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Churn Analysis of a Telecom Company

Aman Preet
Aman Preet Last Updated : 15 Mar, 2022
7 min read

This article was published as a part of the Data Science Blogathon.

Overview

In this article, we will be working on the telecom churn analysis and here we will be doing a complete EDA process to determine if the customer from that particular telecom industry will leave that telecom service or not meanwhile we will draw some insights from data visualization and analysis so that we could get the factors which will affect the output i.e. churn of the customer.

 

Churn analysis
Image Source: Kaggle

Dataset Info

The dataset is the sample dataset if we know the difference between the sample and the population dataset then we may know that sample is drawn randomly from the population and this sample dataset has the customers who have left the telecom company.

Import the required libraries

import numpy as np 
import pandas as pd 
import seaborn as sns 
import matplotlib.ticker as mtick  
import matplotlib.pyplot as plt
%matplotlib inline

Load the data file

telecom = pd.read_csv('WA_Fn-UseC_-Telco-Customer-Churn.csv')

Now while using the head function we can see that beginning records.

telecom.head()

Output:

 

Output 1
Output 2 | Churn analysis

From the shape attribute, we can see the shape of the data i.e number of records and number of columns in the dataset like (1200,13) so that particular dataset will have 1200 rows and 13 columns.

telecom.shape

Output:

(7043, 21)

Now let’s see the columns in our dataset.

telecom.columns.values

Output:

array(['customerID', 'gender', 'SeniorCitizen', 'Partner', 'Dependents',
       'tenure', 'PhoneService', 'MultipleLines', 'InternetService',
       'OnlineSecurity', 'OnlineBackup', 'DeviceProtection',
       'TechSupport', 'StreamingTV', 'StreamingMovies', 'Contract',
       'PaperlessBilling', 'PaymentMethod', 'MonthlyCharges',
       'TotalCharges', 'Churn'], dtype=object)

Here we will be checking what type of data our dataset holds.

telecom.dtypes

Output:

 

Output 3 | Churn analysis

Now let’s see the statistics part of our data i.e. mean, standard deviation, and so on.

telecom.describe()

Output:

 

Output 4 | Churn analysis

Inference:

  • Senior citizen is actually categorical hence the 25%-50%-75% distribution is not proper
  • We can also conclude that 75% of people have tenure.
  • Average Monthly charges are USD 64.76 whereas 25% of customers pay more than USD 89.85 per month
telecom['Churn'].value_counts().plot(kind='barh', figsize=(8, 6))
plt.xlabel("Count", labelpad=14)
plt.ylabel("Target Variable", labelpad=14)
plt.title("Count of TARGET Variable per category", y=1.02)

Output:

 

Target Variable | Churn analysis
100*telecom['Churn'].value_counts()/len(telecom['Churn'])

Output:

No     73.463013
Yes    26.536987
Name: Churn, dtype: float64

Let’s see the value count of our target variable

telecom['Churn'].value_counts()

Output:

No     5174
Yes    1869
Name: Churn, dtype: int64

Inference: From the above analysis we can conclude that.

  • In the above output, we can see that our dataset is not balanced at all i.e. Yes is 27 around and No is 73 around
  • So we analyze the data with other features while taking the target values separately to get some insights.

This code will return us valid and valuable information about the dataset also we can see that the verbose mode is on so it will give all the hidden information also.

telecom.info(verbose = True)

Output:

 

Churn analysis
missing = pd.DataFrame((telecom.isnull().sum())*100/telecom.shape[0]).reset_index()
plt.figure(figsize=(16,5))
ax = sns.pointplot('index',0,data=missing)
plt.xticks(rotation =90,fontsize =7)
plt.title("Percentage of Missing values")
plt.ylabel("PERCENTAGE")
plt.show()

Output:

 

Percentage of missing value

Missing Data – Initial Intuition

Here, we don’t have any missing data.

General Thumb Rules:

  • When we see a lot of outliers in the dataset then don’t really use mean because if the dataset has lots of outliers then we would be in the situation where the regression analysis will have drastic changes.
  • And if we get features that have a high number of missing values then it’s better to drop them.
  • As there’s no thumb rule on what criteria do we delete the columns with a high number of missing values, still one can delete the columns, if you have more than 30-40% of missing values.

Data Cleaning

1. Here we will be copying the telecom data to preprocess it further.

telco_data = telecom.copy()

2. Total Charges should be numeric amounts. So it’s better to convert them to numeral types.

telco_data.TotalCharges = pd.to_numeric(telco_data.TotalCharges, errors='coerce')
telco_data.isnull().sum()

Output:

 

Data Cleaning

3. Here we can see that there are a lot of missing values in the Total charges column.

telco_data.loc[telco_data ['TotalCharges'].isnull() == True]

Output:

 

Output 6 | Churn analysis
Churn analysis

4. Missing Value Treatment

Since the % of these records compared to a total dataset is very low ie 0.15%, it is safe to ignore them from further processing.

Removing missing values

telco_data.dropna(how = 'any', inplace = True)
#telco_data.fillna(0)

5. Now we will be dividing the persons e.g. for tenure < 12 months: assign a tenure group of 1-12, for tenure between 1 to 2 Yrs, tenure group of 13-24; so on.

