How Olaplex Manages Marketing, with Alisa Pospekhova

Announcer:

Hey, welcome to the Nerd Marketing Podcast. Join co-hosts and ecom OGs, Drew Sanocki and Michael Epstein. Get ready as they'll bring you trusted tactics and strategies for boosting your brand's revenue, operations, and profitability.

Drew Sanocki:

Hey everybody, this is Drew Sanocki. Our guest today is Alisa Pospekhova, and I hope I didn't butcher her last name, but I've cyber stalked her for years. She's just got such an amazing background.

She has been in CPG forever. She is the director of brand marketing at Olaplex, which is a two and a half billion dollar public company, beauty brand, and at the same time she's the CEO and founder of kindroot, which is an herbal supplement company. It's really impressive to see not only what CPG is like at the public company level, but also at the startup level, how she navigates both. And there's something interesting in there about what Olaplex looks to when they decide to buy versus build into a new category, which I'm sure a lot of listeners are kind of curious about, especially in the beauty space. So without further ado, Alicia kindroot, which is a healthy lozenge. Yeah, how would you describe it?

Alisa Pospekhova:

It's vitamins and herbs blended into lozenges. So the whole concept is taking herbs on the go in a delicious way, essentially.

Drew Sanocki:

Nice. And how long have you been running that?

Alisa Pospekhova:

One, two and a half years.

Drew Sanocki:

And before that, you were involved in other brands?

Alisa Pospekhova:

I've been in consumer products, wellness, beauty for the past almost 20 years at this point. Supplements, snacks. I worked in a yoga company recently, kind of shifted into beauty, so I love that space. I love creating products and brands and marketing it, so I think launching my own thing just felt really natural as an extension of just fully owning the creativity part of it for me at some point.

Drew Sanocki:

How would you compare kindroot to Olaplex?

Alisa Pospekhova:

It is very different when you're working in a brand that's established, even though we're just celebrating our ninth birthday, so it's still rather new. But I have an operations department, I have a social media department, I have all of these cross-functional people that I'm working with. When I'm looking at kindroot, it's just me. So I am as much of a coordinator and logistics operator as I am a brand marketer and a trademark filer, so it's like a full 360 business management rather than being a bit more in a particular lane in a role. But I would say that I think running my own business and understanding all of those facets makes me a much better brand marketer and cross-functional partner to everybody else. I know exactly what you're talking about at Palette coming in, I've actually dealt with that, so I feel like running own business actually just made me so much better at my corporate career as

Drew Sanocki:

Well. And so Olaplex is 2 billion company.

Alisa Pospekhova:

It's a big, big brand. Yeah.

Drew Sanocki:

Did they start as a DTC brand?

Alisa Pospekhova:

No, so they actually kind of started in the professional channel that was really going after and working with a lot of hairstylists, particularly colorists because the product is sort of targeting repair and then of course went into the retail channel and then D two C as well. But now I mean we have a robust D two C business as well as obviously e-comm through retailers and secondary channels. If you think about Amazon and all of those expansions too,

Michael Epstein:

And you talked about how you can transfer some of the knowledge that you gained from running your own business into these bigger companies. On the flip side, plex to plus billion dollars, Nestle wonderful pistachios brands that you've worked with. What can you take from these massive brands and apply it to a smaller brand?

Alisa Pospekhova:

The scope of information that you're exposed to at these big brands is kind of incredible. You are in beta channels with different media buyers and things like that. I think you see strategic direction from a lot of retailers exposure to information is just so vast that you don't get when you're just a small little operator and quite honestly, retailer is like, Hey, I want you my portfolio, but if you're here or not, maybe not that exciting. Or even on the DTC flip side, you kind of know, Hey, what's YouTube testing? Where are they going? What's their strategy? It's all the kind of information that's available to me in a large brand that I can then kind of think about how to action on my part. We do so much testing. You have partners and I'm like, oh, they're doing that, right? I'm going to take that and I'm going to sort of do it from a brand on a much smaller scale. So I would say spot on. I think there's kind of synergies in both, for

Michael Epstein:

Sure. I know a lot of brands now are thinking about medium mix modeling and omnichannel. What do you learn at that level of scale?

Alisa Pospekhova:

Such a good question. I mean, look, medium max modeling is something that we're actually talking about a lot. I mean especially once you start spending and there's a point when you're a small brand, you're kind of not spending at all, right? Then you kind of go to Medium and then you sort of start spending probably more in the kind of conversion channels. Then you get to be a big brand and now you've kind of spent, and now you're really focusing on optimizing and you sort of have a choice. In a medium sized company, you don't even have a choice where you're spending with these larger barges. The question is where does our money go? Do we put it into Pinterest? Do we put it into out-of-home? How do we approach our audiences? We actually spend quite a lot of time on figuring that out and making sure that our dollars go as far as possible.

