Telecommunications Industry: Analysis on Customer Attrition Prediction and Segmentation

Abstract

Churn prediction is essential for the survival of every business as it allows proactive action planning, whereas customer segmentation is an effective grouping approach commonly used for product marketing and customer relationship management. This paper analyzes the current development of customer attrition prediction and segmentation for the telecommunications (telco) industry, and explores the integration of both approaches that results in an actionable matrix framework for customer retention. This paper consists of four parts: review and analyses on the machine learning techniques used for customer attrition prediction, review and analyses on the machine learning techniques applied for customer segmentation, review on the integration framework, and finally provides discussions for future works. The background and business applications of these approaches are introduced in this paper so businesses can apply the techniques for their business needs. Most importantly, this paper lays out the directions of future works to be done for telco churn management based on the improvements needed form the current state of the art.