Classification methods comparison for customer churn prediction in the telecommunication industry

Abstract

The need for telecommunication services has increased dramatically in schools, offices, entertainment, and other areas. On the other hand, the competition between telecommunication companies is getting tougher. Customer churn is one of the areas that each company gains more competitive advantage. This paper proposes a comparison of several classification methods to make a prediction whether the customers cancel the subscription to a telecommunication service by highlighting key factors of customer churn or not. The comparison is non-trivial due to the urgent requirements from the telecommunication industry to infer the most appropriate techniques in analyzing their customer churn. This comparison is often of huge commercial value. The result shows that Artificial Neural Network (ANN) can predict churn with an accuracy of 79%, Support Vector Machine (SVM) with 78% accuracy, Gaussian Naïve Bayes, and K-Nearest Neighbor (KNN) with 75% accuracy, while Decision Tree with 70% accuracy. Moreover, the technique with the highest F-Measure is Gaussian Naïve Bayes with 65% and the technique with the lowest one is Decision Tree with 49%. Hence, ANN and Gaussian Naïve Bayes are two methods with high recommendation to predict the customer churn in the telecommunication industry.