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1. 1. How To Predict If a Prospect Will Buy With Logistic Regression in Excel http:// blog.excelmasterseries.com /
2. 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. 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. 4. Available Data On Past Prospects
5. 5. Use the Excel Solver To Calculate the Predictive Equation
6. 6. To Solve for the Predictive Equation P(X), You Need To Solve for L (the Logit)
7. 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. 8. As Before Running the Solver, Create the Following Data Columns on a Spread Sheet
9. 9. The Fundamental Basis for Logistic Regression Is Solving For The Above Equation http:// blog.excelmasterseries.com /
10. 10. The Excel Solver finds “Solver Decision Variables” (A, B, and Constant) that maximize the sum of the last column
11. 11. The Solver Dialogue Box http:// blog.excelmasterseries.com /
12. 12. The Solver Finds the Solver Decision Variables (A, B, and Constant) that Optimize the Predictive Equation as Above http:// blog.excelmasterseries.com /
13. 13. You May Have To Adjust the Solver Constraints To Find the Most Accurate Predictive Equation http:// blog.excelmasterseries.com /