AI-Based Customer Churn Prediction Model for Business Markets in the USA: Exploring the Use of AI and Machine Learning Technologies in Preventing Customer Churn

Abstract

Understanding consumer churn is pivotal for companies in the USA to develop efficient strategies for consumer retention and reduce its negative effects on revenue and profitability. To start with, understanding client churn entails pinpointing the factors that contribute to it. This research paper delved into the application of machine learning algorithms such as Random Forests and Decision Trees for designing churn prediction models and exploring key factors that churn probabilities. The dataset used in this study was sourced from the prominent UCI repository of machine learning databases, preserved at the University of California, Irvine. This dataset provided extensive information on a total of 3333 clients, facilitating in-depth analysis and insights. Models performance evaluation comprised examining the model's efficiency using a confusion matrix. Random Forest seemed to be a relatively better performing model than Decision Tree for this specific classification task. In particular, Random Forest attained higher accuracy (96.25%), precision (91.49), Recall (83.49%), F-measure (0.87), and Phi coefficient (0.85).  By deploying Random Forest and Decision Tree models, government companies can get an in-depth comprehension of the factors that lead to consumer churn. As a result, this information may enable them to tailor targeted retention strategies and interventions. By effectively retaining consumers, government organizations can maintain a stable customer base, leading to sustained revenue and economic growth.