Assignment 8

Objective

Predict customer attrition using the Credit Card data, using the classification algorithm from the rpart package.

Data Prep

Created a new binary variable Attrited_Customer by classifying observations of individuals who stayed with the credit card company as “Existing Customer,” and those who left the company as “Attrited Customer.” Split the data (10127 observations), into training and validation datasets (70%/30% , 7137/2990)

Two Interpretations from the Tree

The most likely attrited customers meet the following criteria:

Less than 55 Transactions
Revolving Balance of less than $614
Total Amount of Change between the 1st and 4th Quarters of less than 0.65

The most likely retained customers have at least 79 transactions.

Variable Importance

Model Accuracy

Using the validation data, it is observed that the model can:

Correctly Predict 75.5% of Customers who left
Misclassify Retained Customers from those who left 3.6% of the time

## 
##  
##    Cell Contents
## |-------------------------|
## |                       N |
## | Chi-square contribution |
## |           N / Row Total |
## |           N / Col Total |
## |         N / Table Total |
## |-------------------------|
## 
##  
## Total Observations in Table:  2990 
## 
##  
##                                | validation_tree$attrited_customer_predicted 
## validation_tree$Attrition_Flag | Attrited Customer | Existing Customer |         Row Total | 
## -------------------------------|-------------------|-------------------|-------------------|
##              Attrited Customer |               364 |               118 |               482 | 
##                                |          1155.572 |           206.873 |                   | 
##                                |             0.755 |             0.245 |             0.161 | 
##                                |             0.802 |             0.047 |                   | 
##                                |             0.122 |             0.039 |                   | 
## -------------------------------|-------------------|-------------------|-------------------|
##              Existing Customer |                90 |              2418 |              2508 | 
##                                |           222.084 |            39.758 |                   | 
##                                |             0.036 |             0.964 |             0.839 | 
##                                |             0.198 |             0.953 |                   | 
##                                |             0.030 |             0.809 |                   | 
## -------------------------------|-------------------|-------------------|-------------------|
##                   Column Total |               454 |              2536 |              2990 | 
##                                |             0.152 |             0.848 |                   | 
## -------------------------------|-------------------|-------------------|-------------------|
## 
##  
## Statistics for All Table Factors
## 
## 
## Pearson's Chi-squared test 
## ------------------------------------------------------------
## Chi^2 =  1624.287     d.f. =  1     p =  0 
## 
## Pearson's Chi-squared test with Yates' continuity correction 
## ------------------------------------------------------------
## Chi^2 =  1618.706     d.f. =  1     p =  0 
## 
##