Churn Rate: 7.43% (Lowest among all clusters)
Customers in Cluster 0 are moderate-tenure users who only subscribe to phone services. They tend to prefer traditional payment methods and longer-term contracts, indicating a possible preference for stability and familiarity.
Characteristics:
- Tenure: Medium (Mean: ~30.7 months, Median: 25 months)
- Monthly Charges: Low (Mean: ~$21.08, Median: ~$20.15)
- Total Charges: Low (Mean: ~$665.22, Median: ~$523.68)
- Services Used:
- Phone Subscription: 100% have a phone subscription
- Internet Service: 100% do not have internet service
- Multiple Lines: 77.6% have a single line; 22.4% have multiple lines
- Demographics:
- Gender: Evenly split between male and female
- Senior Citizens: Predominantly not senior citizens (96.6% No)
- Partner Status: Slightly more without partners (51.8% No)
- Dependents: Majority without dependents (58.1% No)
- Contract Type:
- Two-Year Contract: 41.6%
- Month-to-Month: 34.5%
- One-Year Contract: 23.9%
- Billing and Payment:
- Paperless Billing: Majority do not use paperless billing (70.7% No)
- Payment Method: Preference for mailed checks (48.4%), followed by bank transfers and credit card payments (both ~21.8%)
Marketing Strategies:
- Upselling Internet Services: Introduce attractive bundled packages that combine phone and internet services at a discounted rate to increase their monthly spending and enhance their engagement with more company offerings.
- Promote Convenience Features: Highlight the benefits of paperless billing and automatic payment methods to enhance their billing experience.
- Loyalty Programs: Implement loyalty rewards for their continued patronage, especially since a significant portion are on long-term contracts.
Churn Rate: 44.25% (Highest among all clusters)
Cluster 1 consists of newer customers who are possibly more price-sensitive and prefer flexibility, as indicated by their month-to-month contracts. They are less engaged with additional services and favor digital interactions.
Characteristics:
- Tenure: Short (Mean: ~15.3 months, Median: 12 months)
- Monthly Charges: Moderate (Mean: ~$68.60, Median: ~$70.85)
- Total Charges: Moderate (Mean: ~$1,043.98, Median: ~$795.65)
- Services Used:
- Phone Subscription: 85% have a phone subscription
- Internet Service: Mix of Fiber Optic (53.4%) and DSL (46.6%)
- Add-on Services: Low adoption rates for online security, backup services, and device protection (over 70% have not subscribed)
- Demographics:
- Gender: Evenly split between male and female
- Senior Citizens: Higher proportion of senior citizens compared to Cluster 0 (19.9% Yes)
- Partner Status: Majority without partners (67.3% No)
- Dependents: Predominantly without dependents (80.1% No)
- Contract Type:
- Month-to-Month: 87.4%
- Billing and Payment:
- Paperless Billing: Majority use paperless billing (67.3% Yes)
- Payment Method: Preference for electronic checks (49.7%)
Marketing Strategies:
- Retention Efforts: Given their short tenure and flexible contracts, they may have a higher risk of churn. Implement retention campaigns focusing on customer satisfaction and addressing pain points.
- Promote Long-Term Contracts: Offer incentives such as discounted rates or added benefits to encourage switching to longer-term contracts.
- Upsell Add-on Services: Educate them on the value of additional services like online security and device protection to enhance their experience and increase loyalty.
- Personalized Communication: Use targeted messaging that resonates with their digital preferences, highlighting convenience and value.
Churn Rate: 14.35% (Moderate churn rate)
Cluster 2 represents the company's most loyal and valuable customers. They have been with the company for a long time, subscribe to multiple services, and are comfortable with digital and automated interactions.
Characteristics:
- Tenure: Long (Mean: ~57.8 months, Median: 60 months)
- Monthly Charges: High (Mean: ~$88.51, Median: ~$91.55)
- Total Charges: High (Mean: ~$5,109.89, Median: ~$4,983.05)
- Services Used:
- Phone Subscription: 91.5% have a phone subscription
- Internet Service: Mix of Fiber Optic (60.1%) and DSL (39.9%)
- Add-on Services: High adoption rates for online security (55.7% Yes), backup services (67.7% Yes), device protection (70.4% Yes), and technical support (58.2% Yes)
- Demographics:
- Gender: Evenly split between male and female
- Senior Citizens: Approximately 19.6% are senior citizens
- Partner Status: Majority have partners (70.2% Yes)
- Dependents: 35.9% have dependents
- Contract Type:
- Two-Year Contract: 42.9%
- One-Year Contract: 33.9%
- Month-to-Month: 23.2%
- Billing and Payment:
- Paperless Billing: Majority use paperless billing (67.9% Yes)
- Payment Method: Prefer automatic payments via bank transfer (32.6%) and credit card (31.2%)
Marketing Strategies:
- Enhance Loyalty Programs: Offer exclusive deals, early access to new services, or special recognition to reinforce their loyalty.
- Cross-Selling Opportunities: Introduce them to any new premium services or upgrades that could enhance their current packages.
- Solicit Feedback: Engage them in feedback programs to understand their needs better and make them feel valued.
- Maintain Service Excellence: Ensure high-quality customer service and support to keep satisfaction levels high.
To effectively reduce churn, it's crucial to integrate churn probability predictions with the cluster profiles:
-
High Churn Risk (Cluster 1):
- Focus retention strategies here, as customers have low tenure and flexible contracts.
- Monitor customer satisfaction closely and address issues promptly.
- Use predictive analytics to identify early signs of churn (e.g., decreased usage patterns).
-
Moderate to Low Churn Risk (Clusters 0 and 2):
- Cluster 0: While they have medium tenure, the lack of multiple services presents an upselling opportunity to deepen their engagement.
- Cluster 2: Despite low churn risk due to high tenure and satisfaction, continuous engagement is necessary to prevent competitors from enticing them away.