Many students in Wharton’s MBA Program for Executives know Prof. Peter Fader because of his popular Probability Models elective. He also leads a Global Business Week trip in Finland and Sweden for EMBA students interested in studying customer centricity and predictive analytics. When he’s not teaching, the author of two books about customer centricity is conducting research on areas like the lifetime value of customers and sales forecasting or working at his company, Theta Equity Partners. We recently asked Prof. Fader to tell us more about teaching EMBA students and his ventures.
What do you enjoy about teaching EMBA students?
Fader: I first taught in Wharton’s EMBA Program 30 years ago in the core Marketing course. As the business world has changed, there has been an explosion in demand for knowledge about predictive analytics, so now I teach a fairly technical Probability Models elective. I enjoy teaching EMBA students because they are completely invested in learning. It’s not about the grade, but the insights from class that will lead to better decision-making — and greater profits.
What do you want students to get out of your class?
As arrogant as this sounds, I want students to see the world differently. I want them to understand the drivers of customer behavior. For example, why do people donate to a charity or choose between Uber and Lyft? I want to look at business outcomes, break them down into separate processes, and understand the nature of each one. For example, if I want to forecast a firm’s revenue stream, I break it down into how many customers they will acquire, how long those customers will stay, and how many transactions they will make. That will do a much better job at predicting revenue than a typical ‘top-down’ approach. Many business problems can (and should) be pieced together from bottom-up in a similar manner.
As an entrepreneur, do you bring in your own experience to class?
I’ve launched two startups, and it’s wonderful to talk to EMBA students about them. The first was called Zodiac, which I co-founded with several Wharton alumni to commercialize some of the predictive models from my class. We built an SaaS platform and worked with companies in all types of industries like retail, pharmaceuticals, gaming, and travel services. Our clients gave us transactional log data, and we calculated the lifetime value of each of their customers (and gave advice about how to best leverage it). It was a great validation of my models, and I learned a lot about how to implement them in practice. We sold Zodiac to Nike in 2018.
After that sale, I turned right around and took one of the more interesting customer lifetime value (CLV) cases and launched Theta Equity Partners. We help private equity firms conduct due diligence using the idea of customer-based corporate valuation.
You’ve written two books on customer centricity and created a simulation. What is the simulation about?
There are many simulations where students try to sell as much stuff as possible. This simulation is different because it is a customer centricity simulation. The goal is to grow as profitable a customer base as possible. Students look at what kinds of customers they want to acquire, how much to spend on them, and all of the tradeoffs that customer-centric enterprises face.
How did the Global Business Week in Finland and Sweden come about?
Many firms in the Nordic countries are doing some very interesting things with customer centricity and analytics. I have great admiration for firms like Spotify, H&M, Supercell, and others. I raised the idea of a Global Business Week in this part of the world and was delighted to see such an enthusiastic response from the EMBA students.
Last year, we spent a week in Finland and Sweden talking to companies that are building themselves around their different kinds of customers and using deep behavioral insights to drive the development of new products and services. This is quite different from relying on an R&D department to figure out what to sell, as most U.S. companies operate.
I really enjoyed watching the East and West Coast students learn together and engage with the speakers. They have so much to talk about, and it’s wonderful to see them connect with the companies as well as each other. I’m looking forward to leading the trip again this year.
Posted: June 18, 2019