2022 IEEE International Conference on Big Data and Smart Computing (BigComp)

Comparative Methods for Personalized Customer

Churn Prediction with Sequential Data
Ahmet Tuğrul Bayrak Güven Yücetürk Musa Berat Bahadır
Data Science and Innovation Data Science and Innovation Data Science and Innovation
2022 IEEE International Conference on Big Data and Smart Computing (BigComp) | 978-1-6654-2197-3/22/$31.00 ©2022 IEEE | DOI: 10.1109/BIGCOMP54360.2022.00050

Ata Technology Platforms Ata Technology Platforms Ata Technology Platforms

İstanbul, Turkey İstanbul, Turkey İstanbul, Turkey
tugrulb@atp.com.tr guveny@atp.com.tr musab@atp.com.tr

Sare Melek Yalçınkaya Melike Demirdağ İsmail Utku Sayan

Data Science and Innovation Data Science and Innovation Data Science and Innovation
Ata Technology Platforms Ata Technology Platforms Ata Technology Platforms
İstanbul, Turkey İstanbul, Turkey İstanbul, Turkey
sarey@atp.com.tr meliked@atp.com.tr utkus@atp.com.tr

Abstract—Competition in the business environment has been
increasing with the developed technology. There are various
alternative service providers for customers. Those providers
would like to retain their current customers. To reach that goal,
churn prediction is a convenient method. However, predicting
churning customers is not a trivial task. It is more demanding
for some sectors like fast-food, since there can be numerous
reasons when a customer stops having services. In this study, the
challenging situation of customer churn in the fast-food industry
is analyzed, and a fast-food chain’s data is used. The data is
formed sequentially accordingly with customers’ personal churn
periods. Several recurrent neural network models such as gated
recurrent units and long short-term memory are built using
the sequential data to predict the churn stages of customers,
and they are compared with the other standard classification
methods. Apart from recurrent neural network models, a hybrid
model consisting of a convolutional network and long short-term
memory is applied.
Index Terms—churn analysis, sequential data, deep learning,
recurrent neural network, convolutional neural network
I. I NTRODUCTION
With the developing technology, business competition has
increased dramatically. Nowadays, there are many companies
and their alternatives that offer similar services for customers.
Therefore, when the customers are not satisfied with the
service or find more suitable products, they may turn to other
options. For this reason, companies would like to retain their
customers, and churn analysis has become more crucial than
ever [1]. Even a modest increase in churn rate might reduce a
company’s ability to grow. The analysis has an essential role
in business-driven data analytics [2]. Thanks to churn analysis,
companies can predict which customers they will lose before
losing the customers. As a result, it is possible to examine the
cause of customer dissatisfaction and prevent the loss of these
customers [3].
Churn analysis is critical to the fast-food industry, where
competition is extremely high. The analysis is considerably
difficult with this industry, as people’s habits can change
independently of the service they receive. Besides the tra-
ditional, rule-based methods, numerous advanced prediction
models have been conducted on customer churn analysis. Xi
et al. build a recurrent neural network (RNN) using customer
behavior as part of customer churn prediction. They also
treat the problem as a regression problem [4]. Alternatively,
Adwan et al. estimate churning customers via multilayer
perceptron (MLP) with backpropagation, using data from a
telecommunications company. [5]. Similarly, Ullah et al. work
on telecom data and use the random forests (RF) method then
compare it with other classification algorithms [6], whereas
Coussement and Van den Poel implement an SVM model
to predict customer churns [7]. Wei et al. also use telecom
data [8]. Using sequential data with long short-term memory
(LSTM) is another popular approach to churn analysis [9].
Çelik and Osmanoğlu, on the other hand, develop customer
churn models using data from different sectors and compare
them [10]. As a different approach, Bose and Chen build a
model where unsupervised clustering and supervised models
are applied as hybrid [11]. Tama et al. address the problem as a
classification problem and use data from the fast-food industry.
They calculate the customer satisfaction and probability of
customer churn by using decision tree and artificial neural
network models [12]. Similarly, Bayrak and Bahadir work
on fast-food chain data. They apply LSTM on sequential
data [13]–[15]. Whereas, Migueis et al. create a sequence
model using the Markov method and compare this model with
other models [16]. As a different domain, Günther works on
insurance data to build a churn model [17]. Burez et al. study
class imbalances in customer churn prediction. Results of the
study indicate that under-sampling might lead to improved
prediction accuracy [18].
In this study, we use a dataset that contains transactional
data from a fast-food chain. The transaction data is formed
as sequential data to be able to catch the patterns. Instead
of a rule-based model, we use RNN methods such as gated

