Understanding Customer Behaviour with Machine Learning (original) (raw)
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Journal of Systems and Information Technology, 2017
Purpose This paper aims to provide a predictive framework of customer churn through six stages for accurate prediction and preventing customer churn in the field of business. Design/methodology/approach The six stages are as follows: first, collection of customer behavioral data and preparation of the data; second, the formation of derived variables and selection of influential variables, using a method of discriminant analysis; third, selection of training and testing data and reviewing their proportion; fourth, the development of prediction models using simple, bagging and boosting versions of supervised machine learning; fifth, comparison of churn prediction models based on different versions of machine-learning methods and selected variables; and sixth, providing appropriate strategies based on the proposed model. Findings According to the results, five variables, the number of items, reception of returned items, the discount, the distribution time and the prize beside the recency, frequency and monetary (RFM) variables (RFMITSDP), were chosen as the best predictor variables. The proposed model with accuracy of 97.92 per cent, in comparison to RFM, had much better performance in churn prediction and among the supervised machine learning methods, artificial neural network (ANN) had the highest accuracy, and decision trees (DT) was the least accurate one. The results show the substantially superiority of boosting versions in prediction compared with simple and bagging models. Research limitations/implications The period of the available data was limited to two years. The research data were limited to only one grocery store whereby it may not be applicable to other industries; therefore, generalizing the results to other business centers should be used with caution. Practical implications Business owners must try to enforce a clear rule to provide a prize for a certain number of purchased items. Of course, the prize can be something other than the purchased item. Business owners must accept the items returned by the customers for any reasons, and the conditions for accepting returned items and the deadline for accepting the returned items must be clearly communicated to the customers. Store owners must consider a discount for a certain amount of purchase from the store. They have to use an exponential rule to increase the discount when the amount of purchase is increased to encourage customers for more purchase. The managers of large stores must try to quickly deliver the ordered items, and they should use equipped and new transporting vehicles and skilled and friendly workforce for delivering the items. It is recommended that the types of services, the rules for prizes, the discount, the rules for accepting the returned items and the method of distributing the items must be prepared and shown in the store for all the customers to see. The special services and reward rules of the store must be communicated to the customers using new media such as social networks. To predict the customer behaviors based on the data, the future researchers should use the boosting method because it increases efficiency and accuracy of prediction. It is recommended that for predicting the customer behaviors, particularly their churning status, the ANN method be used. To extract and select the important and effective variables influencing customer behaviors, the discriminant analysis method can be used which is a very accurate and powerful method for predicting the classes of the customers. Originality/value The current study tries to fill this gap by considering five basic and important variables besides RFM in stores, i.e. prize, discount, accepting returns, delay in distribution and the number of items, so that the business owners can understand the role services such as prizes, discount, distribution and accepting returns play in retraining the customers and preventing them from churning. Another innovation of the current study is the comparison of machine-learning methods with their boosting and bagging versions, especially considering the fact that previous studies do not consider the bagging method. The other reason for the study is the conflicting results regarding the superiority of machine-learning methods in a more accurate prediction of customer behaviors, including churning. For example, some studies introduce ANN (Huang et al., 2010; Hung and Wang, 2004; Keramati et al., 2014; Runge et al., 2014), some introduce support vector machine ( Guo-en and Wei-dong, 2008; Vafeiadis et al., 2015; Yu et al., 2011) and some introduce DT (Freund and Schapire, 1996; Qureshi et al., 2013; Umayaparvathi and Iyakutti, 2012) as the best predictor, confusing the users of the results of these studies regarding the best prediction method. The current study identifies the best prediction method specifically in the field of store businesses for researchers and the owners. Moreover, another innovation of the current study is using…
Customer data prediction and analysis in e-commerce using machine learning
Bulletin of Electrical Engineering and Informatics, 2024
Customer churn is a major challenge faced by e-commerce companies, as it leads to loss of revenue and decreased customer loyalty. In recent years, for predicting and reducing client churn machine learning techniques are powerful tools. This research aims to explore the use of machine learning algorithms for predicting customer churn, annual spending, and product ontime delivery in e-commerce. The study first conducted a comprehensive review of the literature on customer churn in machine learning. The literature showed that customer churn has been predicted successfully using a variety of machine learning algorithms, including support vector machine (SVM), random forest, and decision tree in various industries. To address this gap in the literature, the study conducted an empirical analysis of customer churn in e-commerce using machine learning algorithms. The data were then pre-processed and analyzed utilizing machine learning techniques for prediction. According to the study's findings, machine learning algorithms are effective in predicting customer churn, and product on-time delivery in e-commerce. The best-performing algorithm SVM achieved an accuracy of 83.45% in predicting customer churn and 68.42% for product on-time delivery prediction.
Customer Churn Prediction on E-Commerce Using Machine Learning
International Journal for Research in Applied Science & Engineering Technology (IJRASET), 2023
For E-commerce businesses to produce successful marketing plans and customer retention tactics, client churn vaticination is pivotal. In order to handle the longitudinal timeframes and multiple data variables of B2Ce-commerce consumers' buying habits, the authors of this study present a loss vaticination model that integrates k-means client segmentation with support vector machine (SVM) vaticination. guests are divided into three groups according to the approach, which also defines the main customer groupings. In order to anticipate client development, the study analyses the efficacity of logistic retrogression and SVM vaticination. The findings show that client segmentation greatly increases each indicator's capability to read values, emphasizing the significance of k-means clustering segmentation. also, it's demonstrated that SVM vaticination is more accurate than logistic retrogression vaticination. The conclusions of this study have important ramifications for client relationship operation.
