This project aims to analyze customer churn in the telecom industry. The objective is to identify key factors that contribute to customer churn and develop strategies to reduce churn rates.
- Understand the factors that influence customer churn.
- Develop models to predict churn.
- Provide actionable insights to reduce churn and improve customer retention.
The dataset contains customer information and includes the following key columns:
- CustomerID: Unique ID for each customer.
- Contract Type: Type of contract (month-to-month, yearly, or bi-annual).
- Payment Method: Method used for payment (credit card, bank transfer, electronic checks, etc.).
- Tenure: Number of months a customer has stayed with the company.
- Churn: Whether the customer has churned (Yes/No).
- Customers on month-to-month contracts are 42% more likely to churn compared to those on yearly (11%) and bi-annual contracts (3%).
- Implication: Long-term contracts improve customer retention.
- Customers using electronic checks have the highest churn rate of 45%, while those using other payment methods such as credit cards or bank transfers have a churn rate between 15-18%.
- Implication: Issues related to convenience and trust with electronic payments may contribute to higher churn. Encouraging customers to switch to more stable payment methods could reduce churn.
- Customers with less than one year of tenure are the most likely to churn, with a 50% churn rate. This rate decreases to 35% for 1-3 years of tenure and drops to 15% for customers who have been with the company for more than three years.
- Implication: Engaging customers early is essential to reduce churn, especially within the first year.
- Fiber Optic customers have a higher churn rate (30%) compared to DSL customers (20%).
- Implication: Service quality issues or competition may contribute to this difference. Improving customer satisfaction with service speed and reliability could help retain Fiber Optic customers.
- Senior citizens (aged 65+) have a churn rate of 41%, compared to 26% for non-senior citizens.
- Implication: Tailored retention programs for senior customers may help reduce churn in this demographic.
- Bar Charts and Line Graphs: These visualizations illustrate the disparity in churn rates based on contract types, payment methods, and customer tenure.
- Churn by Payment Methods: Customers using electronic checks have a churn rate nearly three times higher than those using more secure payment methods like credit cards.
- Churn by Tenure: Churn decreases as customer tenure increases, highlighting the importance of early customer engagement.
- Promote Long-Term Contracts: Offer incentives for customers to commit to longer contracts to reduce churn.
- Address Payment Method Concerns: Implement campaigns encouraging customers to switch from electronic checks to more reliable payment methods.
- Early Engagement: Focus on improving customer experience within the first year, as churn is highest during this period.
- Special Retention Programs for Senior Citizens: Create personalized offers or assistance programs to retain senior customers.