Creating the solution outline

A churn predictor or churn detector is a program that takes a dataset containing the customer records, one row per customer, as input. Each row is then fed to the churn prediction algorithm which predicts whether a customer will churn or not.

The churn predictor can simply be used in batch mode to generate outbound emails or calls, or it can be integrated with the inbound interactive channels, such as a website or call center. Once we know that the customer is likely to churn, then we can offer him or her an incentive, such as a special offer, to make him change his or her mind.

We can take a proactive or reactive approach to churn prevention. In the reactive approach, we offer special incentives to the customer when he or she informs us that he would like to terminate the service. This gives us a few weeks' time to retain the customer. The reactive approach is not very relevant for this chapter because, once the customer announces that he or she is planning to...