Case Studies in Applying Data Mining for Churn Analysis

Background

Churn, also known as turnover, defection or attrition is the loss of clients or customers. Many domains such as banks, mobile phone companies, internet service providers and supermarkets use churn analysis and churn rates as a key business metric as it has been shown that the cost of retaining an existing customer is less than the cost of acquiring new customers (Wei & Chiu 2002; Hung et al., 2006; Huang et al., 2012). These existing customers tend to purchase more than new customers and it is more efficient to deal with existing customers than dealing with new customers (Fornell & Wernerfelt 1987; 1988; Reichheld & Sasser 1990; Bolton 1998).