Exploring nested ensemble learners using overproduction and choose approach for churn prediction in telecom industry

Propension to customer churn in a financial institution: a machine learning approach

This paper examines churn prediction of customers in the banking sector using a unique customer-level dataset from a large Brazilian bank. Our main contribution is in exploring this rich dataset, which contains prior client behavior traits that enable us to document new insights into the main determinants predicting future client churn. We conduct a horserace of many supervised machine learning algorithms under the same cross-validation and evaluation setup, enabling a fair comparison across algorithms. We find that the random forests technique outperforms decision trees, k-nearest neighbors, elastic net, logistic regression, and support vector machines models in several metrics. Our investigation reveals that customers with a stronger relationship with the institution, who have more products and services, who borrow more from the bank, are less likely to close their checking accounts. Using a back-of-the-envelope estimation, we find that our model has the potential to forecast potential losses of up to 10% of the operating result reported by the largest Brazilian banks in 2019, suggesting the model has a significant economic impact. Our results corroborate the importance of investing in cross-selling and upselling strategies focused on their current customers. These strategies can have positive side effects on customer retention.

An ensemble based approach using a combination of clustering and classification algorithms to enhance customer churn prediction in telecom industry

Mobile communication has become a dominant medium of communication over the past two decades. New technologies and competitors are emerging rapidly and churn prediction has become a great concern for telecom companies. A customer churn prediction model can provide the accurate identification of potential churners so that a retention solution may be provided to them. The proposed churn prediction model is a hybrid model that is based on a combination of clustering and classification algorithms using an ensemble. First, different clustering algorithms (i.e. K-means, K-medoids, X-means and random clustering) were evaluated individually on two churn prediction datasets. Then hybrid models were introduced by combining the clusters with seven different classification algorithms individually and then evaluations were performed using ensembles. The proposed research was evaluated on two different benchmark telecom data sets obtained from GitHub and Bigml platforms. The analysis of results indicated that the proposed model attained the highest prediction accuracy of 94.7% on the GitHub dataset and 92.43% on the Bigml dataset. State of the art comparison was also performed using the proposed model. The proposed model performed significantly better than state of the art churn prediction models.

Churn Management in Telecommunications: Hybrid Approach Using Cluster Analysis and Decision Trees

The goal of the paper is to present the framework for combining clustering and classification for churn management in telecommunications. Considering the value of market segmentation, we propose a three-stage approach to explain and predict the churn in telecommunications separately for different market segments using cluster analysis and decision trees. In the first stage, a case study churn dataset is prepared for the analysis, consisting of demographics, usage of telecom services, contracts and billing, monetary value, and churn. In the second stage, k-means cluster analysis is used to identify market segments for which chi-square analysis is applied to detect the clusters with the highest churn ratio. In the third stage, the chi-squared automatic interaction detector (CHAID) decision tree algorithm is used to develop classification models to identify churn determinants at the clusters with the highest churn level. The contribution of this paper resides in the development of the structured approach to churn management using clustering and classification, which was tested on the churn dataset with a rich variable structure. The proposed approach is continuous since the results of market segmentation and rules for churn prediction can be fed back to the customer database to improve the efficacy of churn management.