# Growth Marketing or Performance Marketing: How to Choose?

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## Table of contents

- What is growth marketing?
- What is performance marketing?
- Key differences between growth marketing and performance marketing
- How to choose between growth marketing and performance marketing
- Takeaways

Growth marketing and performance marketing are marketing terms that are often used interchangeably. However, each of these terms has its own unique approach and place in the industry. Each term involves different strategies, goals, and execution methods, and both play a crucial role in a company’s success.

In this guide, we will explore the focus of and differentiate between growth marketing and performance marketing and understand each strategy's impact.

## What is growth marketing?

**Growth marketing is a holistic, data-driven approach, that focuses on optimizing the entire customer journey, right from the awareness to retention stage. This strategy uses experimentation, iterative testing, and cross-functional collaboration with an aim to drive sustainable business growth.**

### Common tactics used in growth marketing

Companies that indulge in [growth marketing strategies](https://www.ai-bees.io/post/growth-marketing-strategies) often deploy the following tactics

 - **A/B testing and experimentation**: Continuously testing marketing strategies, messaging, and user experiences.
 - **Product-led growth**: Using the product itself as a growth engine, like Dropbox’s viral referral system.
 - **Retention and lifecycle marketing** Engaging users through personalized email campaigns, push notifications, and content.
 - **Referral programs**: Encouraging word-of-mouth marketing, such as Airbnb’s referral incentives.
 - **Cross-functional collaboration**: Aligning marketing with product, sales, and customer success teams.

<div class="highlight-gray"> <p> <strong>💡 Related guide: <a href=https://www.mailmodo.com/guides/growth-marketing/></strong>The Complete Guide to Growth Marketing With Examples</a></p> </div>  

## What is performance marketing?

**Performance marketing is a results-driven strategy that ensures that the marketing spend is focused on achieving a specific outcome. Performance marketing makes use of [paid advertising](https://www.mailmodo.com/guides/paid-marketing/) to measure ROI and analyzes data like clicks, conversions, or sales to understand the ‘performance’ of their marketing expenditure.**

### Common tactics used in performance marketing

Companies that rely on performance marketing strategies often deploy the following tactics:

 - [Pay-per-click (PPC)](https://www.mailmodo.com/guides/pay-per-click/)
 - [Affiliate marketing](https://www.mailmodo.com/guides/affiliate-marketing/)
 - Search engine marketing
 - [Social media marketing](https://www.mailmodo.com/guides/social-media-marketing/)
 - Paid advertising
 - Influencer marketing

## Key differences between growth marketing and performance marketing

Now that we understand both growth marketing and performance marketing and their key principles, let’s explore the major differences between the two:
  
| **Aspect**               | **Growth Marketing**                                                       | **Performance Marketing**                                                |
|--------------------------|----------------------------------------------------------------------------|-------------------------------------------------------------------------|
| **Focus**                | Covers the entire funnel, from awareness to retention.                     | Primarily focused on either bottom-of-the-funnel or [top-of-the-funnel](https://www.mailmodo.com/guides/top-of-the-funnel/). |
| **Goals**                | Sustainable long-term growth, user retention, and increased [engagement](https://www.mailmodo.com/guides/customer-engagement/). | Immediate revenue generation, lead generation and [customer acquisition](https://www.mailmodo.com/guides/customer-acquisition/). |
| **Approach & mindset**   | Experimentation, data-driven insights, and cross-functional alignment.     | ROI-focused, direct response, and highly analytical.                     |
| **Core activities**      | Testing and experimentation activities like [A/B testing](https://www.mailmodo.com/guides/ab-testing/). | Paid activities like PPC ads, affiliate marketing, and search engine marketing. |
| **Execution speed**      | Medium to long-term; requires continuous iteration.                        | Immediate impact; campaigns generate results quickly.                    |
| **Measurement**          | Tracking retention, [LTV](https://www.mailmodo.com/guides/customer-lifetime-value/), and organic growth. | Tracking KPIs like ROI, CTR, and conversion rates.                       |
| **Best for**             | Startups, SaaS, and long-term scalability.                                 | E-commerce, D2C brands, and businesses with aggressive growth goals.     |


## How to choose between growth marketing and performance marketing

When considering the right strategy for your business, it is important to consider both growth marketing and performance marketing strategies.

#### Here are a few key considerations when choosing the right strategy for your business:

 - **Budget**: Performance marketing requires more ad spend, while growth marketing focuses on organic and [product-led growth](https://www.mailmodo.com/guides/product-led-growth/). So, if you’re tight on budget, go for growth marketing.
 - **Goals and timeline**: If you need fast results and your main goal is to get more leads and drive immediate conversions, choose performance marketing. But if you have time, want to build long-term sustainability, optimize your marketing efforts and engage customers better, opt for growth marketing.
 - **Company stage**: Depending on factors like the stage that your company is in, whether it’s just starting out or well-established, and the available financial resources, you can opt for performance marketing or growth marketing. For example, if you need to acquire more leads, then performance marketing is a better fit.

Typically, companies in different stages, industries and different business models go for different strategies. Let’s explore:

 - **Startups & SaaS companies**: They tend to choose growth marketing as it helps with long-term engagement and retention. This is particularly helpful for SaaS companies as they have a recurring subscription model.
 - **Ecommerce & D2C brand**: They tend to choose performance marketing tactics that drive immediate sales and conversions. This is because ecommerce relies mainly on impulsive purchases.
 - **Enterprises**: Many such businesses pick a hybrid approach where they leverage both strategies. They use performance marketing for customer acquisition and building up [brand awareness](https://www.mailmodo.com/guides/brand-awareness/) and then engage them with growth marketing.
    




## Takeaways

Growth marketing and performance marketing are both excellent strategies. Each of them is essential for business success, but they have different methods of ensuring the same.

So what strategy should you choose for your business?

There is no right answer to this question; it entirely depends on your business goals. Oftentimes businesses blend both strategies where they use growth marketing tactics to build the brand and retain customers and simultaneously make use of performance marketing to ensure quick revenue generation.

Choose the right strategy based on your business goals and available resources to ensure optimum success.

## Frequently Asked Questions

### Can growth marketing and performance marketing work together?


Yes, growth marketing and performance marketing can complement each other effectively. Growth marketing focuses on building sustainable, long-term growth through organic methods like content marketing, SEO, and community-building, while performance marketing targets immediate, measurable results through paid channels like PPC and social ads. By combining these strategies, companies can foster lasting customer relationships through organic efforts while driving quick conversions and ROI with paid campaigns, ensuring both short-term performance and long-term brand development.


### Which strategy is better for small businesses?


Small businesses usually have limited budgets and may not be able to put a lot of resources into paid marketing. So it’s best that they go with growth marketing. However, if you have the budget available, using performance marketing occasionally can be a good call since it provides those surges of leads.


### How do I measure success for each strategy?


For measuring the success of growth marketing, focus on measuring LTV, retention, and user engagement, while the effects of performance marketing can be easily measured by tracking CTR, conversion rates, and ROI.

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**Author: Mashkoor Alam**

Mashkoor has always been passionate about writing. He used to write short stories on his blog before he started writing for SaaS companies years back. He aspires to have a book under his name.

