Customer Churn Analysis and Prediction using Machine Learning for a B2B SaaS company

Abstract: This past decade, the majority of services have been digitalized and data more and more available, easy to store and to process in order to understand customers behaviors. In order to be leaders in their proper industries, subscription-based businesses must focus on their Customer Relationship Management and in particular churn management, that is understanding customers cancelling their subscription. In this thesis, churn analysis is performed on real life data from a Software as a Service (SaaS) company selling an advanced cloud-based business phone system, Aircall. This use case has the particularity that the available dataset gathers customers data on a monthly basis and has a very imbalanced distribution of the target: a large majority of customers do not churn. Therefore, several methods are tried in order to diminish the impact of the imbalance while remaining as close as possible to the real world and the temporal framework. These methods include oversampling and undersampling (SMOTE and Tomek's link) and time series cross-validation. Then logistic regression and random forest models are used with an aim to both predict and explain churn.The non-linear method performed better than logistic regression, suggesting the limitation of linear models for our use case. Moreover, mixing oversampling with undersampling gives better performances in terms of precision/recall trade-off. Time series cross-validation also happens to be an efficient method to improve performance of the model. Overall, the resulting model is more useful to explain churn than to predict it. It highlighted some features majorly influencing churn, mostly related to product usage.