Page 28 of Campus Heat

“With many things in life, the tried and tested strategy doesn’t work. In real-life situations, improvise to find a solution. But in order to do that, you need to understand the thing you’re working with. This is one of those cases.”

He leaned back skeptically. Like my methods were alien. “I don’t seem to understand where you’re coming from. So please enlighten me and explain this seemingly simple—yet apparently impossible—theory of yours.”

I moved to the chair next to him so it would be easier for us to work through these things.

“Always start simple. Correlation, for example, just measures whether or not two things move together.”

“I get that,” he said smugly, and I raised a brow.

“I don’t think you do. What you understand is the definition. It’s simple enough after all, but take a moment to really think about it.”

I gave him a moment to absorb the concept completely, but he seemed to have drawn a blank. I tilted my head slightly and admired the view.

“If a team practices more, do they usually win more?” I asked, hoping to nudge him in the right direction.

His mouth twitched despite the fact that he was trying to remain serious. “Are you really making this about football?”

“Of course I am. You should always try to look at things you’re struggling with from the perspective of something you like. It makes it a lot easier.”

He gasped in astonishment. “Okay, yes. More practice usually means more wins.”

I smiled at his reaction. I didn’t know if he was actually starting to understand it or not, but he was definitely trying, which was a lot more than I expected to get out of him.

“Usually,” I repeated, highlighting the word and its importance. “But not always. That ‘usually’ is the correlation. It tells you how strongly practice and wins move together.”

He looked back at his spreadsheet and tapped a highlighted section. “So in this case, advertising would be the practice?”

I smiled. “Yes, and the revenue would be the wins.”

“Can you show me?” Ethan asked sheepishly.

With a smile, I pulled his laptop closer and added the numbers to his spreadsheet. The correlation coefficient came back as a strong 0.82, and his posture shifted so quickly that he nearly fell off his chair.

“That’s good, right?” He asked cautiously.

“That’s very good,” I assured him. “It means that advertising and revenue move together strongly. When ad spend increases, revenue increases too.”

“If that’s the case, why doesn’t management just pour money into advertising?”

“Don’t jump the gun,” I said, nudging his notebook. “Correlation only tells us they’re related, but it doesn’t tell us how much the revenue increased.”

For a moment his shoulders sagged, but then he perked back up and leaned forward. It was as if he was more focused and ready to take on the world.

“That would be regression, right?” he asked.

I gave him a smile. “Now you’re getting the hang of it.”

He pointed at the output summary on the screen. “This is where I keep getting lost. The slope thingy. I don’t understand what it actually means.”

“Okay,” I said, grabbing his pencil and flipping to a clean page in his notebook. “Forget the technical terms. They’re like designed to confuse you.”

In large letters I wrote: Revenue = Base Sales + Impact of Advertising.

“Base sales,” I explained, tapping the word. “Is how much a company would make if it spent no money on advertising.”

“Okay, that makes sense because people would go to the store and still end up buying stuff.”

“Correct. That has to do with their location, brand loyalty, and the habits that people have.”