5.1 General Overview

The data set used in this study contains 29 variables and 7,032 customers from a telecom firm. For each client, the data includes:

• Demographic information: CustomerID, City, Zip_Code, Latitude, Longitude, Gender, Senior_Citizen, Partner and Dependents.

• Customer account information: Tenure_Months, Contract, Paperless_Billing, Payment_Method, Monthly_Charges, Total_Charges, Churn_Label, Churn_Value, Churn_Score, CLTV, Churn_Reason.

• Services information: Phone_Service, Multiple_Lines, Internet_Service, Online_Security, Online_Backup, Device_Protection, Tech_Support, Streaming_TV, Streaming_Movies.

Table 5.1: The first 5 customers in the data

CustomerID	City	Zip_Code	Latitude	Longitude	Gender	Senior_Citizen	Partner	Dependents	Tenure_Months	Phone_Service	Multiple_Lines	Internet_Service	Online_Security	Online_Backup	Device_Protection	Tech_Support	Streaming_TV	Streaming_Movies	Contract	Paperless_Billing	Payment_Method	Monthly_Charges	Total_Charges	Churn_Label	Churn_Value	Churn_Score	CLTV	Churn_Reason
1	Los Angeles	90003	33.96	-118.27	Male	No	No	No	2	Yes	Yes	DSL	Yes	Yes	No	No	No	No	Month-to-month	Yes	Mailed check	53.85	108.15	Yes	1	86	3239	Competitor made better offer
2	Los Angeles	90005	34.06	-118.31	Female	No	No	Yes	2	Yes	Yes	Fiber optic	No	No	No	No	No	No	Month-to-month	Yes	Electronic check	70.70	151.65	Yes	1	67	2701	Moved
3	Los Angeles	90006	34.05	-118.29	Female	No	No	Yes	8	Yes	Yes	Fiber optic	No	No	Yes	No	Yes	Yes	Month-to-month	Yes	Electronic check	99.65	820.50	Yes	1	86	5372	Moved
4	Los Angeles	90010	34.06	-118.32	Female	No	Yes	Yes	28	Yes	Yes	Fiber optic	No	No	Yes	Yes	Yes	Yes	Month-to-month	Yes	Electronic check	104.80	3046.05	Yes	1	84	5003	Moved
5	Los Angeles	90015	34.04	-118.27	Male	No	No	Yes	49	Yes	Yes	Fiber optic	No	Yes	Yes	No	Yes	Yes	Month-to-month	Yes	Bank transfer	103.70	5036.30	Yes	1	89	5340	Competitor had better devices
6	Los Angeles	90020	34.07	-118.31	Female	No	Yes	No	10	Yes	Yes	DSL	No	No	Yes	Yes	No	No	Month-to-month	No	Credit card	55.20	528.35	Yes	1	78	5925	Competitor offered higher download speeds

As shown by table 5.1, the Churn_Value status variable indicates whether the customer left the firm’s portfolio within the last month and Tenure_Months is the duration variable.

Since the purpose of our study relies in estimating the overall value of this fictional firm’s portfolio, two groups of target variables can be considered. On the one hand Churn_Value and Tenure_Months permit to determine whether a customer is active in the portfolio. They are used as response variables in the survival models. On the other hand, Monthly_Charges variable indicates the price paid by customers each month and may be used to derive a customer raw value. Even though the CLTV variable represents each customer’s value through measurement of customer lifetime value, we do not have any information on its calculation. Thus, it is not used in the model developed in the next chapter.