Modelling customer churn for the retail industry in a deep learning based sequential framework
University of Essex（埃塞克斯大学）；Profusion Media Ltd.（Profusion传媒有限公司）；Essex Business School（埃塞克斯商学院）；Friedrich-Alexander University Erlangen-Nuremberg（埃尔朗根-纽伦堡弗里德里希-亚历山大大学）
Juan Pablo Equihua, Henrik Nordmark, Maged Ali, Berthold Lausen
As retailers around the world increase efforts in developing targeted marketing campaigns for different audiences, predicting accurately which customers are most likely to churn ahead of time is crucial for marketing teams in order to increase business profits. This work presents a deep survival framework to predict which customers are at risk of stopping to purchase with retail companies in non-contractual settings. By leveraging the survival model parameters to be learnt by recurrent neural networks, we are able to obtain individual level survival models for purchasing behaviour based only on individual customer behaviour and avoid time-consuming feature engineering processes usually done when training machine learning models.
Customer churn prediction is a valuable task in many industries. In telecommunications it presents great challenges, given the high dimensionality of the data, and how difficult it is to identify underlying frustration signatures, which may represent an important driver regarding future churn behaviour. Here, we propose a novel Bayesian hierarchical joint model that is able to characterise customer profiles based on how many events take place within different television watching journeys, and how long it takes between events. The model drastically reduces the dimensionality of the data from th…
Customer retention campaigns increasingly rely on predictive models to detect potential churners in a vast customer base. From the perspective of machine learning, the task of predicting customer churn can be presented as a binary classification problem. Using data on historic behavior, classification algorithms are built with the purpose of accurately predicting the probability of a customer defecting. The predictive churn models are then commonly selected based on accuracy related performance measures such as the area under the ROC curve (AUC). However, these models are often not well aligne…
Accurately predicting customer churn using large scale time-series data is a common problem facing many business domains. The creation of model features across various time windows for training and testing can be particularly challenging due to temporal issues common to time-series data. In this paper, we will explore the application of extreme gradient boosting (XGBoost) on a customer dataset with a wide-variety of temporal features in order to create a highly-accurate customer churn model. In particular, we describe an effective method for handling temporally sensitive feature engineering. T…
Framed Data Inc（Framed Data 公司）；New York University（纽约大学）；Data Science Institute at Lancaster University（兰卡斯特大学数据科学研究所）
As companies increase their efforts in retaining customers, being able to predict accurately ahead of time, whether a customer will churn in the foreseeable future is an extremely powerful tool for any marketing team. The paper describes in depth the application of Deep Learning in the problem of churn prediction. Using abstract feature vectors, that can generated on any subscription based company's user event logs, the paper proves that through the use of the intrinsic property of Deep Neural Networks (learning secondary features in an unsupervised manner), the complete pipeline can be applie…
True Corporation Public Company Limited（True Corporation 大众有限公司）；King Mongkut's University of Technology Thonburi（吞武里蒙固国王理工大学）；International Business Machines Corporation（国际商业机器公司）
Customer temporal behavioral data was represented as images in order to perform churn prediction by leveraging deep learning architectures prominent in image classification. Supervised learning was performed on labeled data of over 6 million customers using deep convolutional neural networks, which achieved an AUC of 0.743 on the test dataset using no more than 12 temporal features for each customer. Unsupervised learning was conducted using autoencoders to better understand the reasons for customer churn. Images that maximally activate the hidden units of an autoencoder trained with churned c…
With the growing competition in banking industry, banks are required to follow customer retention strategies while they are trying to increase their market share by acquiring new customers. This study compares the performance of six supervised classification techniques to suggest an efficient model to predict customer churn in banking industry, given 10 demographic and personal attributes from 10000 customers of European banks. The effect of feature selection, class imbalance, and outliers will be discussed for ANN and random forest as the two competing models. As shown, unlike random forest, …
Customer churn is a major problem and one of the most important concerns for large companies. Due to the direct effect on the revenues of the companies, especially in the telecom field, companies are seeking to develop means to predict potential customer to churn. Therefore, finding factors that increase customer churn is important to take necessary actions to reduce this churn. The main contribution of our work is to develop a churn prediction model which assists telecom operators to predict customers who are most likely subject to churn. The model developed in this work uses machine learning…
