Customer churn analysis using feature optimization methods and tree-based classifiers

• Published in: The Journal of services marketing Vol. 39; no. 1; pp. 20 - 35
• Main Authors: Ehsani, Fatemeh, Hosseini, Monireh
• Format: Journal Article
• Language: English
• Published: Santa Barbara Emerald Publishing Limited 02.01.2025; Emerald Group Publishing Limited
• Subjects: Access to information; Banking industry; Behavior; Competition; Customer services; Decision making; Electronic banking; Internet; Marketing; Optimization; Internet banking service marketing; Transaction data; Customer churn; Feature optimization; Tree-based classifiers
• ISSN: 0887-6045; 2054-1651
• DOI: 10.1108/JSM-04-2024-0156

Purpose As internet banking service marketing platforms continue to advance, customers exhibit distinct behaviors. Given the extensive array of options and minimal barriers to switching to competitors, the concept of customer churn behavior has emerged as a subject of considerable debate. This study aims to delineate the scope of feature optimization methods for elucidating customer churn behavior within the context of internet banking service marketing. To achieve this goal, the author aims to predict the attrition and migration of customers who use internet banking services using tree-based classifiers. Design/methodology/approach The author used various feature optimization methods in tree-based classifiers to predict customer churn behavior using transaction data from customers who use internet banking services. First, the authors conducted feature reduction to eliminate ineffective features and project the data set onto a lower-dimensional space. Next, the author used Recursive Feature Elimination with Cross-Validation (RFECV) to extract the most practical features. Then, the author applied feature importance to assign a score to each input feature. Following this, the author selected C5.0 Decision Tree, Random Forest, XGBoost, AdaBoost, CatBoost and LightGBM as the six tree-based classifier structures. Findings This study acclaimed that transaction data is a reliable resource for elucidating customer churn behavior within the context of internet banking service marketing. Experimental findings highlight the operational benefits and enhanced customer retention afforded by implementing feature optimization and leveraging a variety of tree-based classifiers. The results indicate the significance of feature reduction, feature selection and feature importance as the three feature optimization methods in comprehending customer churn prediction. This study demonstrated that feature optimization can improve this prediction by increasing the accuracy and precision of tree-based classifiers and decreasing their error rates. Originality/value This research aims to enhance the understanding of customer behavior on internet banking service platforms by predicting churn intentions. This study demonstrates how feature optimization methods influence customer churn prediction performance. This approach included feature reduction, feature selection and assessing feature importance to optimize transaction data analysis. Additionally, the author performed feature optimization within tree-based classifiers to improve performance. The novelty of this approach lies in combining feature optimization methods with tree-based classifiers to effectively capture and articulate customer churn experience in internet banking service marketing.