In the telecom industry, customers are able to choose from multiple service providers and actively switch from one operator to another. In this highly competitive market, the telecommunications industry experiences an average of 15-25% annual churn rate.
Given the fact that it costs 5-10 times more to acquire a new customer than to retain an existing one, customer retention has now become even more important than customer acquisition.
For many incumbent operators, retaining high profitable customers is the number one business goal.To reduce customer churn, telecom companies need to predict which customers are at high risk of churn.
In this project, I have analysed customer-level data of a leading telecom firm and built predictive models to identify customers at high risk of churn and identify the main indicators of churn.
The dataset contains customer-level information for a span of four consecutive months - June, July, August and September. The months are encoded as 6, 7, 8 and 9, respectively.
The business objective is to predict the churn in the last (i.e. the ninth) month using the data (features) from the first three months. To do this task well, understanding the typical customer behaviour during churn will be helpful.