And then of course, not only is there sort of D two C, when you're really truly talking about an omnichannel brand, which Olaplex is, there's sort of an additional complexity of, okay, so how does that truly work on a global level in terms of supporting your retail partners but then also running your D two C and if somebody goes to Amazon, looks at your brand, but then maybe doesn't, how do you then maybe try to retarget them on Sephora or D two C? All that whole entire thing is just so much more complex and if you think about it, I mean I think about it, but there's multiple departments that are working on it internally. So getting everybody together on the same page is also pretty complex and multiple agencies. And then you talk about internationally, countries, there's the us but we're now exploring uk, Canada, middle East, Latin America. So the scope of that expands quite dramatically for sure.

Michael Epstein:

When you make those decisions, how do you think about success or how do you think about measuring the efficacy of those different channels?

Alisa Pospekhova:

That's like the million dollar question, and I would say it starts with understanding what your KPI is and what you go after, right? In my marketing career, I will say the number one reason people say like, oh, something didn't work. It is because the marketing team was running an awareness campaign focused on reach and eyeballs, but maybe the CFO thought this was going to generate a ton of sales, and so there was mismatch of expectations. So I think the number one thing is actually going into it as an organization with a truly defined set of what are you actually going after and what is that customer journey? If you're running an awareness campaign, that doesn't mean it's not going to lead to sales, but your customer journey might be 90 days out. If you're starting to look at a daily sales report, which a lot of people do and they're like, Hey, we're not seeing an uptick in sales.

Well you never were going to because that's not what it's focused on. But of course, more and more, especially DTC, you're running full funnel campaigns where each channel has a role in the mix and you're hopefully widening your funnel at the same time as you're trying to then also lead to conversion. And of course the hardest thing to do is sort of do it at scale. So as you're expanding your reach, you're still being as efficient and you're not losing some of your acquisition costs in there, you're not kind of expanding them. So that's what we're focused on really. How do we reach the most amount of people and obviously convert them, but without exceeding some of our targets and expectations.

Drew Sanocki:

I'm curious what your team looks like at kindroot or at a Shopify brand doing up to maybe 20 million in revenue is all done by one person, typically marketing at Olaplex, everything you've talked about on the demand gen side, is that all your team or is it you individually? What does marketing look like?

Alisa Pospekhova:

No, so I mean marketing at Olaplex has multiple departments rolled into it. I run the brand marketing team, specifically brand marketing, usually sort of like the hub. We are kind of setting that go-to-market strategy overall plan for how we get to the market. But we have a separate product marketing team. We have an e-commerce team, we have a media team, and then of course we have kind outside agencies. So there's a lot of collaboration cross-department, but I am very involved in all of it because obviously your media will only work as well as your creative, as you're positioning, as your audience targeting. So we tend to sort of on the brand side, cross all of the different channels just because we tend to drive the plans across the board and responsible for full kind of go-to-market plan.

Drew Sanocki:

What's typical to spend for marketing? Is it like 10% of revenue?

Alisa Pospekhova:

There's different targets, 10% is what usually people will throw out generally. I've also been though in places where we would say, Hey, we want to have a growth spurt, so we will over invest, let's say Q1, Q2 to build out that funnel and then in time for Q4 holiday and then minimize our overarching spend. But we'll go really, really into those warm audiences towards the end of the year and really target them. And then maybe Q1 you kind of reduce as well. So there's just a lot of up and down. And then of course when you go into a VC invested company or market kind of IPO company, there's a whole other layer of what are the market expectations, profitability and stuff. I've also worked for privately owned companies where we were really, really profit focused and sometimes we spent maybe 3% on marketing. Everything had to be just super optimized, so it varies. I also worked on a brand where we were trying to just financially get acquired. It was the weirdest thing where it didn't matter. Profitability, acquisition, none of that happened. It was a CBD brand very, very early in the CBD boom and they just wanted to spend, grow and kind of be acquired. And of course that didn't happen. They went out of business, but sometimes there's sort that type of stuff too. In DC

Drew Sanocki:

I feel like you've got such an interesting vantage point because not only have you been in CPG for 20 years, but you're at this big brand two and a half billion dollars brand, and then down here you've got all these little gnats, all these Shopify startups that are nipping at your ankles. I'm an investor in overtone, which is a fraction of your size in the same category. Do you look at an overtone? Do you even know it exists? Are you looking at them and trying to take inspiration from them or are you guys looking at what categories might be growing quickly that you might want to get into? Or where is the calculation ever made that you should acquire a fast growing CPG? Or do you just kind of ignore this all as noise in the Shopify world? Because I would say most listeners to this want to be acquired by an olaplex someday, right?

