Customer churn may be a critical issue for banks. The extant literature on statistical and machine learning for customer churn focuses on the problem of correctly predicting that a customer is about to switch bank, while very rarely consid-ers the problem of generating personalized actions to improve the customer retention rate. However, these decisions are at least as critical as the correct identification of customers at risk. The decision of what actions to deliver to what customers is normally left to managers who can only rely upon their knowledge. By looking at the scientific literature on CRM and personalization, this research proposes a number of models which can be used to generate marketing ac-tions, and shows how to integrate them into a model embracing both the analytical prediction of customer churn and the generation of retention actions. The benefits and risks associated with each approach are discussed. The paper also describes a case of application of a predictive model of customer churn in a retail bank where the analysts have also generated a set of personalized actions to retain customers by using one of the approaches presented in the paper, namely by adapting a recommender system approach to the retention problem.
KeywordsCustomer ChurnCustomer RetentionPersonalizationPredictive ModelsRecommender Systems
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