Machine Learning Models for Customer Churn Prediction: Current Progresses and Challenges in the Telecommunications and SaaS Industries

Abstract

With the ongoing economic growth and the rise of new companies, customer churn has become a renewed focus for many businesses, particularly in the telecommunications and SaaS sectors. Accurately identifying lost customers using artificial intelligence technology is crucial for helping companies develop effective strategies to retain these valuable clients. This paper provides a comprehensive overview of recent research on the application of various machine learning models, including logistic regression, random forests, decision trees, XGBoost, and advanced deep learning models like Deep Neural Networks (DNN) and Convolutional Neural Networks (CNN), to different types of datasets in the telecommunications and SaaS sectors. The study examines the workflow of each model, offering an in-depth analysis of their effectiveness and performance in predicting customer churn. In addition to evaluating the strengths and weaknesses of these models, the paper also addresses key challenges in machine learning, such as interpretability, applicability, and privacy concerns. It highlights current solutions employed by researchers, including SHapley Additive exPlanations (SHAP) for model interpretability, transfer learning, domain adaptation, and federated learning, to overcome these challenges. Furthermore, this paper emphasizes the ongoing need for further research to enhance the robustness and practical deployment of churn prediction models in these industries. In conclusion, this paper offers a comprehensive overview of current research on customer churn prediction models, highlighting the application of various machine learning techniques and addressing key challenges and solutions within the telecommunications and SaaS sectors.