TreeLogit Model for Customer Churn Prediction

Abstract

For the purpose of improving the predictive accuracy and interpret ability of churn prediction model, TreeLogit model, which integrates the advantage of AD tree model and logistic regression model, is proposed in this paper to predict customers' churn propensities. Compared with TreeNetreg, a model which won the gold prize in the 2003 mobile customer churn prediction modeling contest (The Duke/NCR Teradata Churn Modeling Tournament) , the overall predictive accuracy of TreeLogit model is not inferior. In fact, the predictive accuracy of TreeLogit is superior to the one of TreeNetreg on two important observation points (i.e. the captured rates in 10% and 50% of the most likely churn groups respectively)