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- Growth marketing vs performance marketing isn’t a zero-sum game. Both are necessary.
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- Growth marketing is an investment in long-term, sustainable growth, prioritizing organic and customer-assisted initiatives.
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- Performance marketing is all about increasing immediate revenue with a significant focus on paid media.
Growth marketing and performance marketing are two of the most commonly used terms in marketing parlance.
These are two distinct approaches to marketing that require different strategies to achieve different outcomes. And in most cases, growth marketing vs performance marketing isn’t an either-or. Your business is going to need both if you want to be sustainable long-term, while banking enough revenue to keep the lights on short-term.
Read on to understand the difference between these two approaches and get a sense of when to use each one in your marketing cycle.
What Is Growth Marketing?
Growth marketing, as the name suggests, is about growing your company long-term. It’s not just about driving revenue in the next quarter or two; you want to nurture customers and potential customers, improve retention, build loyalty, and boost lifetime value.
How It Works
With growth marketing, you tend to use tactics that target users throughout the funnel, rather than just quick sales. You want your customers to experience the full flywheel, from awareness to retention to repeat purchases and even brand advocacy. The strategies you would use for growth marketing vs performance marketing are quite different. While the latter tends to prioritize paid media, the former often invests quite a lot into organic growth.
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- Content Marketing and SEO: By creating and disseminating valuable content, you attract potential customers with information that is helpful to them in resolving their pain points. This helps build trust and can convert them into committed buyers.
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- Product-Led Growth (PLG): A relatively recent phenomenon, PLG is all about allowing your product to shine. You want your product’s USPs and customer experience to speak for themselves and your existing users to champion your brand.
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- Referrals: Incentivizing your customers to refer new ones is classic growth marketing. As compared to performance marketing, it won’t necessarily get you instant results, but, over time, can be a valuable tactic to drive new customer acquisition.
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- Loyalty Programs: You also want to reward your customers for sticking with you and making repeat purchases. Reward points, discounts, and personalized service are just some of the ways to go about this.
Growth Measurement Metrics
Tracking the success of your growth marketing efforts is key to repeating that success in the future.
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- Customer Lifetime Value (CLV): The total revenue a customer contributes to your brand over the lifespan of their association with you.
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- Annual Recurring Revenue (ARR): Often a typical metric used by SaaS or subscription-based companies, this measures the amount of revenue you can expect each year from your subscriptions or repeat purchases, while excluding any one-time payments.
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- Retention Rate: This is a measure of the percentage of your customers you’ve retained within a specified period. Retention rate, or its inverse, churn rate, is a good indicator of customer satisfaction, product-market fit, and the long-term health of your business.
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- Net Promoter Score (NPS): This is a measure of how likely customers are to recommend your brand and gives you a sense of brand satisfaction and customer loyalty.
What Is Performance Marketing?
As compared to growth marketing, performance marketing prioritizes short-term revenue — an essential activity to ensure your operations continue uninterrupted and your business can progress to the next stage in its lifecycle.
How It Works
Performance marketing is often characterized by heavy usage of paid media channels that deliver measurable, short-term wins.
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- Social Media Marketing (SMM): Using paid media on popular social platforms, such as Facebook, Instagram, TikTok, and LinkedIn is a great way to drive quick sales and conversions.
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- Search and Display: Search engine marketing (SEM) and display ads are an excellent way to target relevant buyers based on their query keywords and contextual content.
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- Connected TV (CTV) Marketing: CTV marketing allows you to reach out to users of streaming services by placing ads at opportune moments to target a captive audience.
Performance Measurement Metrics:
There is a difference in the metrics you would use to measure performance marketing vs growth marketing. Here are some of the most popular performance KPIs:
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- Cost Per Click (CPC): The cost of earning one click on your ad
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- Cost Per Mille (CPM): The cost of 1,000 ad impressions
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- Conversion Rate: The percentage of users who complete a specific action, such as making a purchase or signing up for a newsletter
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- Return on Ad Spend (ROAS): The revenue divided by your ad spend
Growth Marketing vs Performance Marketing: How It Works In Practice
As much as growth and performance marketing seem to be opposites, in order for a business to grow holistically, both these activities must work in concert. In an ideal world, you want a business to grow with minimal ad spends and focusing on growth initiatives will give you that. But until those investments kick in, your business needs to make money every day, and that’s where performance marketing comes in.
If you need funds to break even by the end of the quarter or to pay employee salaries, it’s a good idea to channel your budget into performance marketing as opposed to growth marketing. On the other hand, if you have organizational or strategic goals you’re trying to meet, growth is the way to go.
Scale Revenue Effortlessly With Proven Performance Marketers
One of the biggest reasons people don’t consider performance marketing a long-term strategy is the idea of wasted ad spend. But what if you had a way to be certain that your ad spends aren’t just optimized but could help you dominate in a cluttered market? Chamber Media uses proprietary datasets and AI to achieve an up to 85% success rate with its social campaigns. Reach out to schedule a consultation. Learn more about growth marketing vs performance marketing on our blog.