Alisa Pospekhova:

I mean, I pay a lot of attention to pretty much everything in the space. I mean, I'm sure you're aware just being in the space, I then haircare is truly booming. I mean beauty is booming and has been for a while, but prestige sort of premium hair care has really kind of started growing in the last three years or so. I mean, it was really still kind of a mass play. And so even if somebody previously went into Sephora or Nordstrom's to buy a lipstick or powder, whatever, the same shopper would go into Target and buy haircare. There just wasn't really enough sort of education. And previously you kind of had two avenues. You had your salon kind of distribution and that was really premium, or you went into Target, Walmart super, whatever. And then you really saw in the past few years, Sephora as an alt is really going into the haircare space.

And you're right, I mean I think the amount of indie hair care brands that are coming into the market has been kind of astounding. I feel like I'm seeing another startup launching every single week or so. So I do pay attention to it because I ultimately feel that a lot of very interesting or daring innovation tends to happen in these small spaces because obviously as you grow and you have more to lose and you start going about the innovation a more methodical way, and I sort of love an entrepreneurial way of it is like, Hey, I see a white space. Maybe I have some research, maybe I don't, maybe I talk to five people and I'm just going to sort of go from it. And I think beautiful, amazing things happen in that sort of way. So I love seeing what's going on from an olaplex standpoint.

We pay attention to it, but I also think two things are important. One, too many brands at some point start copying what other people do, and I am very passionate about know who you are and go after it and sort of stay in your lane. Brands just get diluted way too much. The second one is at some point you kind of have to start acting like a bigger brand. You can't get distracted by everything that's sort of going on. With that being said, you're right. I think that there's also an opportunity to kind of say, Hey, maybe we as a brand don't necessarily go in this direction, but we can kind of acquire somebody who's additive to our portfolio. And that's always something that's I think very, very interesting. And you've been seeing so many acquisitions in the space with way got acquired by p and g recently. You have Gio. I mean it really, really has been growing as a channel, so I'm excited to see what kind of happens there.

Michael Epstein:

And when do you think brands should start thinking more about branding and awareness versus direct response?

Alisa Pospekhova:

Look, I think consumer products are innately experiential and you experience it both from the packaging, the view, how it smells down to how it works, that influences your sort of experience. But that doesn't mean that you have to have this super beautiful packaging. You just have to story tell and have a story. And I don't think that has to be expensive by all means. I think you can just jump into Canva and create an initial brand for a launch for a startup. I don't think it has to be expensive. I do. It has to be mindful. I think you have to be mindful about how you differentiate it, how are you sort of going about it? So that's sort on the branding side. I think there's a lot of conversation around like, oh, just slap something together and put it out there. And my question is, is that how you want to show up in the world if you're sloppy, whatever.

But from the brand awareness side, I don't really recommend investing a ton of money into it from the beginning unless you're instantly VC funded and you kind of want to go out there. And by all means, brands have done it and has sort of gone well. But generally I would say, hey, focus on more of conversion. Direct mail is a great one, right? Because actually hitting somebody with that card, if you were kind of expanding on the retail side, invest in things like displays, retail specific e-commerce activity, really work on driving sales to get to some kind of critical mass because you want to sort of have enough distribution and enough people knowing about you before you turn those things on. It's really easy to spend money, it's ridiculously easy to spend money. So kind of be mindful of that.

Drew Sanocki:

I'm curious what your budget is. Your budget's probably bigger than our company.

Alisa Pospekhova:

It's actually not that big. We actually underspent comparatively to a lot of our competitors. And I would say the reason for that, and again this goes back to what you just asked me previously, is that Olaplex truly started with a really groundbreaking product. They invested in community, they got these amazing pro hairdressers, that channel on board. They spent a lot of time nurturing that community via social media. And so in some ways we haven't had to really invest in a lot of above the line because the word of mouth with hairdressers, like 70% of recommendations for premium haircare come through your stylist, and we have so many consumer testimonials on social. So we are actually, believe it or not, our first awareness campaign just dropped two weeks ago. That was sort of what I ended up working on. So we are running out of home in three key cities and we're really investing in that above the line. But previous to that, for a company our size nine year anniversaries happening on June 24th, we were really kind of focused on mainly conversion driving tactics. So it can be done, but I would say you have to have a truly differentiated product in that sense. That's kind of unsu substitutable, which I think we had

Michael Epstein:

At kindroot, you're omnichannel and you're a one woman show. Yeah. Was that based on your experience being omnichannel and you understood it and were comfortable moving into it or how did you think about going D two C versus omnichannel as you started and grew kindroot? 

Alisa Pospekhova:

Good question. I designed the brand to be able to go sort of omnichannel from very tactical things of case packs and figuring out margins for both channels. So I was ready to go in that sense. I initially thought I was going to be more D two C and not necessarily omnichannel, but I launched the brand right before Covid, and quite honestly, the first six to eight months were just wild because I would have an amazing month and then everybody pivoted to spend and my acquisition costs went crazy. And then a retailer came and I had inventory and I was like, well, I need money this month, so I'll sell to you. So transparently, it was a lot less of a strategic decision as much it was a need for cashflow a particular month. And so that's kind of how I went. But with that being said, I did say no to a few retailers.

