Exploration of customer churn routes using machine learning probabilistic models

Abstract

The ongoing processes of globalization and deregulation are changing the competitive framework in the majority of economic sectors. The appearance of new competitors and technologies entails a sharp increase in competition and a growing preoccupation among service providing companies with creating stronger bonds with customers. Many of these companies are shifting resources away from the goal of capturing new customers and are instead focusing on retaining existing ones. In this context, anticipating the customer¿s intention to abandon, a phenomenon also known as churn, and facilitating the launch of retention-focused actions represent clear elements of competitive advantage. Data mining, as applied to market surveyed information, can provide assistance to churn management processes. In this thesis, we mine real market data for churn analysis, placing a strong emphasis on the applicability and interpretability of the results. Statistical Machine Learning models for simultaneous data clustering and visualization lay the foundations for the analyses, which yield an interpretable segmentation of the surveyed markets. To achieve interpretability, much attention is paid to the intuitive visualization of the experimental results. Given that the modelling techniques under consideration are nonlinear in nature, this represents a non-trivial challenge. Newly developed techniques for data visualization in nonlinear latent models are presented. They are inspired in geographical representation methods and suited to both static and dynamic data representation.