PREDICTIVE ANALYTICS

Problem statement:
To identify the churn rate of the company and identify measures to reduce the churn rate.
2. Multi-collinearity:
Collinearity Diagnosticsa
MDimension

Eigenvalu

Condition

Index

V
(Constant)

Account

VMail Message

Day Mins

Length

e
l
1

8.819

1.000

.00

.00

.00

.00

.718

3.504

.00

.00

.99

.00

.126

8.381

.00

.94

.00

.02

.080

10.500

.00

.01

.00

.83

5
1
6

.067

11.486

.00

.00

.00

.05

.061

12.065

.00

.00

.00

.00

.048

13.563

.00

.01

.00

.04

.038

15.160

.00

.00

.00

.00

.037

15.436

.00

.00

.00

.00

10

.006

37.460

1.00

.03

.00

.06

a. Dependent Variable: Churn

Descriptive Statistics
N

Range

Minimum

Maximum

Mean

Std. Deviation

Account Length

3333

242

243

101.06

39.822

VMail Message

3333

51

51

8.10

13.688

Day Mins

3333

350.8

.0

350.8

179.775

54.4674

Eve Mins

3333

363.7

.0

363.7

200.980

50.7138

Night Mins

3333

371.8

23.2

395.0

200.872

50.5738

Intl Mins

3333

20

20

10.24

2.792

Day Calls

3333

165

165

100.44

20.069

Day Charge

3333

59.64

.00

59.64

30.5623

9.25943

Eve Calls

3333

170

170

100.11

19.923

Eve Charge

3333

30.91

.00

30.91

17.0835

4.31067

Night Calls

3333

142

33

175

100.11

19.569

Night Charge

3333

16.73

1.04

17.77

9.0393

2.27587

Intl Charge

3333

5.4

.0

5.4

2.765

.7538

Area Code

3333

102

408

510

437.18

42.371

Valid N (listwise)

3333

Decision tree:
1)CHAID- Cross validation

Classification
Observed

Predicted
0

Percent Correct

2786

64

97.8%

252

231

47.8%

91.1%

8.9%

90.5%

Overall Percentage
Growing Method: CHAID
Dependent Variable: Churn

Risk
Method

Estimate

Std. Error

Resubstitution

.095

.005

Cross-Validation

.101

.005

Growing Method: CHAID

Dependent Variable: Churn

2) CRT-Cross validation

Risk
Method

Estimate

Std. Error

Resubstitution

.092

.005

Cross-Validation

.112

.005

Growing Method: CRT

Dependent Variable: Churn

Classification
Observed

Predicted
0

Percent Correct

2785

65

97.7%

240

243

50.3%

90.8%

9.2%

90.8%

Overall Percentage
Growing Method: CRT
Dependent Variable: Churn

3 CHAID- split validation(60,40) CHAD

Training sample

Test sample

Risk
Sample

Estimate

Std. Error

Training

.092

.006

Test

.101

.008

Growing Method: CHAID

Dependent Variable: Churn

Classification
Sample

Observed

Predicted
0

Training

Percent Correct

1703

29

98.3%

157

131

45.5%

92.1%

7.9%

90.8%

1089

29

97.4%

104

91

46.7%

90.9%

9.1%

89.9%

Overall Percentage

Test

Overall Percentage

Growing Method: CHAID

Dependent Variable: Churn

4 CRT- Split validation( 60,40)

Risk
Sample

Estimate

Std. Error

Training

.104

.007

Test

.111

.009

Growing Method: CRT

Dependent Variable: Churn

Classification
Sample

Observed

Predicted
0

Training

1649

84

95.2%

129

179

58.1%

87.1%

12.9%

89.6%

1057

60

94.6%

83

92

52.6%

88.2%

11.8%

88.9%

Overall Percentage
Growing Method: CRT
Dependent Variable: Churn

5. Split validation(75.25)
CHAID

Percent Correct

Overall Percentage

Test

Risk
Sample

Estimate

Std. Error

Training

.111

.006

Test

.139

.012

Growing Method: CHAID

Dependent Variable: Churn

Classification
Sample

Observed

Predicted
0

Training

2109

62

97.1%

220

139

38.7%

92.1%

7.9%

88.9%

654

25

96.3%

87

37

29.8%

92.3%

7.7%

86.1%

Overall Percentage
Growing Method: CHAID
Dependent Variable: Churn

6CRT

Percent Correct

Overall Percentage

Test

Risk
Sample

Estimate

Std. Error

Training

.105

.006

Test

.112

.011

Growing Method: CRT

Dependent Variable: Churn

Classification
Sample

Observed

Predicted
0

Training

Percent Correct

2009

102

95.2%

158

198

55.6%

87.8%

12.2%

89.5%

699

40

94.6%

57

70

55.1%

87.3%

12.7%

88.8%

Overall Percentage

Test

Overall Percentage
Growing Method: CRT
Dependent Variable: Churn

Regression:

Model Summary
Model

.257

R Square

.066

Adjusted R

Std. Error of the

Square

Estimate
.063

.341

a. Predictors: (Constant), Night Charge, Eve Calls, VMail Message,

Night Calls, Intl Mins, Account Length, Eve Mins, Day Mins, Day Calls