Churn perdiction in the telecom business

Abstract

Telecommunication companies are acknowledging the existing connection between customer satisfaction and company revenues. Customer churn in telecom refers to a customer that ceases his relationship with a company. Churn prediction in telecom has recently gained substantial interest of stakeholders, who noticed that retaining a customer is substantially cheaper that gaining a new one. This research compares six approaches using different algorithms that identify the clients who are closer to abandon their telecom provider. Those algorithms are: KNN, Naive Bayes, C4.5, Random Forest, Ada Boost and ANN. The use of real data provided by We Do technologies extended the refinement time necessary, but ensured that the developed algorithm and model can be applied to real world situations. The models are evaluated according to three criteria: are under curve, sensitivity and specificity, with special weight to the first two criteria. The Random Forest algorithm proved to be the most adequate in all the test cases.