PROFILE

Peter Fader

Professor of Marketing, The Wharton School of the Univ. of Pennsylvania

Peter S. Fader is the Frances and Pei-Yuan Chia Professor of Marketing at the Wharton School of the University of Pennsylvania. His expertise centers around the analysis of behavioral data to understand and forecast customer shopping/purchasing activities. He works with firms from a wide range of industries, such as consumer packaged goods, interactive media, financial services, retailing, and pharmaceuticals. Managerial applications focus on topics such as customer relationship management, lifetime value of the customer, and sales forecasting for new products. Much of his research highlights the consistent (but often surprising) behavioral patterns that exist across these industries and other seemingly different domains.

Many of these cross-industry experiences have led to the development of the Wharton Customer Analytics Initiative, a new research center that serves as a “matchmaker” between leading-edge academic researchers and top companies that depend on granular, customer-level data for key strategic decisions.

Professor Fader believes that marketing should not be viewed as a “soft” discipline, and he frequently works with different companies and industry associations to improve managerial perspectives in this regard. His work has been published in (and he serves on the editorial boards of) a number of leading journals in marketing, statistics, and the management sciences. He has won many awards for his teaching and research accomplishments.

Current papers, course syllabi, and other materials are available at www.petefader.com.

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  • Posted on: 08/15/2016

    Is brick & mortar ready to leverage in-store shopper data?

    If the focal question asked "should" brick-and-mortar stores leverage in-store shopper data, then the answer is obviously yes. But the question really asks whether they're ready to do so, and unfortunately for most retailers the answer is a resounding no. They can't properly leverage their transaction log data, so forget about in-store shopper data. Retailers need to walk before they run: first figure out who's buying what before you worry about who's doing what. Given the disappointingly slow progress on the former, I'm not holding my breath for the latter. But I hope I can be proven wrong in the next few years.
  • Posted on: 08/04/2016

    Would Walmart + Jet.com be an Amazon killer?

    What a terrible idea! Tying two bricks together won't help either one float. Jet.com has been a mess since day one. Walmart needs a partner with a proven record of success to find a way to make online work for them. They should steer far away from this losing proposition. They'd be overpaying at even half of the reported price.
  • Posted on: 07/11/2016

    Are self-checkouts dooming impulse purchases?

    Maybe it's true that self-checkout inhibits impulse purchases, but in the long run it could be a great way to create consumer "lock-in" that might be so much more valuable than an occasional candy bar. Retailers really need to think about lifetime value rather than maximizing revenue on single transactions.
  • Posted on: 07/05/2016

    How important is non-transactional data to personalized offers?

    Non-transactional data (NTD) is rarely as important as transactional data (TD), but it can help add additional insights -- assuming that the TD is fully leveraged.Too many retailers believe that the sheer quantity of NTD can compensate for the greater quality of TD -- but that's almost never true. NTD may seem to be more interesting, actionable and insightful than TD, but it's not nearly as predictive (which is what matters first and foremost).Retailers must walk (with TD) before they attempt to run (with NTD). Here's a recent interview that picks up on this same theme: "Big Data: Start with Baby Steps".
  • Posted on: 06/30/2016

    Can retailers sell anything without sales?

    So how do we create the new business model that Ori Marom is hinting at? It's actually pretty easy: judge our efforts (including promotional campaigns) on the basis of the future/projected value created for the customers who participate in the campaign. If we're only appealing to low-value cherrypickers, then the campaign is a failure and we shouldn't do it again. But if it is attracting valuable customers and/or enhancing the value of existing valuable customers, then it's a success.Let's stop evaluating our retail businesses on the basis of volume and costs. It's all about granular value. "Lift" is meaningless if it's not lifting value as well as volume.
  • Posted on: 06/13/2016

    How can online returns be minimized?

    That's the wrong question! The right one is "under what circumstances should returns be minimized?" For the "serial returners," it's a no-brainer, but that's a tiny portion of the customer base. There's are, in many cases, more customers for whom returns can be seen as a *good* thing -- a sign of ongoing engagement and an indication of higher lifetime value. Proper analysis of transaction log data can sort out these issues in a clean, granular manner.By the way, it's exactly the same issue about loyalty program redemptions: do you really want to minimize them, or leverage them to create greater future value?For both of these issues (and countless others), it's important to take the long view about customer value maximization instead of just trying to minimize short-run costs.
  • Posted on: 03/03/2016

    Did Restoration Hardware CEO’s customer service rant go too far?

