Telecommunications companies providing cell-phone service are interested in customer retention. In particular, identifying customers who are about
Question:
Telecommunications companies providing cell-phone service are interested in customer retention. In particular, identifying customers who are about to churn (cancel their service) is potentially worth millions of dollars if the company can proactively address the reason that customer is considering cancellation and retain the customer. Data on past customers, some of whom churned and some who did not, have been collected. The variables in this data set are listed in the following table.
Apply logistic regression with lasso regularization to classify observations as churning or not by using Churn as the target (or response) variable. Set aside 20% of the data as a test set and use 80% of the data for training and validation.
a. Determine the lasso regularization penalty that maximizes AUC in a validation procedure.
b. Apply the final model selected in part
(a) to the test set. What are the values of the intercept and variable coefficients in this final model? Interpret the coefficients.
c. For the final model selected in part (a), compute and interpret the lift on the top 10% of test set observations most likely to churn.
Step by Step Answer:
Business Analytics
ISBN: 9780357902219
5th Edition
Authors: Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann