Why you need to know your e.l.f.ing numbers with Kory Marchisotto [Uncensored Renegades]

0:06Welcome ladies and gentlemen to Uncensored Renegades. This is a new show that I'm launching with Corey Marchesotto, and we're going to be focusing in on leadership. And we're going to be doing that in a new format, which is the two of us tackling one topic for 20 minutes. So shorter than normal show, but super focused and with the absolute rock star that is Corey. I know you're going to love this. Now, if you want to make sure you get this every single week, please do go and subscribe to Uncensored Renegades in your feed, and then you'll never, ever miss an episode again. But without further ado, let's get into it.

0:38Here it is. Okay, boss, we're back. We're back. We're back. We're going to try to do it under 20 minutes again. We're going to attempt. We're going to attempt. This isn't going so well, is it? But we're going to try. We're going to try. We got this. Let's go, Johnny boy. We're going to try and pick maybe the dullest topic that we can possibly pick. We're picking them up, aren't we? We're going to talk about numbers. I love numbers. You know what I say to my team all the time? Know your elfing numbers. If you are in business, if you are working for a publicly traded company, better yet, if you are working for a for-profit institution, you better know your elfing numbers.

1:13Years ago, when my daughters were quite little, I was putting one of them to bed. And I spent, and she was like, Daddy, can you tell me what you do? And I spent this, about 15 minutes explaining everything that I do in marketing. And she looked at me and goes, so basically you do the cutting, the sticking and the colouring in.

1:33I love that. I was crushed. I was like, yeah, okay. Oh, but how sweet is that little distillation that she made? She's about right, of course. But I think the thing that people forget is that that's the reputation. That's what people see. The thing that most people tend to see from us is the advertising bit. The reality of a marketer's job, particularly in a role like yours where you're very senior, it's the business of business. And it involves a lot of numbers, doesn't it? And having to convince the board to invest in what you're doing. And basically, you are shaping the future P &O of the company.

2:04Well, if you go back to your daughter's assessment, she's not wrong. It's the sticking, the coloring. What was the third word? Cutting, sticking, and coloring to drive the revenue and to make sure that we can run the math through the P &L and get to the place that we want to be going and reach the goalpost, right? So one of the things that I hear a lot of CMOs especially complaining about is nobody understands them. We hear this all the time. Scott Galloway talks about CMOs have a branding problem. I actually don't think that's the problem. I think the problem is most functions are black and white.

2:39You know exactly what this function is doing. It's got a starting point. It's got an end point. And pretty much everybody can explain it. marketing is amorphous. Again, I've said this before, ask a thousand people what is marketing, you're going to get a thousand different answers. When things are ambiguous, people are naturally confused. So then your job is to be the decoder. And I think CMOs don't realize that. If you are talking to a CFO, do not go in there with your magic wand talking bibbidi-bobbidi-boo shit. Go in there and talk about business impact. We did this thing and here is a direct line to revenue impact.

3:19For example, I have somebody that just started on my team. He's absolutely incredible. He's day one impact. He literally ties every single creator that he gets to talk about Elf to either EMV, which means earned media value, or revenue. And we can see that right away on Amazon, for example. Hey, K-Boss, I hung out with these two influencers. They made this post. And today that product is up 4x. He's a director. He's not even a C-suite executive. And he sends that to me in text. And I encourage him to keep doing so because I can then trumpet his triumph, right? That's what CMOs need to be doing.

4:00Direct impact. We did this because of this. We saw this insight, this data point, whatever it was that led us to that moment. And because of this, this thing happened. That ability to connect the dots is the most important part of a CMO. And that's how you get increased budget. So if I think about my journey at Elf, when I started, we were investing 6 % of net revenue into marketing and digital. And I oversee both of those areas. I didn't go in and say, I need to have 24 % on day one. I am at 24 % six and a half years later because I held hands with the CFO. We agreed together on taking a pragmatic approach.

4:44I didn't know what was going to drive the brand. I needed to put a lot of stimuli out market to see what it would react and respond to. So I took her along for the journey and we did it together. Hey, let's get to 10 % as a starting point. Then let's pause and reflect, see what worked, see what didn't, see what it responded to. And then let's uptick if we see it works to 12, 12 became 14, 14 became 18. You see how this goes. But a lot of people immediately just say, I don't have enough money. I don't have enough people. I need everything now. No, you don't. Incremental progress and being able to pinpoint the specific metrics and tell that story with impact is actually how you win the C-suite and the boardroom.

5:28Yeah, totally agree. Make the investment case, not the cost case. One of my favorite ever quotes I've come across is Len Lodish and Carl Mellor, I think it was, Harvard a business review about 10 years ago. And they said this, if brands are built over decades, why do we manage them in quarters? And I think that comes to some of the rub here, doesn't it? Because we so often measure what's easy, not measure what's hard. And you're talking about the 6 % to 24%, that's where you win the game. That's hard to measure. Much harder to measure than what we sold yesterday or how many people saw us on TikTok.

6:05How do you make the case for the longer term moves that you make? Well, remember, we went from 6 % to 24 % over six and a half years, essentially. Those 25 quarters by which we started to raise the investment and where we're staying today, we have 25 consecutive quarters of net sales growth and market share gains. So we know it's working. We also do ROI analyses to make sure that we can tell our shareholders and our board of directors that this investment is delivering results. So by whatever metric we look at it by, we see that marketing works. Now, I wouldn't walk into any room and say marketing works.

6:45I would walk into our room and say our marketing works because we're doing community based marketing. We're essentially co-creating the brand with our community. And that's actually making them a stakeholder in the business, if you will, right? Because they're actually creating it with us. And I think it depends on what you hold dear as a company. And usually whenever anybody, especially CMOs, ask me for mentoring all the time, almost every question they ask me, I say, it depends. Do not go into your boardroom and sell a campaign called So Many Dicks unless you are elf. Right? You'll get fired.

7:25There's a reason I can do that, and it's because the case is ironclad. Not only is it a reflection of who we actually are, but we've done our homework, we know our numbers, we've done the math, and we've earned the right to be bold and funny. Don't all of a sudden wake up and think you're going to go to the market and be hilarious if you've been boring for the last 20 years. So you have to earn those rights incrementally. So does a CMO. So come into the business, shoot a three-point shot. Don't even worry about winning the game. Shoot a three-point shot. And once you shoot that shot, bring that story into every room you walk into.

8:03Hey, we did this. It got us three points. Fantastic. Can you make another one of those? I sure can. If I can have this to do it, right? I need this, this, and that. So I think that's where the key is. Do you understand the inner workings of a P &L? Do you understand that there is top line that affects bottom line? Do you know what your company's metric is that they hold dear? For us, we're bonused on EBITDA. This is why our CFO teaches a class, which is called What the Elf is EBITDA, because most people don't know what that is. But if I'm going to be bonused on it, well, then I better know what that is.

8:37And the only way I know how to get there is if I start at the top. And now I need to understand that my job impacts revenue. Unless you're in a not-for-profit, then we can have an entirely different discussion, right? I've always believed actually of all the C-suite roles, the CMO role probably has a bigger impact on the future value of the company than any other role. Because A, you're representing the consumer. But B, you're very often setting the future strategy, innovation roadmap, you know, all that and brand building. You should be having a material difference and that actually matters a lot.

9:10It's interesting, I absolutely love what you said there about earning the right. and so many CMOs I meet where they do really bold work actually if you ask them they've built they've earned the right over many many years I mean remember Meg Farron she was the CMO of KFC in the UK there was this crazy moment where KFC ran out of chicken and it was like national headline news like KFC don't have chicken right I mean this is just that and she said what do I do right and mother her creative agency picture this idea where they change kfc to fck and on the bucket they wrote this apology letter on the bucket that's hilarious right how good is that that's hilarious she launched it in 24 hours did not tell a soul but i say i say i like meg how do you do this right she goes i had earned the rights and the trust over seven years to be in a position where actually i can take those kind of decisions another good another funny example i met Fernando Machado, he's like, you know, one of the most celebrated rock star-y CMOs and done some great work.

