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: 12/13/2018

    Retailing success doesn’t depend on silver bullets

    The top two comments here (by Min-Jee and Bob) say it all: the value created for (and extracted from) most customers has got to exceed the value invested in them. And yes, it's hard work to figure that out and do it consistently. But it also takes a lot of discipline: don't "give in" to a particular customer just because they make a lot of noise, or because of some old-fashioned notion that they'll suddenly become a great customer after you satisfy them. The key takeaway here is that value creation happens at the *customer* level, not the *transaction* level. It's about CLV developed over time, not revenue collected at a particular moment. Doing that is hard, but it starts with a very different mindset than most retailers (and store managers) currently utilize.
  • Posted on: 06/13/2018

    The question for today’s retailers: What business are you in?

    The answers here reveal a very interesting pattern: in the first 21 posts, there are 15 mentions of "experience," but only one reference to "relationship." That's the problem with retail today: too much focus on the former and not enough on the latter. Giving out glasses of champagne is not a business model. Building relationships can be one.
  • Posted on: 05/11/2018

    The importance of prioritizing high(er)-value customers

    Yes, yes, yes! This is the key to sustainable growth in today's highly competitive (and data-driven) era. Let's all celebrate CLV day next Monday. (Get it? CLV=155 in Roman numerals, and Monday is the 15th day of the 5th month....) All the other stuff we chatter about (e.g., customer experience, in-store technology, personalization, and branding) follows after you get good at customer valuation. But too many retailers are getting the cart before the horse by jumping into those tactics without a clear understanding of how their customers differ and which ones are likely to be the best in the future.
  • Posted on: 05/03/2018

    Do retailers need to update customer persona development?

    No no no! Focusing on buyer personas is pretty much like relying on horoscopes. Retailers should move far away from them and focus more on the gritty reality of their actual customers and the vast differences across them. As long as retailers focus on personas, they will continue to get steamrolled by Amazon.
  • Posted on: 03/20/2018

    Will it always be about price for Gen Z?

    Most of this generational marketing stuff is utter nonsense. At best, marketers are just making up harmless stereotypes, but at worst, these one-size-fits-all pronouncements become destructive self-fulfilling prophecies. Given the quality of the data and analytical capabilities that we have today, why are we still legitimizing this kind of broad-based stereotyping -- and making big decisions based on it?
  • Posted on: 01/02/2018

    Is Walmart aiming for a new customer with personalized text shopping?

    I'm right there with all the other folks here who have said "great idea but why that subgroup?" This kind of demographic targeting is a terrible idea in this day and age. Why not offer this interesting service to all of their highest CLV customers -- and then learn which ones are most responsive to it? It's ironic to see an initiative that is so technologically advanced in one respect, but so terribly backwards in another.
  • Posted on: 12/26/2017

    Is ‘brick mining’ valuable enough to justify physical stores?

    Of course not! I'm as strong a proponent as anyone for retailers to fully leverage point-of-sale (and other in-store) data, but that's not reason enough to have physical stores. So the question is a bit absurd as it is phrased here, but I do hope that all retailers will make it a high-priority New Year's resolution to start using their data more effectively. My advice:
    1. Make bigger/better investments in systems that allow for clean tagging/tracking of customers at a granular level.
    2. Focus primarily on simple transaction data -- don't get distracted by less-direct sources such as geolocation, social media usage and shopper characteristics.
    3. Carefully test predictive analytics (such as customer lifetime value) instead of relying on purely backwards-looking/descriptive metrics.
    4. Segment and target customers based on these forward-looking metrics instead of demographics, etc.
    5. Do this repeatedly -- the real learning and value arises over time, as you look across different cohorts of customers to see what tends to distinguish the best customers (and what tends to make them even better).
  • Posted on: 11/08/2017

    Big Data is done, put a fork in it

    I'm as strong an advocate as you can get for "Small Data," i.e., squeezing as much value/insight as possible about simple transaction log data before turning to more elaborate "Big Data" schemes. But that doesn't mean that Big Data is done -- quite to the contrary, the real era of Big Data hasn't even started yet. Once we master the art and science of Small Data, we'll finally be in a position to start to properly leverage Big Data, in ways that most retailers can't even imagine today. It's a lot like CRM: people were writing off CRM systems (literally and figuratively) 15 years ago because they weren't yet in a position to make strategic decisions that required it. But today we know that CRM is the bare minimum pf what you need for customer-centric success. Big Data will have a similar resurgence in a few years. But first retailers really need to get started with the Small Data revolution that is right at their doorstep and ready to happen ...
  • Posted on: 11/06/2017

    Can Kroger make a name for itself in fashion?

    It's a great aspiration, but it's a ridiculous short-term goal for Kroger. They should start with "baby steps," focusing on more utilitarian products/services, i.e., more aligned with grocery shopping. it's not unreasonable for them to eventually get there -- look at how Amazon has evolved since its days as a low-price bookstore -- but it will take many years to broaden their brand to enable it. And talking about it now seems to diminish their credibility and strategic thought processes.
  • Posted on: 10/03/2017

    Walmart deal shows it’s serious about same-day delivery

    This is an interesting but very risky move by Walmart. It goes against their usual mantra of maximizing efficiency and avoiding unnecessary overhead/complexity. So I'm not saying that it's a bad idea, but it does seem to be inconsistent with the kinds of decisions/investments they tend to make.
  • Posted on: 10/02/2017

    IKEA buys TaskRabbit to give consumers relief with furniture assembly

    Regular readers of this forum know (and often criticize) me for being so negative about retailers. But this is pure brilliance on the part of IKEA. So clever, so sensible and I bet it will be so successful!
  • Posted on: 09/28/2017

    Macy’s counts on new rewards program

    Recipe for a poor loyalty program: start with discounts and push the good stuff (e.g., experiential components and other relationship-enhancing activities) off until next year ...
  • Posted on: 09/18/2017

    Did this startup make a big mistake calling itself Bodega?

    Brilliant move on their part (or pure luck). This is a mundane business: vending machines for businesses -- not very interesting. But this has been priceless PR, which they will take all the way to the bank.
  • Posted on: 09/13/2017

    Survey says grocery has reached its digital tipping point

    From a consumer standpoint, groceries reached the digital tipping point around five years ago. But the grocers themselves are clinging tightly to their old ways, refusing to truly embrace the new reality. With Amazon more directly in the mix now, this won't end well for them.
  • Posted on: 09/11/2017

    Professor says price gouging is simple supply and demand at work

    Idiot economist. The net present value of a customer (or a customer base) is never maximized by price gouging -- the key is to build a profitable relationship that will growing and manifest over time. So when times are tough, you should allocate scarce resources carefully, but not by seeking out the highest bidder. Yes, you should give preferential treatment to some customers over others, but it should be based on *projected lifetime value,* not just the wad of cash they're showing you today. Customer-centric thinking is the right mindset for retailers to understand how and why they should avoid for the temptation to gouge customers, and it's the same mindset that they should use to avoid getting all caught up in Black Friday nonsense that is just starting up for the upcoming holiday season. At first glance, it might seem that these two business settings are unrelated, but think about it -- they're very similar and very dysfunctional. I like to envision an ideal world where retailers "get it," and so they wouldn't even be tempted -- and thus regulators wouldn't even have to think about impacting market mechanisms when supplies are tight. But as long as economists are driving policy decisions, we'll be dealing with this kind of problematic thinking for a long time.

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