Predicting Customer Churn for DTH: Building Churn Score Card for DTH

Abstract

Customer churn is when the customers either switch from their incumbent service provider to its competitor or stop using the service altogether. Per existing research, it costs five to six times more to acquire customers than to retain existing customers, and this emphasizes the importance of managing churn by organization. In this paper, we build Churn prediction model for one of India’s largest Direct to Home (DTH) operator, for its customer base. We use data provided by the DTH operator to build the model. Given the varied base of customers, the data was segmented in smaller homogenous chunks, with similar profile and behaviour. To achieve this, we conducted segmentwise analysis to determine the factors that affect churn differently in different segments. This indicated the need to have different models. Analysis showed that age on the network was the key segmentation driver and hence separate models were built for each segment. We further applied various data mining techniques such as logistic regression, random forest and gradient boosting method to build the model for each segment. Gradient boosting method outperformed both logistic regression and random forest on measures of AUC and Gini. The proposed model correctly classifies churn customers between 76 and 78% depending on the segment. The primary drivers of churn across all the segments for DTH are the age of the customer, type of package subscribed, longest delinquency, maximum amount recharged and maximum valid days for which customer has recharged their set up box. The paper also shows that customer experience while interacting with operator and quality of device are equally important attributes.