Classification Trees

Objective

Create an analysis predicting customer attrition.

The Tree

Two Interpretations from the tree

  1. The most likely existing customers:
  • Did not have a transaction count less than 55.
  • Did not have a transaction amount more than or equal to 5,272.
  1. The most likely attrited customers:
  • Had a transaction count less than 55.
  • Had a revolving balance less than 612.
  • Had a change in transaction count less than 0.8.
  • Did not have a transaction amount greater than or equal to 1,844.
  • Did not have a relationship count less than 4.
  • Had a transaction amount less than 555.

Variable Importance

The total transaction count is viewed as an important predictor for attrited customers.

Model Accuracy

Using the validation data, it is observed that the model is able to:

  • Predict correctly 76.6% of attrited customers.
  • Misclassify existing customers as attrited customers 2.9% of the time.
## 
##  
##    Cell Contents
## |-------------------------|
## |                       N |
## | Chi-square contribution |
## |           N / Row Total |
## |           N / Col Total |
## |         N / Table Total |
## |-------------------------|
## 
##  
## Total Observations in Table:  2990 
## 
##  
##                           | validation$predicted_attrition 
## validation$Attrition_Flag | Attrited Customer | Existing Customer |         Row Total | 
## --------------------------|-------------------|-------------------|-------------------|
##         Attrited Customer |               364 |               118 |               482 | 
##                           |          1206.844 |           208.795 |                   | 
##                           |             0.755 |             0.245 |             0.161 | 
##                           |             0.825 |             0.046 |                   | 
##                           |             0.122 |             0.039 |                   | 
## --------------------------|-------------------|-------------------|-------------------|
##         Existing Customer |                77 |              2431 |              2508 | 
##                           |           231.937 |            40.127 |                   | 
##                           |             0.031 |             0.969 |             0.839 | 
##                           |             0.175 |             0.954 |                   | 
##                           |             0.026 |             0.813 |                   | 
## --------------------------|-------------------|-------------------|-------------------|
##              Column Total |               441 |              2549 |              2990 | 
##                           |             0.147 |             0.853 |                   | 
## --------------------------|-------------------|-------------------|-------------------|
## 
##  
## Statistics for All Table Factors
## 
## 
## Pearson's Chi-squared test 
## ------------------------------------------------------------
## Chi^2 =  1687.703     d.f. =  1     p =  0 
## 
## Pearson's Chi-squared test with Yates' continuity correction 
## ------------------------------------------------------------
## Chi^2 =  1681.946     d.f. =  1     p =  0 
## 
##