Evaluation of Telecommunication Customer Churn Classification with SMOTE Using Random Forest and XGBoost Algorithms
Abstract
Competition in the telecommunications industry, particularly among Internet Service Providers (ISPs), significantly influences customer churn, which negatively impacts revenue, profitability, and business sustainability. An effective approach to mitigate churn involves identifying potential churners early, enabling companies to implement strategic retention measures. However, predicting churn can be challenging due to the limited data available on churned customers. This study aims to predict customers likely to terminate or discontinue their subscriptions, focusing on addressing data imbalance using the Synthetic Minority Over-Sampling Technique (SMOTE). The dataset, sourced from Kaggle, comprises 21 attributes and 7,034 entries. The pre-processing phase includes data cleaning, feature encoding, and the implementation of Random Forest and XGBoost algorithms after data balancing with SMOTE. The findings reveal that the XGBoost algorithm achieves a prediction accuracy of 82%, outperforming Random Forest with 81%. Key factors influencing churn include Contract, TotalCharges, and tenure. The study concludes by emphasizing the significance of contract flexibility and the need to prioritize customers with high total costs or extended subscription periods to reduce churn rates. Future research is encouraged to investigate alternative methods for handling data imbalance and to explore advanced machine learning algorithms to further enhance prediction accuracy and the effectiveness of customer retention strategies.
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