Simply Salford Blog

Predicting Customer Churn with Gradient Boosting

Posted by Salford Systems on Fri, May 6, 2016 @ 07:00 AM

Customer churn presents a particularly vexing problem for businesses; every company loses clients or customers over time. It's no wonder that companies are pouring money and time into this issue, we've all heard that it's less costly to retain a customer than to attract a new one.   Let's take the wireless telecommunications industry as an example. In 2003, the wireless telecom industry had 20-40% of customers leaving their provider in a given year. As once-explosive subscriber growth rates slowed down, retaining existing customers became increasingly important to a company's overall profitability. Currently, annual churn rates for telecommunications companies average between 10-67%. If the customers who are likely to churn can be identified, the company can target them with retention campaigns, giving them an incentive to stay and preventing loss of revenue.

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Topics: TreeNet, stochastic gradient boosting, gradient boosting machine, customer churn, gradient boosting, Customer attrition