Churn Modelling

TM 298 – Big Data Analytics

Group 1
CHURNament
OVERVIEW
 Overview
• Churn happens when a
user or customer stops
using a company’s
products or services

Source:
https://www.datascience.com/blog/what-
is-a-churn-analysis-and-why-is-it-valuable-
for-business

Big Data Analytics – Churn Modelling

Types of churn
Contractual Non-contractual

Voluntary Involuntary

Big Data Analytics – Churn Modelling

 Overview

Source: https://www.infographicsarchive.com/business-economics/financial-impact-customer-churn/
Big Data Analytics – Churn Modelling
 Churn Modeling
• used to predict each customer’s likelihood of stopping usage of your
products and/or services.
• application of machines learning and data science used in Customer
Relationship Management (CRM)
• Objective: gaining understanding why customers churn and help
designing a data-driven retention strategy
• Output: a measure of the immediate and future risk of a customer
cancellation

Source:https://www.datascience.com/blog/what-is-a-churn-analysis-and-why-is-it-valuable-for-business

Big Data Analytics – Churn Modelling

How it works?
1. Understand
the business

7. Iterate and 2. Get the

Deploy data

3. Explore
6. Visualize and Prepare
the data

5. Get 4. Enrich the

Predictive data

Big Data Analytics – Churn Modelling

USE CASES
 The PROBABILITY of “Churn”
can be predicted!

➔ Use Various Statistical &

Machine Learning techniques.
◆ Process historical purchase
and behavior data

Source:https://www.datascience.com/blog/what-is-a-churn-analysis-and-why-is-it-valuable-for-business

Big Data Analytics – Churn Modelling

 Common Use Cases

➢ Creating Churn Risk Scores

➢ Predict the probability of Churn
➢ Measure feature impacts on the likelihood of churn
➢ Discounting strategies w/ promotion campaigns
➢ Integrating outputs with internal applications to
provide relevant real-time churn risk information

Source:https://www.datascience.com/blog/what-is-a-churn-analysis-and-why-is-it-valuable-for-business

Big Data Analytics – Churn Modelling

 Use Case: Strengthening Loyalty on Mobile Apps

Source:https://www.dataiku.com/solutions/use-cases/churn-analytics/

Big Data Analytics – Churn Modelling

 Other Examples

Churn for Telecom Providers:

Challenges:
Very high acquisition cost paired with a decreasing ability to lock in
customers.
Typical Use Case:
Anticipating subscription cancellations and proposing specific commercial
actions to poster loyalty.

Source:https://www.dataiku.com/solutions/use-cases/churn-analytics/

Big Data Analytics – Churn Modelling

 Other Examples

Churn for E-commerce Players:

Challenges:
Low conversion rates, increase need for differentiation through
recommendation/personalisation.
Typical Use Case:
Increasing loyalty and client lifetime value by activating personalized
campaigns to “dormant” clients - pushing the right product at the right time
through the right channel.

Source:https://www.dataiku.com/solutions/use-cases/churn-analytics/

Big Data Analytics – Churn Modelling

 Other Examples

Churn for Banking & Insurance Companies:

Challenges:
Very high acquisition costs and increasingly competitive market with fully
data-drive new entrants.
Typical Use Case:
Predicting life events from behavioral data to anticipate structural
changes in the client’s consumption profile that may signal chum or
upsell/cross-sell opportunities.

Source:https://www.dataiku.com/solutions/use-cases/churn-analytics/

Big Data Analytics – Churn Modelling

REAL
WORLD
EXAMPLES
Real Life Examples

Big Data Analytics – Churn Modelling

 Globe Overtook Smart

Lamiel, C. (2018, March 13). Globe vs. PLDT: Which had more subscribers in 2017? Retrieved September 30, 2018, from
https://www.yugatech.com/internet-telecoms/globe-vs-pldt-which-had-more-subscribers-in-2017/#sthash.PVkpkmYr.dpbs#DYxHYtwbptmCvIVg.97

Big Data Analytics – Churn Modelling

 Churn is the culprit

Offering Globe* Smart**

Prepaid 8% 7%

Postpaid 2.6% 5.7%

*TeleGeography. (2017, November 6). Globe Telecom says revenue growth momentum continues; 9M17 turnover reaches record PHP95.1bn. Retrieved September 30, 2018, from
https://www.telegeography.com/products/commsupdate/articles/2017/11/06/globe-telecom-says-revenue-growth-momentum-continues-9m17-turnover-reaches-record-php95-1bn/
**Amojelar, D. G. (2017, January 12). PLDT changes tack as Globe takes lead. Retrieved September 30, 2018, from
http://manilastandard.net/business/226541/pldt-changes-tack-as-globe-takes-lead.html

Big Data Analytics – Churn Modelling

 Use Big Data for Churn Management

Dalinina, R. (n.d.). Building Customer Churn Models for Business. Retrieved September 30, 2018, from https://www.datascience.com/blog/what-is-a-churn-analysis-and-why-is-it-valuable-for-business

Big Data Analytics – Churn Modelling

 Predictive Data Modeling

O. (2018). An Executive’s Guide to Predictive Data Modeling. Retrieved September 30, 2018, from https://www.datascience.com/resources/white-papers/executives-guide-to-predictive-data-modeling

Big Data Analytics – Churn Modelling

ALGORITHM
Algorithms - Logistic Regression
● Machine Learning technique used for binary classification

Big Data Analytics – Churn Modelling

Algorithms - Logistic Regression
● Machine Learning technique used for binary classification

Big Data Analytics – Churn Modelling

Algorithms - Decision Tree
A tree like structure where each
node represents a
feature(attribute), each
link(branch) represents a
decision(rule) and each leaf
represents an
outcome(categorical or
continues value).

Big Data Analytics – Churn Modelling

 Churn Modelling
Ernesto Camus III, Rodgerson Dy, Donna De Guzman, Danica Mendoza