Growth Hacking versus Performance Marketing: Strategies for Startups

Learn strategies, tactics, and tools tailored for startups and SaaS businesses to achieve real growth

Dec 10, 2024

When I first heard about growth hacking and performance marketing, I thought they were just fancy buzzwords. But as I dug deeper, I realized how these two strategies can completely transform how businesses, especially startups and SaaS companies grow.

Growth hacking for startups is all about using creative, cost-effective methods to gain traction, while performance marketing focuses on measurable results like signups or sales. Both are powerful in their own ways, but knowing when to use them can make all the difference. Let me break it down for you.

"It’s not what you sell that matters as much as how you sell it." - Brian Halligan, the former CEO and co-founder of HubSpot

And Brian is absolutely right! Even the most brilliant ideas need a solid plan to reach the right people. That’s where growth hacking and performance marketing come into play.

At first glance, these terms may seem similar, but they’re quite different in approach. Depending on your business goals whether you’re scaling a startup or growing your SaaS company you’ll lean towards one or the other.

Here’s everything you need to know to make that choice.

Key Takeaways

Growth hacking is all about creative, cost-effective strategies to drive rapid growth.
It often involves tactics like A/B testing, email campaigns, and referral programs to retain users.
Performance marketing is a pay-for-results approach where you partner with affiliates to drive actions like signups or sales.
Both strategies benefit businesses differently, depending on your goals.

What Is Growth Hacking?

Growth hacking is a mindset focused on finding cost-effective, unconventional ways to drive business growth. It’s especially useful for startups and SaaS companies working with tight budgets.

The term was first coined by Sean Ellis in 2010, and while it started with startups, even larger companies have adopted it.

Who Is a Growth Hacker?

According to Ellis, a growth hacker is someone “whose true north is growth.” This means they focus solely on strategies that drive measurable growth. From A/B testing and SEO to email marketing and analytics, growth hackers use every tool in the book to attract and retain their audience.

Example: Growth Hacking for SaaS in Action

Think of Amazon Prime. It’s a textbook case of growth hacking for SaaS except, in this case, the “software” is a membership program.

For a small monthly or yearly fee, Prime members get next-day delivery, access to Prime Video, and more. Plus, there’s a 30-day free trial for new users. Why would Amazon offer so much for so little?

It’s all about customer lifetime value (CLV) , a metric that shows how much a customer is worth to a business over time. By increasing CLV, Amazon ensures long-term loyalty and higher spending.

Prime members in the U.S. spend an average of $1,400 per year compared to $600 for non-members, according to reports from Statista and The Motley Fool.

What Is Performance Marketing?

On the flip side, performance marketing is a results-driven strategy that combines brand marketing with paid advertising. You pay only when a specific action like a signup, purchase, or download is completed. It’s a win-win for both businesses and affiliates, as the payment is tied to performance.

Example: Performance Marketing in Action

Take Abby Lawson’s blog, Just a Girl and Her Blog, as an example. She partners with affiliate programs to promote products her audience would genuinely find useful. Instead of pushing sales, she seamlessly integrates affiliate links into her content. This way, her readers get value, and she earns a commission when they make purchases.

Key Differences: Growth Hacking vs. Performance Marketing

Here’s a quick comparison to help you decide which strategy suits your startup:

If you’re just getting started, here are two growth hacking tactics for startups that deliver results:

Pre-Launch Campaigns

Creating buzz before a launch is another effective technique. Remember Apple’s unbranded posters for the AirPods Pro? By teasing the product before revealing details, they built anticipation and drove media coverage without spending a fortune.

Referral Marketing

Referral programs will remind you of the classic growth hacking for SaaS stories. For instance, Dropbox grew from 100,000 users in 2008 to 33.9 million in 2017 by offering free storage space to users who referred friends. Both the referrer and the new user got rewards, making it a win-win.

In My Experience..

Choosing between growth hacking for a startup and performance marketing isn’t about which is better, it's about what works for you. If you’re a SaaS company looking for rapid growth, growth hacking might be your best bet. On the other hand, performance marketing is perfect for results-driven campaigns where you pay for specific outcomes.

Either way, what you need to understand is having the right mix of strategies suited for your budget. And yes, these are still relevant today in AI driven world.

Thanks for reading my first blog! If you found the insights on growth hacking and performance marketing helpful, you can subscribe and stay updated on more content like this. I’ll be diving into strategies, tips, and case studies to help you grow your business, especially if you’re an early stage startup.