A linear model is a type of analysis that enables a business to test individual variables to determine their impact on their overall sales.
Any given business — especially omnichannel businesses — has multiple factors that drive sales. In the ecommerce space, that’s magnified with social media, paid online ads, organic search traffic, and more guiding consumers into ecommerce websites. A linear model allows a business to test these and other independent variables to determine their impact on a business goal (usually sales).
More specifically, a linear model is a mathematical equation that many analytical systems can run automatically to see how a factor influences a dependent variable, such as sales growth, conversion rates, or newsletter signups.
Linear models are useful for determining where to place marketing spend because they give a business detailed data on what’s driving business success. With this information, the business can adjust strategies that aren’t working, invest more in strategies that are, and better understand the nuances of their sales cycles and channels.