Name: Sanket Kanase
Company: Codtech IT Solutions
ID: CT08DS324
Domain: Data Analytics
Duration: Dec 2024 - Jan 2025

Customer Churn Analysis

Objective The purpose of this analysis is to investigate the factors influencing customer churn, particularly focusing on payment methods and contract types. By understanding the key drivers behind churn, we can develop strategies to improve customer retention.

Key Insights

• Contract Type & Churn:
  • Customers on month-to-month contracts exhibit the highest churn rate, with 42% likely to churn.
  • In contrast, customers on one-year and two-year contracts have churn rates of 11% and 3%, respectively.
  • Implication: Longer contract periods serve as a strong retention tool, decreasing the likelihood of churn.
• Payment Methods & Churn:
  • Customers paying via electronic checks show the highest churn rate at 45%.
  • Customers using credit cards, bank transfers, or mailed checks have significantly lower churn rates, averaging around 15-18%.
  • Implication: Convenience, security, and trust issues with electronic payments could contribute to higher churn. Encouraging customers to switch to more stable payment methods may reduce churn.
• Churn Rate by Tenure:
  • Customers with less than one year of tenure are the most likely to churn, with a churn rate of 50%.
  • For customers with 1-3 years of tenure, the churn rate decreases to 35%, while those who have been with the company for over three years have a churn rate of just 15%.
  • Implication: Engaging customers early in their journey is critical for retention.
• Churn by Internet Service Type:
  • Customers using Fiber Optic services show a churn rate of 30%, higher than the 20% churn rate for DSL customers.
  • Implication: Increased competition or dissatisfaction with service quality may contribute to higher churn among Fiber Optic users.
• Senior Citizens & Churn:
  • The analysis indicates that senior citizens (aged 65+) have a churn rate of 41%, compared to 26% among non-senior citizens.
  • Implication: Developing targeted retention programs for senior customers may help reduce churn in this demographic.

Visualizations

The analysis includes various bar charts and line graphs that highlight:

• Churn rates by different contract types and payment methods.
• Trends in customer tenure vs. churn rate, emphasizing the need for early-stage customer loyalty programs.

Recommendations

1. Promote Long-Term Contracts:
   • Offer incentives for customers to commit to longer contracts to help reduce churn rates.
2. Address Payment Method Concerns:
   • Implement campaigns to encourage customers to switch from electronic checks to more reliable payment methods.
3. Focus on Early Customer Engagement:
   • Improve customer experience strategies in the first year, where churn rates are the highest.
4. Special Senior Citizen Retention Programs:
   • Create personalized offers or assistance programs tailored to retain senior demographics.

Conclusion

This analysis captures the main patterns and takeaways regarding customer churn. Implementing the recommendations mentioned may significantly improve customer retention and ultimately enhance the business's long-term success.