    Let's put aside his ridiculous style — 'nuff said about that.

    More importantly, the substance of his message is just plain wrong. The notion of "delighting every customer" is naive, inefficient and not the best way to build a sustainable customer-centric business at scale.

    We really need to get past that tired notion and start getting smarter about the best ways to manage our customer relationships.

  • Posted on: 02/12/2016

    Will arugula and tattoos go together in Whole Foods’ new concept?

    This is a great concept. The hard part is figuring out what are the right kinds of businesses to pull under the umbrella. If they can create the right array of "magnets " to attract, retain and develop the right customers (i.e., high CLV), this can be an unbeatable strategy. But they have to avoid the temptation to focus too much on the products/services, per se, instead of the value of the customers who buy them.

  • Posted on: 02/09/2016

    What should retailers do with the holiday gift of customer data?

    Top of the list should be customer valuation. Are those holiday shoppers valuable customers throughout the year, or do they tend to be short-term cherry-pickers? I suspect it's the latter, which would have tremendous implications for (or against) much of the prescriptive advice offered by others here.

    Until retailers can really do customer valuation in a robust, valid manner, many of the other tactics expressed here are may be more like rearranging the deck chairs on the Titanic....

  • Posted on: 01/25/2016

    Is digital loyalty a bigger hurdle for smaller retailers?

    There is no doubt that bigger is better. Every retailer should read "How Brands Grow" by Byron Sharp and learn to live by the "empirical law" of Double Jeopardy.

    You can argue with it all you want, but virtually all evidence points to the fact that larger stores (i.e., those with greater customer penetration) also benefit from (slightly) greater purchase frequency.

    Don't try to break this "law" — it's really hard to do so, and deviations from it are not sustainable.

  • Posted on: 11/06/2015

    Will Americans ever give up their paper coupons?

    Paper coupons are such a bad idea for so many reasons. This is one of those cases in which retailers need to show true leadership. They need to take some risks, make some investments and show some courage to move from paper to digital (and to reduce their reliance on coupons overall). Progress to date has been disappointing, but there's always hope.

  • Posted on: 11/05/2015

    Is customer experience the new loyalty?

    Count me as skeptical. Despite all the talk about data and customization, most CX initiatives still have a "one size fits all" flavor to them. It's just another band-aid that retailers are putting on a gaping wound caused by their inability to truly understand and leverage customer-level data.

  • Posted on: 11/03/2015

    Why is Amazon opening a brick and mortar bookstore?

    I've said it before and I'll say it again: virtually all retailers should have a brick-and-mortar presence.

    It all comes down to AEIOU:

    • A: Advice, which is always delivered better in person than online;
    • E: Experiential value — way more than just product selection and low prices;
    • I: Interaction with real humans, which is often (but admittedly not always) a good thing;
    • O: Opportunities for much more meaningful/successful cross-selling;
    • U: Understanding — traditional retailers should be in a better position to capture relevant data about buying/browsing habits than any online rival.

    Amazon is great but it can be (and it will be) even better once they master the brick-and-mortar world as well.

  • Posted on: 10/05/2015

    Staples chooses to be different, closes stores on Thanksgiving

    Good move by Staples. I agree with the earlier comments that the net profitability of Thanksgiving Day operations are likely small — particularly when you look at overall impact on the customer base, not just the short-term blip. I doubt that being closed on Thanksgiving has any significant impact on their most valuable customers — it only helps the bargain hunters who aren't worth focusing on anyway.

  • Posted on: 10/01/2015

    Will surge pricing become the new normal?

    Get used to it, consumers! Surge pricing is here to stay, and that's a good thing in most circumstances. It is a more natural way for markets to operate, and smart retailers can learn a lot about the value of their customers (and the value of their products/services) from it.

    In contrast, price gouging is a bad thing, and retailers/consumers will quickly learn the difference between it and surge pricing. The increased ubiquity of surge pricing will actually help retailers and consumers learn where to draw the line and avoid crossing it.

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