Using big data to analyze consumer behavior can provide effective decision-making tools for preventing customer attrition (churn) in customer relationship management (CRM). Focusing on a CRM dataset with several different categories of factors that impact customer heterogeneity (i.e., usage of self-care service channels, duration of service, and responsiveness to marketing actions), we provide new predictive analytics of customer churn rate based on a machine learning method that enhances the classification of logistic regression by adding a mixed penalty term. The proposed penalized logistic …
In this study, a predictive model using Multi-layer Perceptron of Artificial Neural Network architecture was developed to predict customer churn in a financial institution. Previous researches have used supervised machine learning classifiers such as Logistic Regression, Decision Tree, Support Vector Machine, K-Nearest Neighbors, and Random Forest. These classifiers require human effort to perform feature engineering which leads to over-specified and incomplete feature selection. Therefore, this research developed a model to eliminate manual feature engineering in data preprocessing stage. Fif…
McGill University（麦吉尔大学）；University of Toronto（多伦多大学）；Rubikloud Technologies Inc.（Rubikloud技术公司）
In order to better engage with customers, retailers rely on extensive customer and product databases which allows them to better understand customer behaviour and purchasing patterns. This has long been a challenging task as customer modelling is a multi-faceted, noisy and time-dependent problem. The most common way to tackle this problem is indirectly through task-specific supervised learning prediction problems, with relatively little literature on modelling a customer by directly simulating their future transactions. In this paper we propose a method for generating realistic sequences of ba…
University of California, Davis（加州大学戴维斯分校）；Target Corporation（塔吉特公司）
Facing growing competition from online rivals, the retail industry is increasingly investing in their online shopping platforms to win the high-stake battle of customer' loyalty. User experience is playing an essential role in this competition, and retailers are continuously experimenting and optimizing their user interface for better user experience. The cost of experimentation is dominated by the opportunity cost of providing a suboptimal service to the customers. Through this paper, we demonstrate the effectiveness of opportunistic bandits to make the experiments as inexpensive as possible …
Life assurance companies typically possess a wealth of data covering multiple systems and databases. These data are often used for analyzing the past and for describing the present. Taking account of the past, the future is mostly forecasted by traditional statistical methods. So far, only a few attempts were undertaken to perform estimations by means of machine learning approaches. In this work, the individual contract cancellation behavior of customers within two partial stocks is modeled by the aid of various classification methods. Partial stocks of private pension and endowment policy are…
School of Computing, National College of Ireland（爱尔兰国家学院计算机学院）
The telecommunications industry is highly competitive, which means that the mobile providers need a business intelligence model that can be used to achieve an optimal level of churners, as well as a minimal level of cost in marketing activities. Machine learning applications can be used to provide guidance on marketing strategies. Furthermore, data mining techniques can be used in the process of customer segmentation. The purpose of this paper is to provide a detailed analysis of the C.5 algorithm, within naive Bayesian modelling for the task of segmenting telecommunication customers behaviour…
Fashion preference is a fuzzy concept that depends on customer taste, prevailing norms in fashion product/style, henceforth used interchangeably, and a customer's perception of utility or fashionability, yet fashion e-retail relies on algorithmically generated search and recommendation systems that process structured data and images to best match customer preference. Retailers study tastes solely as a function of what sold vs what did not, and take it to represent customer preference. Such explicit modeling, however, belies the underlying user preference, which is a complicated interplay of pr…
We apply causal machine learning algorithms to assess the causal effect of a marketing intervention, namely a coupon campaign, on the sales of a retailer. Besides assessing the average impacts of different types of coupons, we also investigate the heterogeneity of causal effects across different subgroups of customers, e.g., between clients with relatively high vs. low prior purchases. Finally, we use optimal policy learning to determine (in a data-driven way) which customer groups should be targeted by the coupon campaign in order to maximize the marketing intervention's effectiveness in term…
Uplift models provide a solution to the problem of isolating the marketing effect of a campaign. For customer churn reduction, uplift models are used to identify the customers who are likely to respond positively to a retention activity only if targeted, and to avoid wasting resources on customers that are very likely to switch to another company. We introduce a Qini-based uplift regression model to analyze a large insurance company's retention marketing campaign. Our approach is based on logistic regression models. We show that a Qini-optimized uplift model acts as a regularizing factor for u…
