clear framework of growth marketing. Performance marketing focuses on leads and revenue as its main KPIs. If a channel or tactic does not directly lead to an increase in revenue, then the channel may be considered a failure and discarded going forward.

Performance marketing teams are often siloed in their approach, so a company that only uses performance marketing is at risk of missing out on the broader benefits of engaging with customers across the entire lifecycle. By focusing solely on immediate revenue-generating activities, companies may overlook opportunities for long-term growth and the brand development that comes from investing in customer relationships, loyalty, and brand equity.

Performance Marketing Tactics

Performance marketing channels are those that can be directly attributed to specific outcomes or conversions. These span multiple digital marketing channels like paid search and display advertising, affiliate marketing, sponsored content, and social media ads. The emphasis is on tracking and optimization to ensure that each dollar spent is accountable and contributes to the immediate goals of the campaign.

  1. ROI (Return on Investment): A critical metric for performance marketers, ROI measures the profitability of a campaign by comparing the net return on investment to the cost of the investment. It helps in evaluating the effectiveness of each dollar spent.
  2. CPC (Cost Per Click): This metric tracks the cost incurred every time a user clicks on a digital advertisement. It’s crucial for managing budgets and optimizing ad spending across different platforms.
  3. CPM (Cost Per Thousand Impressions): Used primarily in display advertising, CPM measures the cost for every thousand impressions (views) an ad receives, helping marketers understand the cost-effectiveness of reaching a wide audience.
  4. CPA (Cost Per Acquisition): This metric calculates the cost associated with acquiring a new customer, considering all campaign expenses. It’s more specific than CAC, focusing on the efficiency of individual campaigns rather than overall marketing efforts.
  5. Conversion Rate: While both growth and performance marketers track conversion rates, performance marketers focus intensively on the conversion rate of specific campaigns to gauge their effectiveness in turning clicks into actions (e.g., sales and sign-ups).
  6. Click-Through Rate (CTR): The ratio of users who click on a specific link to the number of total users who view a page, email, or advertisement. It’s an important measure of how well your keywords and ads are performing.

Where are these two marketing methods similar?

Despite their differences, the two marketing approaches share similarities:

  • Both of them rely heavily on testing and measuring and have a data-driven approach to optimize their strategies and tactics continually.
  • They’re both used frequently in the startup world, particularly by technology and SaaS companies who acquire the majority of their customer base through online marketing, capitalizing on the agility and scalability that digital channels offer.
  • They both use similar channels for growth. Growth marketing teams and performance marketers utilize SEO, PPC, and much more.

Which Method is Better for My Brand?

Performance marketing can be an appealing model for marketers because of the emphasis on specific campaigns with quantifiable KPIs. Less coordination between marketing efforts is needed which can make for a more streamlined process. However, the downside to this approach is that successful metrics for a siloed campaign don’t necessarily lead to effective scaling.

Growth marketing creates strategies based on a holistic, long-term view of customer engagement and brand growth, and it requires collaboration between channels. Growth marketers use many of the same tactics and KPIs, but the emphasis on the entire customer journey is unique. The growth marketing mindset is a good fit for your brand if you want to build momentum and scale your business in a rapidly changing environment. 

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Austin Cline

Austin Cline is the founder and principal at Sitemap.io. He is actively involved in the SEO community and frequently writes about the intersection of great content marketing and search engine optimization. You can connect with him on his LinkedIn and sign up to get his posts to your email by joining our email newsletter.

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