A CEO of a high growth eCommerce business called me a few weeks ago and asked what they felt was a slightly embarrassing question. What is the difference between performance marketing and growth marketing?
We were strategizing their organization’s path forward and I suggested they consider a Director of Growth Marketing. That’s when the exec asked for clarification.
For this executive, and most others still slogging through the recession and pandemic, growth is the ultimate goal. Consumer needs are changing and marketers have to embrace them.
According to McKinsey, “[This year] In Latin America, 13 million people made their first-ever e-commerce transaction.” And in the United States, “Consumers are turning to digital and reduced-contact ways of accessing products and services. This digital trend is magnified for Gen Z, millennials, and higher-income consumers in general. Social commerce is on the rise as well: 34 percent of people say they have shopped on Instagram based on an influencer recommendation.”
New customers. New ways of shopping. New marketing responsibilities.
Before we get into the fine print, this is your major takeaway: growth marketing is leveraging existing warm leads and customer base. Performance marketing is heavily skewed towards new customer acquisition, whether that’s acquiring new interest or a new shopper.
What is Growth Marketing?
This function is all about the ultimate goal of any organization: growth.
In the past, marketers may have put all of their efforts into account-based marketing or top of the funnel activities. This approach prioritizes customer retention and growth.
Drift, a revenue acceleration platform, offers this definition, “Growth marketing isn’t about fixating on one part of your funnel. It’s about looking at your entire customer lifecycle and using those insights to create compounding returns that drive more engaged customers.”
What is a Director of Growth Marketing?
When an organization is approaching profitability and ready to scale, they need an experienced growth marketer to drive and nurture leads. This leader has experience in all aspects of marketing: lead generation and acquisition, native, influencer, content creation, content marketing, email marketing, and analytics.
A successful Director of Growth Marketing has an entrepreneurial drive and desire to make a significant impact. They have the ability to think strategically and execute.
McKinsey recently reported, “Some 70 percent of buyers say they prefer digital interactions; sellers like the greater effectiveness. Videoconferences and live chats are helping companies seal the deal; traditional phone calls are now a last resort.”
A Director of Growth Marketing understands this shift in customer preference and uses it to engage the customer again and again.
What is Performance Marketing?
You would not be criticized for thinking that performance marketing is very similar to its growth counterpart. But there are differences. This function has a narrower focus on navigating paid media channels.
According to Taboola, “Performance marketing is a comprehensive term for online marketing and advertising programs where advertisers pay only when a specific action occurs. These actions can include a generated lead, a sale, a click, and more.”
When you hear performance marketing think paid search, paid social, performance display advertising, programmatic, affiliate marketing, and SEO.
What is a Director of Performance Marketing?
A Director of Performance Marketing is an expert in paid digital acquisition marketing. They’ve got experience in planning, activation, and optimization of performance marketing. They know how to use paid media channels to acquire customers. This person understands how to invest ad dollars to produce the best results and measure ROI on marketing spend. Most of the CMOs we represent strive for a 4:1 return on media spend; for every dollar they spend, they are expecting a $4 return.
McKinsey reported 34% of people have made an Instagram purchase thanks to an influencer’s recommendation. A Director of Performance Marketing will capitalize on the rise of social commerce. Successful performance marketers recognize the importance of e-commerce as customers develop a stronger preference for digital shopping experiences.
A Critical Decision
Think about these two functions this way. Growth marketing focuses on the bigger picture and your customers at every stage of their relationship with your business. Performance marketing hones in on all things paid.
You may have noticed that Content Marketing is a hard skill for both roles. There is some overlap, but if 60% or more of the role is driving new customers, you’re looking at performance marketing. If 60% or more of the role is getting in front of existing customers and typically in a highly cost-effective manner, you’re looking at growth marketing.
If your organization is big enough it needs a Director of Growth. This person does not oversee paid media — the performance marketer is in charge of this function. However, if you are a smaller organization, your head of marketing most likely does both growth and performance marketing. In this case, you identify them as a Vice President or Director of Marketing.
Are you uncertain what the right hire is for your business needs, objectives, and budget? Start by downloading this growth marketing interview scorecard. This will give you a good idea of what you need to ask candidates. After reading this, you might still wonder what your organization needs. Contact us and we can help you strategize your next hire.