Data-driven Customer Behaviour Model Generation for Agent Based Exploration

Abstract

Customer retention is a critical concern for most mobile network operators because of the increasing competition in the mobile services sector. This concern has driven companies to exploit data as an avenue to better understand customer needs. Data mining techniques such as clustering and classification have been adopted to understand customer retention in the mobile services industry. However, the effectiveness of these techniques is debatable due to the increasing complexity of the mobile market itself. This study proposes an application of Agent-Based Modeling and Simulation (ABMS) as a novel approach to understanding customer retention. A dataset provided by a mobile network operator is utilized to automate decision trees and agent based models. The most popular churn modeling techniques were adopted in order to automate the development of models, from decision trees, and subsequently explore customer churn scenarios. ABMS is used to understand the behavior of customers and detect possible reasons why customers churned or stayed with their respective mobile network operators. Data analysis is able to identify that location and choice of mobile devices were determinants for the decision to churn or stay with their mobile network operator - with word of mouth as an important factor. Importantly, agent based simulation is able to explore further the determinants in the wider marketplace.