PREDICTIVE MODELING

CASE STUDY:

CHURN PREDICITIONS

ORGANISATIONS:

TECHNISCHE UNIVERSITAT

MUNCHEN GERMANY

PRESENTED BY

DHANU SUBRAMANI R

720721110009
 WHAT IS CHURN PREDICTIONS?

Churn prediction, also known as

customer attrition prediction, is the process of identifying
customers who are likely to stop using a product or service
in the near future. The aim of churn prediction is to
proactively identify at-risk customers so that companies
can take appropriate actions to retain them. Here's a brief
overview of churn prediction:

1. Data Collection: The first step in churn prediction is to

gather relevant data about customers, including
demographic information, transaction history, usage
patterns, and interactions with the product or service.
2. Feature Engineering: Once the data is collected, relevant
features are engineered or extracted from the raw data.
These features could include metrics such as frequency of
usage, average transaction value, length of time as a
customer, and any other relevant behavioral indicators.
3. Model Training: Various machine learning algorithms,
such as logistic regression, decision trees, random forests,
or neural networks, can be used to train a predictive model
based on historical data. The model learns patterns from
past instances of churn and non-churn to predict future
churn.
4. Model Evaluation: The performance of the trained model
is evaluated using metrics such as accuracy, precision,
recall, and F1-score. Cross-validation techniques may be
employed to ensure the model's generalizability.
5. Prediction: Once the model is trained and evaluated, it
can be deployed to make predictions on new data. For
each customer, the model generates a probability score
indicating the likelihood of churn within a certain time
frame.
6. Actionable Insights: Based on the churn predictions,
companies can develop targeted retention strategies to
prevent customers from leaving. These strategies may
include personalized offers, proactive outreach, improving
product features, or enhancing customer service.
7. Monitoring and Iteration: Churn prediction is an ongoing
process. Companies need to continually monitor model
performance, collect new data, and refine their strategies
based on the evolving needs and behaviors of customers.

Overall, churn prediction helps businesses proactively

manage customer retention by identifying and addressing
potential churn risks before they occur, ultimately
improving customer satisfaction and revenue retention.
 ORGANISATIONS

Churn prediction is a crucial aspect of customer

relationship management in many organizations, including
academic institutions like Technische Universität München
(TUM) in Germany. Churn, also known as customer attrition,
refers to the phenomenon where customers cease their
relationship with a company or institution. Churn prediction
involves analyzing historical data to identify patterns and factors
that indicate when a customer is likely to churn in the future. By
predicting churn, organizations can proactively take measures to
retain customers and mitigate potential revenue loss.
Organizations like TUM can leverage churn prediction for
various purposes:

1. Student Retention: In the case of TUM, predicting churn may

involve anticipating when students are likely to drop out of their
programs. By identifying at-risk students early on, the university
can intervene with support services, counseling, or academic
assistance to improve student retention rates.
2. Research Funding: For academic institutions, maintaining
relationships with funding bodies, donors, and partners is
crucial. Churn prediction can help identify factors that influence
funding organizations to withdraw their support or collaboration,
allowing TUM to take preventive measures to maintain these
relationships.
3. Alumni Engagement: After students graduate, TUM may want
to keep them engaged as alumni for various purposes, including
donations, mentorship programs, or networking opportunities.
 Churn prediction can help anticipate when alumni are becoming
disengaged, allowing TUM to tailor outreach efforts to re-
engage them.
4. Corporate Partnerships: TUM may have partnerships with
corporate entities for research, sponsorship, or recruitment
purposes. Churn prediction can help identify signs that a
corporate partner may be considering terminating or scaling
back the partnership, enabling TUM to address concerns and
maintain fruitful collaborations.

To implement churn prediction,

organizations like TUM would typically
follow these steps:
1. Data Collection: Gather relevant data such as student records,
engagement metrics, survey responses, financial transactions,
and any other relevant information.
2. Data Preprocessing: Clean and preprocess the data to ensure its
quality and prepare it for analysis. This may involve handling
missing values, encoding categorical variables, and scaling
numerical features.
3. Feature Engineering: Extract meaningful features from the
data that can help predict churn. These features could include
demographic information, academic performance, engagement
with university resources, feedback, etc.
4. Model Development: Choose appropriate machine learning
algorithms such as logistic regression, decision trees, random
forests, or neural networks to build predictive models. Train
these models on historical data, using techniques like cross-
validation to evaluate their performance.
5. Model Evaluation and Deployment: Assess the performance
of the trained models using evaluation metrics such as accuracy,
precision, recall, and F1-score. Once satisfied with the model's
performance, deploy it to predict churn in real-time or on new
data.
6. Continuous Monitoring and Improvement: Monitor the
performance of the deployed model over time and update it as
necessary with new data or improved algorithms to ensure its
effectiveness in predicting churn.

By implementing churn prediction, organizations like TUM can

enhance their decision-making processes, improve customer
retention efforts, and ultimately, achieve their organizational
goals more effectively.
THANKING YOU