Churn prediction for SaaS company with machine learning
Purpose – In an era marked by fierce business competition, customer retention is crucial for sustaining profitability. Churn prediction, the ability to forecast customer defections, is essential to enhance retention and can profoundly impact a company’s bottom line. Among prediction techniques, mach...
Saved in:
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Emerald Publishing
2025-06-01
|
| Series: | Innovation & Management Review |
| Subjects: | |
| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/INMR-06-2023-0101/full/pdf |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | Purpose – In an era marked by fierce business competition, customer retention is crucial for sustaining profitability. Churn prediction, the ability to forecast customer defections, is essential to enhance retention and can profoundly impact a company’s bottom line. Among prediction techniques, machine learning techniques have proven to be efficient and reliable. Thus, this research aims to develop a model that effectively predicts customer churn for TecnoSpeed and provides insights into customer behavior. Design/methodology/approach – Through a preprocessing and normalization of data, seven machine learning algorithms were applied. The models were trained, and also cross-validation and parameter tuning techniques were applied to improve results. The study also explores feature performance, providing insights into attributes that influence customer churn, thereby guiding effective strategies. Findings – The results of three algorithms achieved over 90% accuracy, with less than 10% of the errors being part false negatives. We also introduce the Churn Probability Index, a novel metric that aggregates the outputs of multiple predictive models to provide an assessment of high-risk churn. This research is of significant importance as it contributes to the development of effective retention strategies for SaaS companies. Originality/value – By applying machine learning to churn prediction, this study offers valuable insights into the performance and comparative analysis of different algorithms in a real-world SaaS environment. This study stands distinguished by its emphasis on a practical business scenario, enriched by a robust dataset provided and a large set of machine learning techniques. The findings provide practical implications for managers and administrators seeking to optimize customer retention and profitability. |
|---|---|
| ISSN: | 2515-8961 |