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COMM1190 Data, Insights and Decisions

Assessment 1: Initial report

TelcomCo churn rate project

The General Manager (GM) at TelcomCo is mandated to deliver a customer retention update to

the Board of Directors. To prepare, the GM initiated a pilot study led by a junior analyst using

sample data on customer service usage patterns.

The junior analyst’s initial findings, documented in a memo (Appendix A), were based on pilot

data from July 2024. As a Business Analyst at TelcomCo, you have been asked to conduct a deeper

analysis using an expanded dataset to investigate churn rate factors and offer actionable

recommendations for improving customer retention. Additionally, the GM raised concerns about

the memo’s quality, requiring a revised report.

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Appendix A: Analysis of customer pilot data

MEMORANDUM

DATE: 12 September 2024

TO: Board of Directors

RE: Marketing Analytics Report

Introduction

This report presents an initial statistical analysis of customer data from the company’s central

database. The dataset includes information on customer demographics, account types, service

usage, churn rate rates, and spending patterns. The analysis focuses on pilot data from July 2024

and is structured into four sections: customer demographics, monthly charges, customer

satisfaction, and recommendations.

Customer Characteristics

Figure 1 and Table 1 summarise key customer characteristics from the pilot sample, including

demographic information and service usage insights.

Figure 1: Customer Characteristics

The gender distribution among customers is evenly split. The average age of the customers is

46.64 years, with an average tenure of 32.25 months. Approximately 75% of customers do not

have dependents, and over 60% are not living with a partner.

Figure 2: Age

Gender Male Female Partner Yes No Dependents Yes No 3 | P a g e

According to Figure 2, the customer age distribution peaks in the 19-25 age group, with about

15% of customers being senior citizens. The distribution is not symmetrical, indicating a

concentration in younger age groups.

Table 1: Customer Characteristics

Statistic Tenure Age

Mean 32.25 46.64

Median 29 46

Mode 1 21

Standard Deviation 24.84 19.20

Skewness 0.26 0.38

Range 72 71

Minimum 0 19

Maximum 72 90

After analysing customer characteristics, we explore the financial impact through

transaction sales data.

Transaction sales

The monthly charges represent the transaction sales, indicating the amount customers pay for

the company’s telecommunications services. Table 2 shows summary statistics for these charges.

Based on a sample of 999 customers, the average spending is $66.48, while the median is $74.25,

suggesting a negatively skewed distribution. A mode of $19.90 indicates a significant portion of

customers pay low charges, possibly reflecting a large group of customers subscribing to lower- tier service packages.

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Table 2: Transaction Sales

Statistic Monthly Charges

Mean 66.48

Standard Error 0.95

Median 74.25

Mode 19.90

Standard Deviation 29.93

Sample Variance 896.07

Kurtosis -1.20

Skewness -0.30

Range 97.30

Minimum 18.95

Maximum 116.25

Sum 66,413.50

Count 999

A correlation analysis was conducted, and the results are shown in Table 3. There is a moderate

positive correlation between tenure and monthly charges, indicating that customers who stay

longer tend to spend more. However, tenure has a weak negative correlation with age,

suggesting that age and tenure are not closely related.

Table 3: Correlation Matrix

Variable Age Monthly Charges Tenure

Age 1 0.176 -0.028

Monthly Charges 0.176 1 0.252

Tenure -0.028 0.252 1

Customer churn rate

The overall churn rate is 25%, as depicted in Figure 3. Figure 4 shows that female customers are

slightly more likely to churn rate than male customers. Additionally, Figure 5 reveals that

customers not living with a partner are more prone to churn rate, as illustrated by the percent

stacked bar chart.

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Figure 3: Churn rate

Figure 4: Churn rate by Gender

Figure 5: Churn rate by Living Status

Churn Yes No 0 50 100 150 200 250 300 350 400 450 Yes No Churn rate by Gender Female Male 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Yes No Churn rate by Living Status Partner-Yes Partner-No 6 | P a g e

Conclusion

• A high proportion of customers are in the youngest age bracket, contributing to the lower

mean spending than the median.

• Female customers and those not living with a partner show a higher propensity to churn

rate.

• A positive correlation exists between tenure and monthly spending, indicating that

customers who stay longer tend to spend more. TelcomCo can leverage this information

to reduce churn rate (e.g., loyalty programs or incentives for long-term customers).

Recommendation

The small pilot dataset limits the reliability of these insights. More customer data should be

collected to generate a more robust analysis, and additional variables should be explored.

To enhance the reliability of the analysis, TelcomCo should expand the dataset by collecting

additional customer data, such as customer engagement metrics, service quality feedback, or

payment history. This would enable more comprehensive insights into churn behaviour.

Additionally, future analyses should explore new variables like customer satisfaction over time

and the impact of promotional offers. A more extensive analysis could involve segmenting

customers by service package or region to tailor retention strategies effectively.

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Appendix B: Data dictionary

Variable Description

CustomerID Unique identifier for each customer.

Gender Gender of the customer (Male, Female).

Age Age of the customer in years (18+).

Partner Whether the customer lives with a partner (Yes, No).

Dependents Whether the customer has dependents (Yes, No).

Tenure

Number of months the customer has stayed with the company. For analytical

purpose, the tenure can be classified into three broad categories: short-term (<9

months); medium term (between 9 and 18 months) and long-term (greater than

18 months)

InternetService Type of internet service (Fiber optic, 5G, DSL, No service).

OnlineProtect Level of online security/back-up (0: None, 1: Security, 2: Backup, 3: Both).

TechSupport Type of tech support (1: Chatbot, 2: Email, 3: Phone).

Streaming Streaming subscription status (0: None, 1: TV, 2: Movies, 3: Both).

Outage Frequency of service outages (Occasional, Frequent).

ContractType Type of contract (1: Month-to-month, 12: One year, 24: Two year).

MonthlyCharges Monthly amount charged to the customer.

MultipleLines

Whether the customer has subscribed to more than one phone line (0: no phone

line; 1: one phone line and 2: more than one line)

Churn Whether the customer churns (Yes, No).

Pilot Indicates whether data is from the pilot study (1: Yes, 0: No).

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