Churn Management in Telecommunications: Hybrid Approach Using Cluster Analysis and Decision Trees
| Autor: | Božidar Jaković, Mirjana Pejić Bach, Jasmina Pivar |
|---|---|
| Rok vydání: | 2021 |
| Předmět: |
Computer science
k-means Decision tree churn telecommunications Market segmentation ddc:330 clustering market segmentation prediction decision trees CHAID Cluster analysis Structure (mathematical logic) business.industry Decision tree learning ComputerSystemsOrganization_COMPUTER-COMMUNICATIONNETWORKS k-means clustering Variable (computer science) HD61 HG1-9999 Risk in industry. Risk management Telecommunications business Finance |
| Zdroj: | Journal of Risk and Financial Management Volume 14 Issue 11 Journal of Risk and Financial Management, Vol 14, Iss 544, p 544 (2021) |
| ISSN: | 1911-8074 |
| DOI: | 10.3390/jrfm14110544 |
| Popis: | The goal of the paper is to present the framework for combining clustering and classification for churn management in telecommunications. Considering the value of market segmentation, we propose a three-stage approach to explain and predict the churn in telecommunications separately for different market segments using cluster analysis and decision trees. In the first stage, a case study churn dataset is prepared for the analysis, consisting of demographics, usage of telecom services, contracts and billing, monetary value, and churn. In the second stage, k-means cluster analysis is used to identify market segments for which chi-square analysis is applied to detect the clusters with the highest churn ratio. In the third stage, the chi-squared automatic interaction detector (CHAID) decision tree algorithm is used to develop classification models to identify churn determinants at the clusters with the highest churn level. The contribution of this paper resides in the development of the structured approach to churn management using clustering and classification, which was tested on the churn dataset with a rich variable structure. The proposed approach is continuous since the results of market segmentation and rules for churn prediction can be fed back to the customer database to improve the efficacy of churn management. |
| Databáze: | OpenAIRE |
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