Customer churn prediction using machine learning: A study in the B2B subscription based service context
2021 (English)Independent thesis Advanced level (professional degree), 20 credits / 30 HE credits
Student thesis
Abstract [en]
The rapid growth of technological infrastructure has changed the way companies do business. Subscription based services are one of the outcomes of the ongoing digitalization, and with more and more products and services to choose from, customer churning has become a major problem and a threat to all firms. We propose a machine learning based churn prediction model for a subscription based service provider, within the domain of financial administration in the business-to-business (B2B) context. The aim of our study is to contribute knowledge within the field of churn prediction. For the proposed model, we compare two ensemble learners, XGBoost and Random Forest, with a single base learner, Naïve Bayes. The study follows the guidelines of the design science methodology, where we used the machine learning process to iteratively build and evaluate the generated model, using the metrics, accuracy, precision, recall, and F1- score. The data has been collected from a subscription-based service provider, within the financial administration sector. Since the used dataset is imbalanced with a majority of non- churners, we evaluated three different sampling methods, that is, SMOTE, SMOTEENN and RandomUnderSampler, in order to balance the dataset. From the results of our study, we conclude that machine learning is a useful approach for prediction of customer churning. In addition, our results show that ensemble learners perform better than single base learners and that a balanced training dataset is expected to improve the performance of the classifiers.
Place, publisher, year, edition, pages
2021. , p. 49
Keywords [en]
Customer churning, Machine Learning, business-to-business, subscription-based companies.
National Category
Computer Sciences
Identifiers
URN: urn:nbn:se:bth-21872OAI: oai:DiVA.org:bth-21872DiVA, id: diva2:1574424
External cooperation
Fortnox AB
Subject / course
Degree Project in Master of Science in Engineering 30,0 hp
Educational program
IEACI Master of Science in Industrial Management and Engineering
Presentation
2021-05-24, 15:00 (English)
Supervisors
Examiners
2021-06-292021-06-282022-05-12Bibliographically approved