BACKGROUND & OBJECTIVES
Churn Prediction
Predicting whether a customer will stop using your product or service is an important component of customer behavior analytics.
The cellular telephone industry has always offered a compelling value proposition: convenient, mobile telephone service. The wireless carriers have recently begun to “manage” their customer base. This involves three main areas: Acquisition, Development and Retention. Attention has focused on retention, minimizing the number of customers who defect to another company. These defections are called customer “churn.”As a result, the big challenge these days is to increase customer’ loyalty before subscribers decide to leave and to aim efforts at customers who are at risk of churning. This need for a Proactive Retention Program has made Predictive CRM (Customer Relationship Management) and Churn Modeling the new buzzwords in the cellular sector.
For large companies it becomes very difficult to analyse every cases, one by one, to understand the cause out of that which customer churn/not churn.
But what if we can predict which customer will churn? Statistical Analysis has given us the power to predict the probability of an customer which can churn by virtue of fitting a well selected and accurate model.
This can be an enormously useful information for the company perspective which will allow them to figure out which customer is more likely to churn and thus in advance help them in reducing the risk involved while associating with that customer.
Typical information that is available about customers’ concerns demographics, behavioral data, and revenue information.
At the time of renewing contracts, some customers do and some do not: they churn.
​
It would be extremely useful to know in advance which customers are at risk of churning, as to prevent it ‒
especially in the case of high revenue customers.
Churning has a huge impact on Revenue of a company.
If the company predicts the churn rate of
the customers with high accuracy,
it gives the company a estimate of how its revenues would look like and in turn give it freedom to plan finances ahead.