10:13I'm like, dude, how do you get away with this stuff? And he just goes, you hire Fernando Machado, you get Fernando Machado.

10:22Yeah, you know, I actually have, and I love Fernando. He's an amazing guy and this is not to discredit him at all. I have a different position on that. You need to stand at the intersection of who you are and what is the brand you represent. I'm going to be a very different CMO if you put me in a different company, because it's not my job just to be me. It's my job to be me at the company I'm working for and understand deeply what is this brand about? What does it want to say to the world? How is that uniquely differentiated from anything else? And it's going to be wildly different than if I am the CMO of a different company that wasn't born to disrupt, right?

11:04The company I'm standing in front of right now was born to disrupt. It's in our DNA. I am compelled to be disruptive. Otherwise, I'm not being true to my brand. But you need to understand that as a CMO. You can't just come in and say, it's my way or the highway. This is how I'm doing it. You've got to come in and ask a lot of questions. You really need to get under the hood. You really need to understand what makes this brand tick. Not do you love about it, John Evans? What do the people we're serving love about this brand? And when I came into Elf, the first thing that I did was go right into the consumer bank.

11:42I read every single letter, all of them, especially the handwritten ones. Because if somebody is going to take the time to handwrite a letter to their brand and send it in and find the address and put a stamp on it. I mean, that is a real commitment. And here's what I found out. We weren't actually in the business of beauty at all. We were in the business of democratizing access. The letters that I were reading were people saying to me, thank you for opening a door for me that everybody else shut. That is a very important insight. Everybody else put velvet ropes. Everybody wouldn't let me come to the party.

12:23They priced me out. I was shut out. And I'm like, holy shit, I got to think about this business very differently. And when you reframe it that way and say, what business am I actually in? You'd be surprised how much that opens a door for you to rethink how you engage the community you serve. That's very true. Well, one thing that struck me actually as you told that story is the consumer focus but we mustn't forget that we have an we need to take the same approach internally i remember way back early in my career and i was pitching for a new business unit where i was going to basically be responsible for all the new brands and run it as a separate company so the idea was that you know we were launching things and they were failing because we just moved on to the next thing and i said what if we had a separate company that only did the new stuff that obsessed about it from you know the idea through the execution that we managed it we integrated everything you know all the way through the brand managers the sales team the merchandising team all the way into store and that was the concept and i remember you know i was quite young probably my late 20s my first big pitch to the board i remember getting a mentor and she was kind of talking me through how to do this she said well look you just need to lay out right who do you need to win over to make the decision like who's got an influence over the decision where are they today where do you want them to be I remember as part of this, I actually interviewed the entire board of the company and I started with the CEO and the CEO said to me, remove every reason to say no.

13:51And I had this idea. So I went around all the board and I just said, tell me what is wrong with my pitch. Tell me every reason you could give me why this will not work and you would say no. Right. And then I remember when it came to pitch day, so I came in and my very first, very boring, I didn't have the vision and the mission and the exciting stuff. And here's my new team and here's what we're calling it. I just said, you gave me 26 reasons why this is going to fail. And here's my mitigation plan against every single one. And I didn't get past the first page because the CEO looked at the team and said, well, I assume on this basis, you're all in agreement that John's going to go ahead, right?

14:29And it was the quickest yes I ever got. and all I did was say, here are the reasons to say no, but this is how I'm going to mitigate it. And that's the other side of the coin, isn't it? When you're trying to pitch to a board is that their fiduciary responsibility is to manage the risk and return of the company. And sometimes it's about making sure you've done the thinking and think about the risk. What could go wrong? What were you doing if that happens as well? But that's a really good metaphor because so many people want to do what Elf is doing right now. Companies 10X our size are unpacking us every day and studying what we do and trying to figure out how they can do what we do.

