Customer Churn Analysis in a Telecommunication Industry

(Customer Retention Analysis)

Introduction

Let’s get things started

Do you own a business and wonder why customers keep leaving?

Well let’s find out

Before we get into that, let’s make sure we understand the topic.

Churning?

The word churning has different contextual meaning.

According to Meriamwebster churning means to stir or aggregate violently.

The corporatefinanceinstitute (CFI) defines churning as the practice of executing trades for a customer’s investment account by a broker or brokerage firm for the sole purpose of generating commissions.

An article by productplan defines churning as a measurement of the percentage of accounts that cancel or choose not to renew their subscriptions.

With the rapid development of telecommunication industry, the service providers are inclined more towards expansion of the subscriber base.

To meet the need of surviving in the competitive environment, the retention of existing customers has become a huge challenge.

In a survey done by the Telecom Industry, it was stated that the cost of acquiring a new customer is far more than retaining the existing ones and this tend to pose a decline in the revenue with time.

Customer churn, also called customer attrition, is the number of paying customers who fail to become repeat customers. In this context, churn is a quantifiable rate of change that occurs over a specified amount of time. Refer.

Customers are the most important asset in business. The customers have numerous choices of service providers that they can easily switch a service or even provider. Such customers are called churned customers. The behavior of customers who shift from one service provider to another is known as churn.

This Project..

This is a monthly challenge by the Maven Analytics team on the Customer Churn analysis of a fictional Telecommunication company.

www.mavenanalytics.io

Recommended Analysis

1. How many customers joined the company during the last quarter? How many customers joined?
2. What is the customers profile for a customer that churned, joined and stayed? Are they different?
3. What seems to be the key drivers of customer churn?
4. Is the company losing high value customers? If so, how can they retain them?

Tools used

SQL: For Data transformation.

PowerBI: I utilized the power query function in PowerBI to perform further Data transformation and to create a dashboard.

Data Collection

The dataset can be downloaded here

Data Transformation

• SQL was used for the initial data transformation.
• The dataset was then imported into Microsoft Power BI, specifically using Power Query, to undergo a cleaning process, during which the following steps were performed:

The null values were replaced with a wild card and was filtered out in the visualization tools

Outliers were identified

Added a conditional column to get each categories of the customer status

Added an index column to determine the serial numbers of each customers and used them as customer’s ID

Changed each column to the appropriate data type.

Exploratory Data Analysis

Imported the dataset into PowerBI for visualization and each problem statements were answered using suitable charts and graphs;

1. How many customers joined the company during the last quarter? How many customers joined?

A total of 613 customers joined in the first month, 238 in the second month, 200 in the third month and 176 customers joined in the fourth month of the last quarter.

2. What is the customers profile for a customer that churned, joined and stayed? Are they different?

A total of 4720 customers stayed, 1869 churned and 454 joined the company.

This indicates the a loss in potential customers as the increase in churn and decrease in those joining the company.

3.What seems to be the key drivers of customer churn?

Majority of the customers churned because they got better offers from competitors. Others were not satisfied by the services, team members attitude and price of subscriptions.

4.Is the company losing high value customers? If so, how can they retain them?

From the analysis, it was deduced that the monthly subscribers gained more revenue for the company and thus referred to as the high value customers.

Furthermore monthly subscribers had the highest churn rate, indicating the loss of high value customers.

Recommendation

• Offer better services than competitors.
• Seminar and workshop should be organized for the customer service unit on how to treat clients.
• Always appreciate loyal customers
• Keep in touch with customers via surveys and newsletters.

Dashboard Presentation

Conclusion

Customer churn analysis is important in maximizing market efficiency and minimizing costs because acquiring new clients costs more than retaining existing ones.

Reference

Customer churn analysis in telecom industry

ieeexplore.ieee.org

Thanks for reading!