Predicting user churn on streaming services using recurrent neural networks

University essay from KTH/Skolan för datavetenskap och kommunikation (CSC)

Abstract: Providers of online services have witnessed a rapid growth of their user base in the last few years. The phenomenon has attracted an increasing number of competitors determined on obtaining their own share of the market. In this context, the cost of attracting new customers has increased significantly, raising the importance of retaining existing clients. Therefore, it has become progressively more important for the companies to improve user experience and ensure they keep a larger share of their users active in consuming their product. Companies are thus compelled to build tools that can identify what prompts customers to stay and also identify the users intent on abandoning the service. The focus of this thesis is to address the problem of predicting user abandonment, also known as "churn", and also detecting motives for user retention on data provided by an online streaming service. Classical models like logistic regression and random forests have been used to predict the churn probability of a customer with a fair amount of precision in the past, commonly by aggregating all known information about a user over a time period into a unique data point. On the other hand, recurrent neural networks, especially the long short-term memory (LSTM) variant, have shown impressive results for other domains like speech recognition and video classification, where the data is treated as a sequence instead. This thesis investigates how LSTM models perform for the task of predicting churn compared to standard nonsequential baseline methods when applied to user behavior data of a music streaming service. It was also explored how different aspects of the data, like the distribution between the churning and retaining classes, the size of user event history and feature representation influences the performance of predictive models. The obtained results show that LSTMs has a comparable performance to random forest for churn detection, while being significantly better than logistic regression.  Additionally, a framework for creating a dataset suitable for training predictive models is provided, which can be further explored as to analyze user behavior and to create retention actions that minimize customer abandonment.

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