I was still strategic in a sense of going after or partnering with those that I felt aligned with. The brand didn't require a ton of spend and investment where I felt like the consumer was the right one. And so if you look at us, we're still sort of primarily e-comm based in a sense that my biggest channels are Amazon, target.com, thrive Market. It's still sort of those e-comm retailers, and then we have some distribution within natural channels. But from to your point, being a one person show with some sort of freelancers, retail is just incredibly laborious and expensive to get into, which is why I've kind of prioritize e-comm channels because it's not that hard. To your point to set up, I have a three pl, I have Shopify, everything else can kind of be done virtually rather than starting out with sales teams and field teams and merchandising teams and regional distributors and moving freight around, that's where you start to need a lot more people on your team to execute, which I just isn't something I want to do right now.

Drew Sanocki:

You've got a really interesting perspective. You see a lot of CPG brands both at krut and Olaplex. What do you see working right now in CPG? I guess it could be either categories you see that are particularly hot or marketing approaches, be it influencer or community or Facebook. What's working right now,

Alisa Pospekhova:

I will say right now is kind of a wild time. I almost want to say, I don't know. It is sort of a time where I feel like a lot of brands and people are struggling. Things are getting more and more expensive, more and more saturated. The ease with which I think you can sort of open a Shopify store is almost a little bit too ridiculously easy to where it's like there's just so many brands and kind of the path to market. Just in general though, I think building of a community I think is super important and that's what I see. The brands that are succeeding seem to be investing a lot in a lot of engagement, almost kind of to old school tactics of farmer's markets, local events. The online space is almost too dominated in a sense that you have to kind of mix digital and offline together to come to people.

That's where I see more and more probably brands that are hyper-focused on very, very specific problem solving. So it's not like you can launch a skincare brand for acne anymore. I feel like it has to be skincare brand for acne for boys between 14 and 17. You just have to be super, super targeted. Or if I were to launch a haircare company, I probably would launch one that would be like, Hey, targeting not hair loss, but hair loss of postpartum women. You just have to have a super precise solution. I think too, both from the storytelling but also just overall marketing to win right now.

Drew Sanocki:

Yeah, we talk a lot about niches and how it's niching down that makes it easier to get initial traction, but then the size of the market is smaller or you acquire all the cheap customers that there are to acquire, and then you pretty quickly plateau. So totally, it's a double-edged sword.

Alisa Pospekhova:

It is, it is. Because then it's like how do you expand from that, right? Then you're like, yeah, but if you expand now you're competing against kins and Ola plexes and Wallas of the world, then that's what you're just going to get eaten alive.

Drew Sanocki:

You just get grinded.

Alisa Pospekhova:

You just get it completely obliterated,

Drew Sanocki:

Just get jammed.

Alisa Pospekhova:

And that's sad because I'm a true, I love small brands and I love small business is a huge passion of mine. So I am always like, oh, small new brand. I just always want to help and buy and support, I guess. 

Drew Sanocki:

What career advice would you give to some aspiring CPG entrepreneur? Would it be to go work at a big brand and kind of learn the ropes or just set up that Shopify store and get started?

Alisa Pospekhova:

Both, but no. I mean, I think that my advice is actually not to be too locked into a path, a career or whatever, be more so open to possibilities and opportunities. I'm someone in addition to small and big, I've changed a lot of industries. So I have gone from juice to supplements to yoga to beauty, and people always ask me like, oh, well how did you switch from one to another? And I'm like, I never actually thought about it as switching. I thought about it. I'm selling the same premium yoga mat to the same consumer who is buying olaplex, who was buying mushroom coffee supplements. It's all the same. I think whether you sort of start small and stay there or you go big, you're going to get a little stagnant if you're kind of repeating the same things. So for me, always thinking, Hey, what's the next adventure? What's the next place that I'm going to go and learn Something that I don't know. 

Drew Sanocki:

Thank you, Elisa.

Alisa Pospekhova:

Thank you.

Drew Sanocki:

This was awesome. Yeah, great perspective and from a veteran entrepreneur, so really appreciate you coming on.

Alisa Pospekhova:

Thank you. Thank you for having me.

Announcer:

On this season of the Nerd Marketing Podcast, you'll hear from the Wharton professor that literally wrote the book on customer centricity, along with Drew and Michael's experience in private equity and advice from VC firm partners on what they look for in investments. And you'll hear topics about brick and mortar retail strategies for CPG brands and much more. Alright, Drew and Michael, we'll be back very soon.

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