Ashland MultiComm services

Introduction:

Ashland MultiCommServices want to make as many as possible trial 3-For-All service trial
subscriptions are converted to regular subscriptions. In order to be more efficient, the marketing
department needs to be able to forecast the monthly total of new regular subscriptions.

Our aim is to provide them an efficient model that could help them predicting the number of new
regular subscriptions accurately.

Question 1:

Forecasting by taking the prior three months as the basis for future projections is not relevant and
particularly inaccurate. Indeed, they take a three-month period as the basis for a much broader
period prediction, the sample might be too little to forecast accurate results.

In addition, this method might trigger a problem with of the four assumptions of regression:
independence of errors. Indeed, the independence of errors requires that errors need to be
independent of one another. It is even more important when data are collected over a period of
time. It is the case here. In these situations, the errors in a specific time period are sometimes
correlated with those of the previous time period. That is why this method should not be used to
predict future projections.

Question 2:

Many other factors besides telemarketing hours can be useful in predicting the number of new
subscriptions. We had thought of:

- The evolution of prices, which could be a very useful element in forecasting new
subscriptions. Indeed, if a special offer is made, this could have an influence on the number
of new subscriptions, which will then tend to increase.
- Company strategies on social networks. If the brand promotes its offer on social networks,
the brand's visibility will increase, and the number of subscriptions will also increase. This can
be done through hashtag, challenges or contests aimed at getting the product talked about.
The reaction or not of customers to advertising campaigns on social networks would give an
idea of the new subscriptions.
- Customer satisfaction. By distributing satisfaction questionnaires, for example to measure
the quality of service, the company will be able to predict the number of new subscriptions
because customers are satisfied and will talk about it around them, or unsubscriptions if they
are dissatisfied. The Net Promoter Score could be an interesting indicator for this. It shows
loyalty, customer satisfaction and the probability of recommendation to another customer.
 - The number of subscriptions to competitors could also be a good indicator. Indeed, it would
allow to compare the offer with that of rival companies and forecast the number of
subscriptions consequently.

Question 3:

A)
Thanks’ to the data provided by Mrs. Salvador, we could draw the following scatter plot and its
prediction line.

New Subscriptions Y
7000
6000
f(x) = 4.40795066160568 x − 413.820442313887
5000 R² = 0.861727799685622
4000
3000
2000
1000
0
600 700 800 900 1000 1100 1200 1300 1400 1500 1600

The equation Y = 4408X – 412.82 is the regression model (with Y = The number of new subscriptions
and X = The number of hours spent on telemarketing a month).

It means that, for an increase of one hour of telemarketing, there will be 4408 new subscriptions per
month.

Statistiques de la régression
Coefficient de détermination multiple (multiple R) 0,928292949
Coefficient de détermination R^2 (R square) 0,8617278
Coefficient de détermination R^2 (Adjusted R
square) 0,8554427
Erreur-type (Standard Error) 409,7765913
Observations 24

R² equals to 0,86. This means that 86% in the new subscriptions number can be explained by the
number of hours spent on telemarketing.

Thus, using the number of hours spent on telemarketing to predict the new
subscriptions’ number looks relevant.
B) If we spend 1,200 hours on telemarketing per months
The number of new subscriptions is estimated by the following equation:

Y = -413.8204 + 4.4080 * 1,200

Y = -413.8204 + 5,289.6 = 4,876.79

Thus, there will be 4,876 new subscriptions if the regression model we used is accurate, so the 4
assumptions of regression need to be respected:

- Linearity: In this sample, when we draw a scatter plot, the hypothesis of linearity seems to
be respected as the values of Y depending on X do not differ too much from the tendency
curve. Then, the linearity assumption is respected.

X = The number of hours spent on telemarketing (independent variable)

Y = The number of new subscriptions (dependent variable)

7000
New Subscriptions Y
6000
f(x) = 4.40795066160568 x − 413.820442313887
5000 R² = 0.861727799685622
4000
3000
2000
1000
0
600 700 800 900 1000 1100 1200 1300 1400 1500 1600

- Independence of errors: On the scatterplot of “residuals versus fits” below, we can see that
most of the values are around 0, except 2 little exceptions. So, there is no relationship
between Y and the errors. Thus, the independence of errors assumption is verified.

Hours X Graphique des résidus

1500
1000
Résidus

500
0
-500600 700 f(x) 800
= − 1.15443439534398E-15
900 1000 1100 x 1200
+ 1.83384274857446E-12
1300 1400 1500 1600
R² = 1.11022302462516E-16
-1000
Hours X
 - Normality: On the normal probability plot below, we can see that it looks linear, so the
assumption of normality is verified.

Normal probability plot

10000
5000
0
0 20 40 60 80 100 120
Centile

- Equal variance: By having a look at the graph of independence of errors, we can see that this
condition is respected, the plot does not show a pattern like a megaphone shape. Then, the
equal variance condition is respected.

Mini conclusion: Thus, the estimation number we done must be accurate.

C)

Conclusion:

Thus, according to our results, the statistical model used is relevant because it allows to give accurate
forecasts of the number of subscriptions as a function of the number of telemarketing hours: we
demonstrated that there is a powerful link between both as 86% in the new subscriptions number
can be explained by the number of hours spent on telemarking. Obviously, these conclusions are
valid as long as we avoid extrapolation and do not go beyond the limits of the sample.

These results will enable the company to respond to this demand, adapt its offer and better
envisage the future.