Week $8$ Assignment Machine Learning Model Building

K Nearest Neighbors

Background information: Customer Churn Prediction in the Telecom Sector

Customer churn, also known as customer retention, customer turnover, or customer defection, is the loss of clients or customers.

Telephone service companies, Internet service providers, pay TV companies, insurance firms, and alarm monitoring services, often use customer attrition analysis and customer attrition rates as one of their key business metrics because the cost of retaining an existing customer is far less than acquiring a new one. Companies from these sectors often have customer service branches which attempt to win back defecting clients, because recovered long$-$term customers can be worth much more to a company than newly recruited clients.

Companies usually make a distinction between voluntary churn and involuntary churn. Voluntary churn occurs due to a decision by the customer to switch to another company or service provider, involuntary churn occurs due to circumstances such as a customer's relocation to a long$-$term care facility, death, or the relocation to a distant location. In most applications, involuntary reasons for churn are excluded from the analytical models. Analysts tend to concentrate on voluntary churn, because it typically occurs due to factors of the company$-$customer relationship which companies$$ control, such as how billing interactions are handled or how after$-$sales help is provided.