CMO Confidential

Peter Fader | Wharton School | The Warby Parker Case - I Can See Clearly Now With My CLTV Glasses On

Jan 6, 2025
In a captivating discussion, Dr. Peter Fader, a marketing professor at The Wharton School and co-founder of Zodiac, shares his expertise on customer lifetime value (CLTV). He dives into Warby Parker's journey, illustrating how its steady approach outperformed Peloton's rapid growth amidst market volatility. Fader explains the significance of aligning customer metrics with financial forecasts, debunking the myth that each company is unique. Get insights into how predictive analytics reshape business valuations and the critical importance of strategic customer retention.
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ADVICE

Using CLTV

  • Use customer lifetime value (CLTV) to understand a company's true value.
  • Decompose revenue into customer behaviors like acquisition, retention, and purchase frequency.
INSIGHT

Model Applicability

  • Many companies believe their customer base is unique, rejecting applicable data models.
  • These models are robust and reliable across diverse businesses, emphasizing rules over exceptions.
ANECDOTE

Warby Parker's Valuation

  • Warby Parker's IPO saw an initial surge to $6B, then a drop, contrasting with Fader's $2.5B valuation.
  • Fader's model, based on customer unit economics, proved accurate as Warby's stock stabilized around $22/share.
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