Telecom Customer Retention: Data-Driven
Analysis Project
PROBLEM STATEMENT
This telecommunications company faces a significant customer retention challenge with
1,869 customers churning out of 7,043 total customers, representing a 26.54%
churn rate. The financial impact is substantial, with $2,862,927 in revenue loss from
churned customers, representing 17.8% of the company's total revenue base of $16.1
million.
Key Business Challenges:
High churn rate among month-to-month customers (42.7%)
Revenue leakage from electronic check payment users (45.3% churn)
Service quality issues with fiber optic customers (41.9% churn)
Critical retention issues with new customers (47.7% churn in first 12 months)
PROJECT DESCRIPTION
This project analyzes a comprehensive dataset of 7,043 customer records with 21 key
attributes including customer demographics, service usage, contract details, and
payment information. The dataset spans customers with tenure ranging from 0 to 72
months, with monthly charges from $18.25 to $118.75.
Analytical Approach:
Data Scope: Complete customer portfolio analysis across multiple dimensions
Statistical Methods: Churn rate analysis by customer segments and risk factors
Revenue Impact Assessment: Financial modeling of churn consequences
Predictive Insights: Identification of high-risk customer segments
Key Dataset Characteristics:
Customer tenure: Average 32.4 months, ranging 0-72 months
Revenue range: $18.25-$118.75 monthly charges
Service distribution: 44% fiber optic, 34.4% DSL, 21.7% no internet
Contract mix: 55% month-to-month, 24.1% two-year, 20.9% one-year
WHO ARE THE END USERS?
Customer Success Teams
Primary Focus: 3,875 month-to-month customers with 42.7% churn risk
Immediate Action: 1,869 customers who have already churned require win-back
strategies
Retention Campaigns: Target 2,175 customers with ≤12 months tenure (47.7%
churn risk)
Revenue Operations Teams
Portfolio Protection: Secure $16.1 million total revenue base from further 26.5%
annual churn
Loss Recovery: Address $2.86 million in identified revenue losses
Risk Mitigation: Focus on $12.4 million monthly revenue from high-risk segments
Marketing Teams
Acquisition Strategy: Improve onboarding for 2,175 new customers (≤12 months
tenure)
Retention Campaigns: Target 2,365 electronic check users with 45.3% churn rate
Contract Optimization: Convert 3,875 month-to-month customers to longer terms
Product Teams
Service Quality: Address 41.9% churn rate among 3,096 fiber optic customers
Payment Experience: Optimize systems for 2,365 electronic check users
Feature Development: Enhance services based on churn factor analysis
Executive Leadership
Strategic Planning: Address 26.5% company-wide churn rate impact
Investment Decisions: Allocate resources based on $2.86M revenue loss analysis
Performance Monitoring: Track improvements against current baseline metrics
TECHNOLOGY USED
Data Processing & Analytics
Python/Pandas: Processing 7,043 customer records with 21 attributes
Statistical Analysis: Churn analysis across 3 contract types and 4 payment
methods
Revenue Analytics: $16.1 million portfolio analysis and impact modeling
Segmentation: Customer clustering based on tenure, service type, and payment
behavior
Machine Learning Framework
Feature Engineering: 19 customer attributes (excluding customerID and target
variable)
Classification Models: Predictive modeling for churn probability assessment
Risk Scoring: Customer-level churn risk calculation and ranking
Performance Metrics: Model validation using precision, recall, and ROC analysis
Business Intelligence Tools
Dashboard Development: Interactive visualizations for stakeholder reporting
KPI Tracking: Real-time monitoring of churn rates and revenue impact
Automated Reporting: Scheduled analysis of customer behavior patterns
Integration: CRM and billing system data consolidation
Deployment Infrastructure
Cloud Platform: Scalable processing for real-time churn prediction
API Development: Integration endpoints for operational systems
Monitoring: System performance and model accuracy tracking
Version Control: Model management and deployment pipelines
RESULTS
Dataset Analysis Achievements
Comprehensive Analysis: 7,043 customers analyzed across 21 behavioral and
demographic dimensions
Churn Rate Discovery: 26.54% overall churn with significant segment variations
identified
Revenue Impact Quantification: $2,862,927 revenue loss documented (17.8% of
total revenue)
Risk Segmentation: High-risk customer groups identified and prioritized
Key Risk Factors Identified
Contract Type Impact
Month-to-month: 42.7% churn rate (3,875 customers)
One-year contracts: 11.3% churn rate (1,473 customers)
Two-year contracts: 2.8% churn rate (1,695 customers)
Recommendation: Contract migration could reduce churn by 1,217 customers
Payment Method Analysis
Electronic check: 45.3% churn rate (2,365 customers) - Highest risk
Mailed check: 19.1% churn rate (1,612 customers)
Bank transfer: 16.7% churn rate (1,544 customers)
Credit card: 15.2% churn rate (1,522 customers) - Most stable
Service Type Performance
Fiber optic: 41.9% churn rate (3,096 customers) - Quality concerns
DSL: 19.0% churn rate (2,421 customers) - Stable performance
No internet: 7.4% churn rate (1,526 customers) - Lowest risk
Tenure-Based Insights
0-12 months: 47.7% churn rate (2,175 customers) - Critical onboarding period
13-24 months: 28.7% churn rate (1,024 customers)
25-48 months: 20.4% churn rate (1,594 customers)
49-72 months: 9.5% churn rate (2,239 customers) - Most loyal segment
Business Impact Metrics
High-risk customer segment: 1,303 customers in month-to-month + electronic
check category
Average customer value: $2,280 lifetime value (potential loss per churn)
Monthly revenue at risk: $250,858 from month-to-month customer base
Recovery opportunity: 1,869 churned customers represent $2.86M recovery
potential
Actionable Recommendations
Immediate Actions (0-30 days)
1. Contract Migration Program: Target 3,875 month-to-month customers for
contract upgrades
2. Payment Method Optimization: Incentivize 2,365 electronic check users to
switch payment methods
3. New Customer Onboarding: Enhanced support for 2,175 customers with ≤12
months tenure
Strategic Initiatives (30-90 days)
1. Fiber Optic Service Quality: Address technical issues affecting 3,096 customers
(41.9% churn)
2. Loyalty Programs: Develop retention offers for high-value customer segments
3. Predictive Analytics: Implement real-time churn scoring for proactive intervention
Long-term Impact (90+ days)
1. Revenue Protection: Potential to reduce annual revenue loss from $2.86M to
$1.4M
2. Churn Rate Improvement: Target reduction from 26.5% to 15% through focused
interventions
3. Customer Lifetime Value: Increase average customer value through retention
improvements
ROI Projections
Potential Revenue Recovery: $1.4M annually through targeted retention
programs
Cost Avoidance: $2.86M in prevented future churn through early intervention
Customer Acquisition Savings: Reduced need for new customer acquisition (5-7x
cost difference)
This data-driven analysis provides a comprehensive foundation for implementing
targeted customer retention strategies based on actual customer behavior patterns and
documented business impact.