Using a Survival Model to Compute Add-On Selling Equity

Computing add-on selling equity using this approach can be done within the same framework and using most of the same data that were used to compute retention equity using a survival model. The only additional information required is the number of add-on sales offers made each period (n_a-1), the probability of response to each offer (r_a-o), and the sales per offer (s_a-o). These figures will allow you to compute the expected add-on selling sales in each period. Specifically, the expected add-on sales profits equals the number of offers times the probability of response to each offer times the sales per offer (i.e., n_a-o* r_a-o* s_a-o = expected add-on sales ). Table Add-On Sales -2 shows and example of how the add-on selling equity is incorporated into the same retention equity framework that is presented in Table Retention-7. Once the add-on sales are determined they can be added to the sales due to retention. The equity computation then proceeds with steps 9-12 as outlined in the retention equity computation using a survival model.