Customer Behaviour Analysis

for Churn Prediction and

Segmentation
Problem Identification
Increase customer turn over rate by customer behaviour
analysis

Tentative solution
▫ Churn analysis based on history data
▫ Segmentation and behavioral analysis for targeted
approach

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 Approach to Solution
Data Processing
▫ Exploratory data analysis
▫ Data partioning
▫ Feature engineering
Churn prediction
▫ Data sampling for training
and test data
▫ Optomization of accucracy
▫ Confusion matrix
▫ Decision tree
Customer segmentation
▫ Data preprocessing
▫ Elbow method
▫ Clustering through K
means
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1. Data Processing
Exploratory Data Analysis
▫ 1058598 data points
▫ 03 features
▫ Sales date
▫ Sales amount
▫ Customer ID
▫ Data sample for 41 days not enough to run a thorough
analysis therefore optimum results might not be
achieved
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Data Partioning
▫ Data separated in two based on dates
▫ 28 days for training data (4 weeks)
▫ 12 days for test data

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 Feature Engineering
Frequency / Activity Revenue
▫ DoD Flags ▫ Daily revenue
▫ Wow Flags ▫ Weekly revenue
▫ 7 days activity ▫ 7 days revenue
▫ 3 days Activity ▫ 3 days revenue
▫ Growth based on frequency ▫ Growth based on revenue
▫ Bins based on month’s
revenue
*Node to covert date to days was not working with given data due to unavailability of time of transaction in data
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2. Churn Prediction
Conditions for Churn Prediction
▫ Customer vise activity check for all 4 weeks (28 days)
▫ Sales made after 28 days in a month

03 iterations were made to optimize accuracy by

adding more features to prediction model

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 Confusion matrix
Iteration 1

▫ Using following data variables

▫ Day on day flags
▫ Week on Week flags (for 1 month)
▫ Weekly sales distribution in 1 month
▫ Sales generated in 10 days after 1 month
 Confusion matrix
Iteration 2
▫ Using following data variables
▫ Day on day flags
▫ Week on Week flags (for 1 month)
▫ Weekly sales distribution in 1 month
▫ Daily sales record (for 1 month)
▫ Last 3 days and last 7 days (frequency and revenue)
▫ Activity and Sales generated in 10 days after 1
month
 Confusion matrix
Iteration 3
▫ Using following data variables
▫ Day on day flags
▫ Week on Week flags (for 1 month)
▫ Weekly sales distribution in 1 month
▫ Daily sales record (for 1 month)
▫ Last 3 days and last 7 days (frequency and revenue)
▫ Growth analysis (grower / flat / decliner / new user)
▫ Activity and Sales generated in 10 days after 1 month
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3. Customer Segmentation
Data Pre Processing (Revenue)
▫ Original data – 101 features
▫ Keeping revenue based attributes only –8 features
▫ Removing outliers - 8 features
▫ Applying low variance filter – 7 feature
▫ Normalization done for standardization (from 0 to 1)

Customer segmentation processing done on revenue based

features only
Elbow Analysis
▫ The elbow method runs k-means clustering on the
dataset for a range of values for k (say from 1-10) and
then for each value of k computes an average score for
all clusters. By default, the distortion score is
computed, the sum of square distances from each point
to its assigned center.

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Revenue based Customer Segmentation
cluster_0 cluster_1 cluster_2 cluster_3 cluster_4 cluster_5

Sales Month

After Month Sales Sales W1

0.5

Last 3 day Rev Sales W2

Sales W4 Sales W3
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 Description
Clusters Description

Cluster 0 Notable sales in sales in 28 days, high revenue generated after 28 days
Cluster 1 Segment generates high revenue in week 1
Cluster 2 Segment generates high revenue in week 2
Cluster 3 Segment generates high revenue in week 3. creates overall impact in revenue
Cluster 4 Segment generates high revenue in week 4
Cluster 5 Segment generates revenue in last 3 days of the month
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4. WorkFlow Snippets
Data Processing 01

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Data Processing 02

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Churn Prediction Model

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Segmentation Model

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Complete Workflow

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Thanks!
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