Analyze the Dataset

27.customer_churn_prediction.csv

Bayes: I'll analyze this customer churn prediction dataset and create a comprehensive plan for the analysis.

Plan

Data Source

customer_churn_prediction

Estimated: 21 min

Data Quality Assessment and Preparation

  • Load dataset, examine structure, handle missing values in contract_type and payment_method, check for duplicates and outliers

Churn Rate and Distribution Analysis

  • Analyze overall churn rate, examine distribution across all features (tenure, charges, usage, support calls, contract type, payment method)

Feature Relationships and Correlations

  • Identify correlations between features, analyze numerical vs categorical feature impacts on churn, create visualizations showing key relationships

Customer Segmentation and Risk Profiling

  • Segment customers by behavior patterns, identify high-risk profiles, analyze support calls impact, compare churned vs retained customer characteristics

Key Drivers and Insights

  • Summarize main churn drivers, provide actionable recommendations for retention, highlight priority customer segments

Comprehensive Report Generation

  • Generate complete report with all findings, visualizations, insights, and business recommendations

Data Quality Assessment and Preparation

Load dataset, examine structure, handle missing values in contract_type and payment_method, check for duplicates and outliers.

Data Quality Assessment and Preparation

Data Cleaning and Preparation

Cleaned Churn Data

Customer_id Tenure_months Monthly_charges Total_usage_gb Support_calls Contract_type Payment_method Churn
CUS1000 29 75.63 386 6 Monthly Credit 1
CUS1001 15 26.03 495 0 Monthly Credit 0
CUS1002 8 33.3 414 0 Two-Year Credit 0
CUS1003 21 37.34 250 1 Monthly Bank Transfer 0
CUS1004 19 43.56 203 1 Annual Credit 1
CUS1005 23 99.67 499 3 Annual Debit 1
CUS1006 11 75.75 122 2 Two-Year Credit 1
CUS1007 11 50.74 250 2 Monthly Credit 1
CUS1008 24 78.97 345 1 Two-Year Credit 1
CUS1009 24 93.22 66 2 Annual Debit 1

Summary of Data Quality Assessment

The dataset has been thoroughly examined and cleaned – it contains 500 customer records with 8 features, had 50 missing values in the payment_method column (10%) which were filled with the most common value "Credit", no duplicates or invalid data, and is now ready for analysis with a notably high churn rate of 86.20%.

Churn Rate and Distribution Analysis

Churn Rate and Distribution Analysis

Key Insights from the Churn Distribution Analysis:

  1. Overall Churn Crisis: 86.2% churn rate (431 customers) vs only 13.8% retention (69 customers) - this is an extremely high churn rate indicating a critical business problem.
  2. Tenure is a Strong Differentiator: Retained customers have significantly longer tenure (median 26 months) compared to churned customers (median 17 months), showing that newer customers are much more likely to leave.
  3. Higher Charges Drive Churn: Churned customers pay higher monthly charges (median $64.13) compared to retained customers (median $38.87), suggesting price sensitivity is a major churn driver.
  4. Usage Patterns are Similar: Total usage GB is nearly identical between churned and retained customers (both around 275-280 GB median), so usage alone doesn't predict churn.
  5. Support Calls Indicate Dissatisfaction: Churned customers make significantly more support calls (median 2 calls) compared to retained customers (median 0 calls), suggesting support issues correlate with churn.
  6. Monthly Contracts are Highest Risk: Monthly contracts have the highest churn rate at 90.6%, followed by Two-Year (84.8%) and Annual (80.7%), indicating contract flexibility increases churn risk.
  7. Payment Method Shows Minor Variation: Bank Transfer has slightly higher churn (89.6%) compared to Credit (84.9%) and Debit (84.8%), but differences are relatively small.
  8. Customer Base Composition: Most customers are on Monthly contracts (233), followed by Annual (155) and Two-Year (112), with Credit being the most common payment method (205).

Feature Relationships and Correlations

Strongest Churn Predictors (in order of importance):

  1. Monthly Charges (r = 0.311) - Positive correlation: Higher charges → Higher churn risk.
  2. Support Calls (r = 0.309) - Positive correlation: More support contacts → Higher churn risk.
  3. Tenure Months (r = -0.278) - Negative correlation: Longer tenure → Lower churn risk.
  4. Total Usage (r = -0.010) - Virtually no correlation: Usage is NOT a churn predictor.

Customer Segmentation and Risk Profiling

Customer Segmentation and Risk Profiling Analysis

Key Drivers and Insights

  1. High-Risk Segments: Premium New and Budget New segments show 100% churn rates.
  2. Critical Risk Group: 30 customers in the critical risk group with high support calls average.
  3. Best Performance Segment: Budget Loyal segment retains 67.9%.

Comprehensive Report Generation

Bayes: I understand. Let me now create a comprehensive summary document for step 4 completion.

Key Churn Drivers and Actionable Recommendations Analysis

Strategic Recommendations & Next Steps

  1. New Customer Experience: Focus on the first 6 months as a critical retention period for new customers.
  2. Price Sensitivity Management: Introduce a value-based pricing strategy to address the churn caused by high monthly charges.
  3. Improved Support Resolution: Implement a first-contact resolution program to manage churn risk associated with support calls.
  4. Replicate Success Factors: Enhance the strategies that worked for the Budget Loyal segment to improve retention for all customers.