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DOI 10.1109/BigComp54360.2022.00050

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Fig. 1: Average-order-day histogram of all customers
recurrent unit (GRU), LSTM, bi-directional long short-term
memory (BI-LSTM), and a combined model of LSMT and
convolutional neural networks (CNN) and compare them with
the traditional ones.
II. M ETHOD
A. Data
The data used for the study consists of sales records of a
fast-food chain. The data does not include any demographic
information of customers and contains 69582643 transaction
records. The data is grouped customer-wise, and 12755590
rows are created. The features used for the study are sales id,
customer id, sales date and quantity. To increment the ap-
plicability of the method, the properties are kept as basic as
possible. To remove the outlier values on some orders, Z-score
is conducted. After the Z-score is applied, 102439 rows are
eliminated. Therefore, the data becomes more consistent.
B. Definition of Customer Churn
As stated earlier, when customers leave a service after a
while, they become churn. For the customers to be churned,
they have to be regular customers in the first place. Otherwise,
it might not be possible to detect a pattern. The rule of being
a regular customer may vary in different sectors. However, the
general rule is to have a specific number of orders and not have
orders in a period of time. In the study, the minimum limit
to be considered as a regular customer is to have at least five
sequential orders in their average-order-day frequency, which
is the mean of the day differences between orders. Other-
wise, they are not considered as regular customers and are
eliminated. The average-order-day frequency for all customers
(for both regular or non-regular) can be observed in Figure
1a. After the non-regular customers are eliminated, 205728
regular customers remain. The average-order-day frequency
is calculated individually for each regular customer, and the
average of all the customers is 60.209 (Figure 1b). To measure
that value, the day differences between orders are found. Then,
the values as far as the standard deviation from the mean are
eliminated. The remaining maximum value is assigned as the
average-order-day frequency for each customer.
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TABLE I: PATTERN SAMPLES
Regular order
Samples Customer pattern
frequency
[9, 3, 7, 5, 6, 19, 12, 10, 15, 2, 5, 7, 3] 15 110111001110
[111, 13, 9, 4, 0, 21, 1, 10, 6, 3, 19, 19] 21 110111101111
[2, 2, 7, 4, 11, 49, 27, 16, 1, 141, 55, 30] 55 111111111110
Fig. 2: An example pattern of a multiple-time churn
After that process, a customer’s regularity pattern is created
by checking if they have an order in their average-order-day
frequency. If the day difference between the two successive or-
ders is less than a customer’s average-order-day frequency, the
customer pattern has the value ”1”, otherwise ”0”. Therefore,
for n+1 orders the pattern consists of n values. An example
regularity pattern for different order frequencies can be viewed
in Table I. Another example for a customer having churned can
be viewed in Figure 2. The customer has 24 orders and a 30-
day average-order-day frequency with two regularity periods
between orders 1-9 and 13-24.
A customer can churn several times, which occurs after a
regularity period. In the figure mentioned, the row Customer
Pattern shows that the customer has two regularity periods
greater than the threshold value of five and has churned two
times accordingly. Since the customer order pattern is binary,
the formulization and data structure can be applied to all the
customers.
C. Preparing the Training Data
In the study, the different stages of a churning process
are labeled as shown in Figure 3. Phase 03 corresponds to
a customer’s last order in a churn, that is, in a regularity
period. Similarly, Phase 01 indicates that the customer is away
from the churning process, with Phase 02, the customer is in
the middle of the churning process. Each stage includes the
previous one cumulatively. Since a customer can churn more
than once, previous churn profiles of customers are labeled
separately with the time stamp. By this, the data is augmented,
and the models are trained with the augmented data using not
just the present profile of a customer but for each profile when
a customer churns. After calculating the features of a customer
for different churn profiles, the data is labeled. The labels are
{1, 2, 3} where the values represent different churn stages.
The label values also correspond to phase numbers where the
value ”3” means that a customer has churned. While labeling
 Fig. 3: Sample phase structure

