Title
Predicting Customer Churn in Telecom Services
Executive Summary
In today’s competitive telecom market, customer attrition is a pressing concern that significantly
affects business sustainability. Retaining loyal customers is far less expensive than constantly
attracting new ones, making churn prediction a strategic necessity. This project focuses on
constructing a machine learning framework to anticipate customer churn and identify key
behavioral drivers behind it.
The study will analyze diverse customer attributes, including service usage, billing details, and
contract preferences, to recognize patterns associated with churn. Data preprocessing,
exploratory data analysis, and classification models such as Logistic Regression, Random Forest,
and XGBoost will be applied to build a reliable prediction system.
The outcomes will not only measure predictive accuracy but also generate actionable insights
into the most influential churn indicators. Such insights can assist telecom firms in introducing
retention initiatives like personalized offers, improved service packages, and loyalty programs.
Therefore, the project helps to show how machine learning can be used into practical strategies
that can improve customer experience and revenue retention.
Objectives and Scope
1. Exploring telecom customer datasets will identify behavioral and financial attributes
impacting churn.
2. To design and implement machine learning models capable of accurately predicting customer
churn.
3. To evaluate model performance and compare predictive strengths of different algorithms.
4. To propose data-driven strategies that telecom providers can use to proactively reduce churn
rates.
1
Methodology
This study will adopt an empirical research approach using secondary data from a publicly
available customer churn dataset. The methodological framework will include:
1. Data Preparation
- Handle anomalies and missing entries.
- Encode categorical data and normalize continuous variables.
2. Exploratory Data Analysis (EDA)
- Visualize churn trends across different customer segments.
- Examine correlations between churn and attributes such as tenure, billing, and contract type.
3. Model Development
- Train supervised learning models including Logistic Regression, Random Forest, and
XGBoost.
- Perform cross-validation to ensure robustness of results.
4. Model Assessment
- Measuring outcomes using Precision, Recall and ROC-AUC.
- Benchmark models to identify the most effective classifier.
5. Feature Analysis
- Derive feature importance to highlight customer groups most at risk.
6. Recommendations
- Translate model insights into retention strategies such as targeted incentives, contract
restructuring, and proactive support.
2
Preliminary Findings & Expected Results
Past research in churn modeling highlights that short-tenure customers, higher billing amounts,
and month-to-month contracts strongly contribute to attrition. Whereas traditional statistical
methods like logistic regression give baseline performance, ensemble models such as Random
Forest and boosting algorithms provides higher predictive accuracy.
This study shows that XGBoost will outperform, thereby achieving an estimated accuracy of
~80% and ROC-AUC close to 0.85. The model is also expected to highlight tenure length,
contract type, and internet service category as primary churn predictors.
The final deliverables will include a high-performing predictive model and practical
recommendations for retention planning. This will enable telecom providers to proactively
manage churn, reduce revenue leakage, and enhance customer loyalty through data-driven
decision-making.