15:04Who doesn't want 25 consecutive quarters of growth? Who doesn't want 25 consecutive quarters of market share gain, right? Here's the thing, right? They don't realize exactly what you just pointed out, which is 26 reasons why not. We actually don't spend time there. We ask, why the elf not? And we ask, what if? So many times everybody's starting point is all the reasons we can't do this. And it actually poisons the well. And I totally get it in the case of your pitch. And that's a brilliant approach. I would encourage all of the people listening to this episode to not start from a place of no, because when you start from a place of no, you believe the know yourself.

15:48And you can't get to bold breakthrough work if your starting point is all the reasons why this is not going to work. So I have a formula that I created that works brilliantly every time and almost everything we do passes through this formula. Step one, tune the elf in. Who am I serving? What do they want? What is the insight? This is super important. What problem am I trying to solve? Like tune in, ear to the ground, listen to the people you're serving. Step two, put your head in the stars. Notice my second step is to dream big. Not to point out all the reasons why we shouldn't, but to actually go imagine what could be possible to the fullest extent.

16:30And I push people, push the work as far as you can. Let me tell you, you went off the cliff, right? Big, bold imagination. Step three is put your feet on the ground and make it happen. Now go do the big thing. step four is do it fast because you've got to move at the speed of culture you've got to operate in real time and step five super important and i learned this from another johnny boy who's my nephew who interned with us and he has this line that i love that i use all the time which is it's hard to beat a team that's having a good time so step five is have fun while you're doing it and it'll show in your work yeah i love that advice a lot yeah it's interesting actually with the um what happened next with the pitch that I did because at the end of the meeting, the CEO turned around and said, this same idea has been pitched seven times in the last eight years, but this time we said yes.

17:24And I'm like, that's interesting. Why did you say yes? And apparently that everyone had identified what the problem was in the company. So the company had sort of failed to innovate and get behind small brands. And he just said, this is the first person that's actually come up with an answer and thought through how we do it. It's very easy in business to say, oh, we should be doing this. We should be doing this. But like as Mike Cesario says, ideas are worth zero dollars. Zero. And it's like the ability to execute is everything. And that I think is another, again, another in terms of selling into the board.

17:55What they want is they want to know how. How are you going to do it? You know, and have you thought through the risks and, you know, what's the potential? Yeah, there's a very easy framework for that to boil it down for the audience to pick up and take with them. You have to have all three the what the why and the how do not go with any one of those without the others the what the why and the how is how you make the best pitch and sell your case absolutely brilliant and just to uh the the other part of your mind actually where i started with the idea where the idea came from was quite interesting because we were away at a kind of management development program there's off sites you do for sort of a few days you get away to think about you you know it doesn't haven't often but anyway um but there i was thinking about me yeah and um i i forgot everything that anyone said for the entire four or five days whatever i'll say except that there's one thing and it's ridiculously simple they someone just put this big kind of dark big circle and said what are you talented and passionate about write everything down that you get energy from you know where your talent is on the other side what are the needs of the business that are currently unfulfilled in meeting the vision and the direction the company's going and where is that little overlap and it's ridiculously simple but just having the chance to go you know who am i what am i about where am i going yeah and what does the company need and just marry those two things i remember i was it's so simple i was really excited i remember phoning up a couple of board members and saying can i buy you breakfast on monday and i just literally took this pad of paper in with me 8 a.m into the industrial park and wherever we were kind of thing and just said that is what i'm going to solve you know and then three months later was that that was the pitch that takes me to Sarah Blakely.

19:33She's the ex-founder of Spanx. Well, the founder of Spanx, who's now moved on to a new business, turned a crazy idea that everybody threw her out of the room when she pitched it into a multi-billion dollar company. And she's got these three S's that I love. And she said, it really all comes down to three things. Show up. People forget the power of just showing up. Show up with a solution and a smile. That's brilliant. It's so simple. So simple. I love that well i think that's probably where we end right yeah we got it and ladies and gentlemen we've managed this in 20 minutes and since the goalpost was 15 we're doing pretty good exactly we moved our own goalpost here didn't we very successfully one day