Predict if-a-prospect-will-buy-with-logistic-regression-in-excel
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Predict if-a-prospect-will-buy-with-logistic-regression-in-excel

Predict if-a-prospect-will-buy-with-logistic-regression-in-excel

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Predict if-a-prospect-will-buy-with-logistic-regression-in-excel Presentation Transcript

  • 1. How To Predict If a Prospect Will Buy With Logistic Regression in Excel http:// blog.excelmasterseries.com /
  • 2. What Is Logistic Regression? ● Logistic Regression is used to calculate the probability of an event occurring ● Logistic Regression is used when the dependent variable in a regression (Y) is binary (can only be 1 or 0) ● Marketers use Logistic Regression to create quality scores that calculate the probability of a prospect buying http:// blog.excelmasterseries.com /
  • 3. An Example of Marketing Use of Logistic Regression We have historic customer data for the following customer attributes for each past prospect: 1) Whether or not the prospect purchased 2) Prospect’s age and gender http:// blog.excelmasterseries.com /
  • 4. Available Data On Past Prospects
  • 5. Use the Excel Solver To Calculate the Predictive Equation
  • 6. To Solve for the Predictive Equation P(X), You Need To Solve for L (the Logit)
  • 7. You Will Use the Excel Solver to Solve for “Solver Decision Variables” (A, B, and Constant) Which Cause the Predictive Equation P(X) To Be As Accurate As Possible
  • 8. As Before Running the Solver, Create the Following Data Columns on a Spread Sheet
  • 9. The Fundamental Basis for Logistic Regression Is Solving For The Above Equation http:// blog.excelmasterseries.com /
  • 10. The Excel Solver finds “Solver Decision Variables” (A, B, and Constant) that maximize the sum of the last column
  • 11. The Solver Dialogue Box http:// blog.excelmasterseries.com /
  • 12. The Solver Finds the Solver Decision Variables (A, B, and Constant) that Optimize the Predictive Equation as Above http:// blog.excelmasterseries.com /
  • 13. You May Have To Adjust the Solver Constraints To Find the Most Accurate Predictive Equation http:// blog.excelmasterseries.com /
  • 14.