Customer Churn Prediction in B2B Non-Contractual Business Settings Using Invoice Data

Abstract

Customer churn is a problem virtually all companies face, and the ability to predict it reliably can be a cornerstone for successful retention campaigns. In this study, we propose an approach to customer churn prediction in non-contractual B2B settings that relies exclusively on invoice-level data for feature engineering and uses multi-slicing to maximally utilize available data. We cast churn as a binary classification problem and assess the ability of three established classifiers to predict it when using different churn definitions. We also compare classifier performance when different amounts of historical data are used for feature engineering. The results indicate that robust models for different churn definitions can be derived by using invoice-level data alone and that using more historical data for creating some of the features tends to lead to better performing models for some classifiers. We also confirm that the multi-slicing approach to dataset creation yields better performing models compared to the traditionally used single-slicing approach.

Keywords

• churn prediction
• machine learning
• B2B
• non-contractual
• analytics