Get the max tenure

print(telco_data['tenure'].max())

Output:

72

Here we will try to group the tenures

telco_data['tenure_group'].value_counts()

Output:

1 - 12     2175
61 - 72    1407
13 - 24    1024
49 - 60     832
25 - 36     832
37 - 48     762
Name: tenure_group, dtype: int64

6. Remove columns not required for processing

Drop column customerID and tenure

telco_data.drop(columns= ['customerID','tenure'], axis=1, inplace=True)
telco_data.head()

Output:

 

Missing value | Churn analysis
Missing value treatment

Data Exploration

Univariate Analysis

for i, predictor in enumerate(telco_data.drop(columns=['Churn', 'TotalCharges', 'MonthlyCharges'])):
    plt.figure(i)
    sns.countplot(data=telco_data, x=predictor, hue='Churn')

Output:

Data Exploration
Output | Churn analysis
output for partner | Churn analysis
output for dependents
Phoneservice | Churn analysis
Multiple lines | Churn analysis
Paperless Billing | Churn analysis
Churn analysis
Tenure Group

 

2. Here as we know we can’t have character values for our ML model so hence we should convert it into binary numerical values i.e. Yes=1; No = 0

telco_data['Churn'] = np.where(telco_data.Churn == 'Yes',1,0)
telco_data.head()

Output:

 

Churn analysis
Output | Churn analysis

3. Now we have to convert the categorical data into dummy variables with the getting dummies function.

telco_data_dummies = pd.get_dummies(telco_data)
telco_data_dummies.head()

Output:

Churn analysis

9. Here we will be making a regression plot between charges.

sns.lmplot(data=telco_data_dummies, x='MonthlyCharges', y='TotalCharges', fit_reg=False)

Output:

 

Monthly Charges | Churn analysis

Inference: Here from the above graph it is clear that as the monthly charges are increasing we can experience the total charges also increase which shows the positive correlation too.

10. Measure the churn by charges

Mth = sns.kdeplot(telco_data_dummies.MonthlyCharges[(telco_data_dummies["Churn"] == 0) ],
                color="Red", shade = True)
Mth = sns.kdeplot(telco_data_dummies.MonthlyCharges[(telco_data_dummies["Churn"] == 1) ],
                ax =Mth, color="Blue", shade= True)
Mth.legend(["No Churn","Churn"],loc='upper right')
Mth.set_ylabel('Density')
Mth.set_xlabel('Monthly Charges')
Mth.set_title('Monthly charges by churn')

Output:

 

Output | Churn analysis

Insight: Here it is evident that when the churn is high then the charges are high.

Tot = sns.kdeplot(telco_data_dummies.TotalCharges[(telco_data_dummies["Churn"] == 0) ],
                color="Red", shade = True)
Tot = sns.kdeplot(telco_data_dummies.TotalCharges[(telco_data_dummies["Churn"] == 1) ],
                ax =Tot, color="Blue", shade= True)
Tot.legend(["No Churn","Churn"],loc='upper right')
Tot.set_ylabel('Density')
Tot.set_xlabel('Total Charges')
Tot.set_title('Total charges by churn')

Output:

 

Total charges by churn

Inference: Here we get the surprising insight that as we can see more churn is there with lower charges.

Tenure, Monthly Charges & Total Charges then the picture is a bit clear:- Higher Monthly Charge at lower tenure results into lower Total Charge. Hence, all these 3 factors viz Higher Monthly Charge, Lower tenure, and Lower Total Charge are linked to High Churn.

We can also analyze the heat map of our complete dataset.

plt.figure(figsize=(12,12))
sns.heatmap(telco_data_dummies.corr(), cmap="Paired")

Output:

 

Overall Output

 

Conclusion

These are some of the quick insights on churn analysis from this exercise:

  1. Electronic check mediums are the highest churners
  2. Contract Type – Monthly customers are more likely to churn because of no contract terms, as they are free-to-go customers.
  3. No Online security, No Tech Support category are high churners
  4. Non-senior Citizens are high churners

Note: There could be many more such insights, so take this as an assignment and try to get more insights.

Here’s the repo link to this article. Hope you liked my article on churn analysis. If you have any opinions or questions, then comment below.

About Me

Greeting to everyone, I’m currently working in TCS and previously, I worked as a Data Science Analyst in Zorba Consulting India. Along with full-time work, I’ve got an immense interest in the same field, i.e. Data Science, along with its other subsets of Artificial Intelligence such as Computer Vision, Machine Learning, and Deep learning; feel free to collaborate with me on any project on the domains mentioned above (LinkedIn).

Here you can access my other articles, which are published on Analytics Vidhya as a part of the Blogathon (link).

The media shown in this article is not owned by Analytics Vidhya and are used at the Author’s discretion. 

blogathonchurn analysisregressiontelecom industry
Aman Preet
Aman Preet

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vivek
vivek

Why total charges is taken as "Object" variable instead of numeric or float. In this dataset we have 11 missing values in Total_Charges, but it got ignored in your analysis

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