Faced with underperforming boutiques, Elf made the strategic choice to shut them down. They immediately reinvested the $16 million in operational savings into their core growth channels—digital marketing and national retail partnerships—which accelerated overall business momentum.
Elf's CEO believes it's immoral to charge consumers inflated prices for beauty products when high-quality, affordable alternatives are possible. This reframes the "dupe" strategy from a competitive tactic to a consumer-centric mission, especially for budget-conscious demographics.
Elf's CEO asserts the company is in the "entertainment industry," not beauty. This mindset shifts their marketing focus from selling products to delighting their community. It justifies tactics like a Twitch channel or airdropping care packages, which build brand love over direct ROI.
Facing significant tariff costs, Elf chose radical transparency over a surprise price increase. They announced the change three months in advance on social media, explaining the external pressures. This honest approach was met with positive community feedback and preserved customer loyalty.
Elf's CEO joins TikTok Live sessions where he is directly lobbied by the community for new products. He uses this "zero distance" feedback to bypass traditional R&D, personally pushing his innovation team to fast-track product development from 18 months down to six.
Elf uses a unique compensation model where every employee's bonus (from 0-200%) is tied to the same company-wide adjusted EBITDA metric. This aligns operations, sales, and marketing on a shared financial fate, fostering cross-functional collaboration and a strong sense of ownership.
Instead of seeking synergies by integrating acquired companies like Hailey Bieber's Rhode, Elf Beauty keeps the founder and their team in place. The goal is to provide resources like sales support and R&D to help the founder's original vision scale faster, avoiding common M&A pitfalls.
Elf's CEO hosts product review meetings every two weeks that are open to all employees, regardless of role. He actively monitors the meeting's chat for feedback, believing the best ideas can come from anyone, like an inventory planner with a contrarian view on a new product.
Elf maintains low prices by embedding its own quality control and lean manufacturing teams within partner supplier facilities. This hybrid model gives them a high degree of control over cost and speed, allowing them to sell products like a $3 lipstick profitably, even amidst inflation and tariffs.