TABLE II: MODEL FEATURES

Feature Explanation
max amount maximum amount spent for an order
min amount minimum amount spent for an order Fig. 5: Sequential input structure
avg amount average amount spent for an order
max day diff maximum day difference between orders
min day diff minimum day difference between orders
avg day diff average day difference between orders
days since previous days since the previous order
number of orders total number of orders learning tasks. LSTM and CNN are complementary in their
number of churns total number of being churned modeling capabilities, as LSTM is good at temporal modeling,
whereas CNN is good at reducing frequency variations. They
can be combined into one unified model. The CNN-LSTM
the data, previous phases of churn profiles are calculated by architecture includes using CNN layers for feature extraction
shifting to three previous orders to avoid the labels from being on input data combined with LSTMs for sequence prediction
too similar as in Figure 3. [20]. A CNN-LSTM model can be defined by adding CNN
layers first, followed by LSTM layers with a dense layer. The
D. Non-sequential Models pipeline of the model is displayed in Table III. The architecture
For the study, commonly used non-sequential classification can be considered two different models, CNN is for feature
methods are built as baseline [19]. The models built are extraction, and LSTM is for rendering the features in time
decision tree (DT), RF, k-nearest neighbors (KNN), logistic steps.
regression (LR), support vector classifier (SVC), and MLP. The labelling of the training data is similar with the data
While labeling the data, three different labels are applied used in traditional models. In Figure 4, Phase 01, Phase 02
whenever a customer has churned, even in the past. ”3” is near and Phase 03 are shown as labels indicating the churn status.
to churn, ”1” is far away from being churned, and ”2” is in the Since each phase here consists of sequential data, these phases
middle of the churning process. The labeling is executed as can be expressed sequentially. To create a sequential model,
displayed in Figure 3; therefore, the phase numbers correspond the data is transformed into the structure in Figure 5. In the
to the labels. Besides, the features in the training set are shown figure, c represents the customer, r represents the regularity
in Table II. period of the customer, p represents the phase value, and s
represents the rank value. For each phase, the current profile
E. Sequential Models and 2 previous profiles (Phase 03 - Seuence 03, Phase 03 -
As it is mentioned earlier, the transactional data is formed Seuence 02, Phase 03 - Sequence 01 etc.) are calculated and
sequentially in Figure 5. Several RNN models are built for the stored as an array form shown in Figure 5. c05 r02 p03 s03
study, such as LSTM, BI-LSTM, and GRU. Apart from these is the third sequence value of the third phase of the second
models, a CNN-LSTM model is built as well. Both LSTM regularity period of the fifth customer. c05 r02 p03 s03 also
and CNN have shown improvements over a wide variety of corresponds to the first line in Figure 4. Similar structure
is applied for all required reference for all customers and
calculated with attributes in Table II.

III. E XPERIMENTS
The experiments for the models are executed in Python
programming language using Sklearn and Keras libraries. The
number of data for each label is 212453, and the labeled data
set contains 637359 rows. The 10% of the data is separated
as the test set. After separating the test set, the train set
includes 573623 rows. The parameters used in the models
can be viewed in Table IV. For the non-sequential models,
10-fold cross-validation is executed during the training. For
Fig. 4: Phases and sequences
the parameter tuning, grid-search is applied. The layers for
CNN-LSTM models is available in Table III.

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 TABLE III: CNN-LSTM LAYER DETAILS before or after a churn period. Apart from that, the permitted
customer demographic data can also be added to the feature
Layers Parameters set.
Conv1D filters=32, kernel size=3, activation=’relu’
MaxPooling1D pool size=2
hidden nodes=100, dropout=0.1 R EFERENCES
LSTM
activation=’sigmoid’, optimizer=’adam’
Dense units=3, activation=’sigmoid’
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