A Churn Prediction Model Using Random Forest: Analysis of Machine Learning Techniques for Churn Prediction and Factor Identification in Telecom Sector

Abstract

In the telecom sector, a huge volume of data is being generated on a daily basis due to a vast client base. Decision makers and business analysts emphasized that attaining new customers is costlier than retaining the existing ones. Business analysts and customer relationship management (CRM) analyzers need to know the reasons for churn customers, as well as, behavior patterns from the existing churn customers’ data. This paper proposes a churn prediction model that uses classification, as well as, clustering techniques to identify the churn customers and provides the factors behind the churning of customers in the telecom sector. Feature selection is performed by using information gain and correlation attribute ranking filter. The proposed model first classifies churn customers data using classification algorithms, in which the Random Forest (RF) algorithm performed well with 88.63% correctly classified instances. Creating effective retention policies is an essential task of the CRM to prevent churners. After classification, the proposed model segments the churning customer’s data by categorizing the churn customers in groups using cosine similarity to provide group-based retention offers. This paper also identified churn factors that are essential in determining the root causes of churn. By knowing the significant churn factors from customers’ data, CRM can improve productivity, recommend relevant promotions to the group of likely churn customers based on similar behavior patterns, and excessively improve marketing campaigns of the company. The proposed churn prediction model is evaluated using metrics, such as accuracy, precision, recall, f-measure, and receiving operating characteristics (ROC) area. The results reveal that our proposed churn prediction model produced better churn classification using the RF algorithm and customer profiling using <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">k-means</i> clustering. Furthermore, it also provides factors behind the churning of churn customers through the rules generated by using the attribute-selected classifier algorithm.