TELECOM CUSTOMER CHURN PREDICTION
Did you know that attracting a new customer costs five times as much as keeping
an existing
1. Introduction
What is Customer Churn?
Customer churn is defined as when customers or subscribers discontinue doing
business with a firm or service. Customers in the telecom industry can choose from a
variety of service providers and actively switch from one to the next. The
telecommunications business has an annual churn rate of 15-25 percent in this highly
competitive market. Individualized customer retention is tough because most firms
have a large number of customers and can't afford to devote much time to each of them.
The costs would be too great, outweighing the additional revenue. However, if a
corporation could forecast which customers are likely to leave ahead of time, it could
focus customer retention efforts only on these "high risk" clients. The ultimate goal is to
expand its coverage area and retrieve more customers loyalty. The core to succeed in
this market lies in the customer itself.
Customer churn is a critical metric because it is much less expensive to retain existing
customers than it is to acquire new customers. To reduce customer churn, telecom
companies need to predict which customers are at high risk of churn. To detect early
signs of potential churn, one must first develop a holistic view of the customers and
their interactions across numerous channels, including store/branch visits, product
purchase histories, customer service calls, Web-based transactions, and social media
interactions, to mention a few. As a result, by addressing churn, these businesses may
not only preserve their market position, but also grow and thrive. More customers they
have in their network, the lower the cost of initiation and the larger the profit. As a
result, the company's key focus for success is reducing client attrition and implementing
effective retention strategy.
Objectives
I will explore the data and try to answer some questions like:
What's the % of Churn Customers and customers that keep in with the active
services?
Is there any patterns in Churn Customers based on the gender?
Is there any patterns/preference in Churn Customers based on the type of
service provided?
What's the most profitable service types?
Which features and services are most profitable?
Many more questions that will arise during the analysis
Business Problem
You are asked to develop a machine learning model that can predict customers
who will leave the company.
You are expected to perform the necessary data analysis and feature engineering
steps before developing the model.
Dataset Story
Telco customer churn contains information about a fictitious telecom company
providing home phone and Internet services to 7043 customers in California in
the third quarter. It includes which customers left, stayed or signed up for
service.
The data set consists of 21 Variables and 7043 Observations.
CustomerId : Customer Id
Gender : Gender
SeniorCitizen : Whether the customer is a senior citizen (1, 0)
Partner : Whether the client has a partner (Yes, No) ? Married or not. Living
together, being roommates
Dependents : Whether the client has dependents (Yes, No) (Child, mother,
father, grandmother)
tenure : Number of months the customer stays with the company
PhoneService : Whether the customer has phone service (Yes, No)
MultipleLines : Whether the customer has more than one line (Yes, No, No
phone service)
InternetService : Customer's internet service provider (DSL, Fiber optic, No)
OnlineSecurity : Whether the customer has online security (Yes, No, No Internet
service)
OnlineBackup : Whether the customer has online backup (Yes, No, No Internet
service)
DeviceProtection : Whether the customer has device protection (Yes, No, No
Internet service)
TechSupport : Whether the customer receives technical support (Yes, No, No
Internet service)
StreamingTV : Whether the customer has streaming TV (Yes, No, no Internet
service) (The customer has a third-party indicates whether the provider uses the
Internet service to broadcast television programs)
StreamingMovies : Whether the customer has streaming movies (Yes, No, No
Internet service) (Customer has a third-party Indicates whether the customer is
using the Internet service to stream movies from the provider)
Contract : Duration of the customer's contract (Month to month, One year, Two
years)
PaperlessBilling : Whether the customer has a paperless bill (Yes, No)
PaymentMethod : Customer's payment method (Electronic check, Postal check,
Bank transfer (automatic), Credit card (automatic)
MonthlyCharges : Amount charged to the customer monthly
TotalCharges : Total amount charged to the customer
Churn : Whether the customer is using or not (Yes or No) - Customers who left in
the last month or quarter.
Each row represents a unique customer. Variables contain information about
customer service, account and demographic data.
Services that customers sign up for => phone, multiple lines, internet, online
security, online backup, device protection, technical support and TV and movie
streaming.
Customer account information => how long they have been a customer, contract,
payment method, paperless billing, monthly fees and total fees.
Demographic information about clients => gender, age range and partners and
dependents whether or not