E-Business Churn Prediction Model Using Machine Learning
International Journal of Scientific Research in Computer Science, Engineering and Information Technology, 2023
Businesses need to keep their clients in the present competitive environment in order to remain in the market. To achieve this, they must anticipate customer attrition and take proactive steps to keep clients. In this research, we offer a model for predicting customer churn based on machine learning that can forecast the probability of consumers leaving with accuracy. To anticipate customer turnover, we employ a variety of machine learning techniques, including logistic regression, random forest, and support vector machines. To assess the effectiveness of our methodology, we additionally employ a number of assessment measures. Our findings show that the suggested model works better than the current models and can aid companies in keeping consumers. Keywords : Machine learning, Logistic Regression, Random Forest, and Customer Churn Customer retention, classification, e-business churn forecast, accuracy, precision, recall, F1-score, Log loss, ROC AUC, calibration loss, cost matrix gain
2017
E-Commerce industry, especially the players in Business-to-Consumer (B2C) sector is witnessing immense competition for survival by means of trying to penetrate to the customer base of their peers and at the same time not letting their existing customers to churn. Avoiding customer attrition is critical for these firms as the cost of acquiring new customers are going high with more and more players entering into the market with huge capital investments and new penetration strategies. Identifying potential parting away customers and preventing the churn with quick retention actions is the best solution in this scenario. It is also important to understand that what the customer is trying to achieve by opting for a move out so that personalized win back strategies can be applied. E-Commerce industry always possess huge amount of customer data which include information on searches performed, transactions carried out, periodicity of purchases, reviews contributed, feedback shared, etc. fo...
International Journal of Scientific Research in Computer Science, Engineering and Information Technology, 2022
In current days, the customers are getting more attracted towards the quality of service (QoS) provided by the organizations. However, the current era is evidencing higher competition in providing technologically advanced QoS to the customers. Nevertheless, efficient customer relationship management systems can be advantageous for the organization for gaining more customers, maintaining customer relationships and improve customer retention by adding more profit to the organizational business. Furthermore, the machine learning models such as support vector machine Random Forest algorithms can add more value to the customer retention strategies.
Performance Analysis of Machine Learning Algorithms in Customer Churn Prediction
2018
Customer attrition is termed by several industrialists and e-commerce professionals to recognize the customers, who are about to change their service from the existing company or end their period of subscription. In recent years, companies such as e-commerce, telecommunication and insurance sectors are facing tremendous pressure due to financial disintermediation and marketing and the gradual increase in the competitiveness tends to provide better service with lesser cost. So, early prediction of the behaviour of the clients plays an important role in the real-time market and can help to retain the loyal customers. In this research, a survey on different data mining techniques and machine learning algorithms along with the challenges of customer attrition prediction in the motor insurance sector are depicted. The survey on the application of the various machine learning algorithm for churn prediction is mainly observed in telecommunication sector and Support Vector Machine (SVM), Ar...
Customer Churn Prediction Using Machine Learning
International Journal for Research in Applied Science & Engineering Technology (IJRASET), 2023
Rapid technology growth has affected corporate practices. With more items and services to select from, client churning has become a big challenge and threat to all firms. We offer a machine learning-based churn prediction model for a B2B subscription-based service provider. Our research aims to improve churn prediction. We employed machine learning to iteratively create and evaluate the resulting model using accuracy, precision, recall, and F1-score. The data comes from a financial administration subscription service. Since the given dataset is mostly non-churners, we analyzed SMOTE, SMOTEENN, and Random under Sampler to balance it. Our study shows that machine learning can anticipate client attrition. Ensemble learners perform better than single base learners, and a balanced training dataset should increase classifier performance. I.
Churn Prediction Using Machine Learning and Recommendations Plans for Telecoms
Keeping customers satisfied is truly essential for saying that business is successful especially in the telecom. Many companies experience different techniques that can predict churn rates and help in designing effective plans for customer retention since the cost of acquiring a new customer is much higher than the cost of retaining the existing one. In this paper, three machine learning algorithms have been used to predict churn namely, Naïve Bayes, SVM and decision trees using two benchmark datasets IBM Watson dataset, which consist of 7033 observations, 21 attributes and cell2cell dataset that contains 71,047 observations and 57 attributes. The models' performance has been measured by the area under the curve (AUC) and they scored 0.82, 0.87, 0.77 respectively for IBM dataset and 0.98, 0.99, 0.98 respectively for cell2cell dataset. The proposed models also obtained better accuracy than the previous studies using the same datasets.
2020
Customer acquisition and retention is a key concern for several industries and is particularly acute in fiercely competitive and fast growth businesses. Retaining a loyal customer is far more important than acquiring a new one, thus making customer churn one of the critical concerns for big corporations. Finding factors triggering customer churn is vital to implement necessary remediation to pre-empt and cut back this churn. This research focuses on implementing machine learning (ML) algorithms to identify potential churn customers, categorise them based upon usage patterns, and visualize the analysis results. Results show that Extra Trees Classifier, XGBoosting Algorithm and Support Vector Machine have the best churn modelling performance, particularly for 80:20 dataset distribution with average AUC scores of 0.843, 0.787 and 0.735 respectively and low false negatives. The research demonstrates that ML algorithms can successfully predict potential customer churn and help in devisin...