Customer Churn Modeling using Machine Learning with parsnip
Written by Diego Usai
This article comes from Diego Usai, a student in Business Science University. Diego has completed both 101 (Data Science Foundations) and 201 (Advanced Machine Learning & Business Consulting) courses. Diego shows off his progress in this Customer Churn Tutorial using Machine Learning with
parsnip. Diego originally posted the article on his personal website, diegousai.io, which has been reproduced on the Business Science blog here. Enjoy!
R Packages Covered:
parsnip- NEW Machine Learning API in R, similar to
scikit learnin Python
rsample- 10-Fold Cross Validation
recipes- Data preprocessing
yardstick- Model scoring and metrics
skimr- Quickly skim data
ranger- Random Forest Library used for churn modeling
Churn Modeling Using Machine Learning
by Diego Usai, Customer Insights Consultant
Recently I have completed the online course Business Analysis With R focused on applied data and business science with R, which introduced me to a couple of new modelling concepts and approaches. One that especially captured my attention is
parsnip and its attempt to implement a unified modelling and analysis interface (similar to python’s
scikit-learn) to seamlessly access several modelling platforms in R.
parsnip is the brainchild of RStudio’s Max Khun (of
caret fame) and Davis Vaughan and forms part of
tidymodels, a growing ensemble of tools to explore and iterate modelling tasks that shares a common philosophy (and a few libraries) with the
Although there are a number of packages at different stages in their development, I have decided to take
tidymodels “for a spin”, and create and execute a “tidy” modelling workflow to tackle a classification problem. My aim is to show how easy it is to fit a simple logistic regression in R’s
glm and quickly switch to a cross-validated random forest using the
ranger engine by changing only a few lines of code.
For this post in particular I’m focusing on four different libraries from the
parsnipfor machine learning and modeling
rsamplefor data sampling and 10-fold cross-validation
recipesfor data preprocessing
yardstickfor model assessment.
Note that the focus is on modelling workflow and libraries interaction. For that reason, I am keeping data exploration and feature engineering to a minimum. Data exploration, data wrangling, visualization, and business understanding are CRITICAL to your ability to perform machine learning. If you want to learn the end-to-end process for completing business projects with data science with
Shiny web applications using
AWS, then I recommend Business Science’s 4-Course R-Track System - One complete system to go from beginner to expert in 6-months.
Here’s a diagram of the workflow I used to web scrape the Specialized Data and create an application:
Start with raw data in CSV format
skimrto quickly understand the features
rsampleto split into training/testing sets
recipesto create data preprocessing pipeline
yardstickto build models and assess machine learning performance
Tutorial - Churn Classification using Machine Learning
This is an intermediate tutorial to expose business analysts and data scientists to churn modeling with the new
parsnip Machine Learning API.
1.0 Setup and Data
First, I load the packages I need for this analysis.
For this project I am using the Telco Customer Churn from IBM Watson Analytics, one of IBM Analytics Communities. The data contains 7,043 rows, each representing a customer, and 21 columns for the potential predictors, providing information to forecast customer behaviour and help develop focused customer retention programmes.
Churn is the Dependent Variable and shows the customers who left within the last month. The dataset also includes details on the Services that each customer has signed up for, along with Customer Account and Demographic information.
Next, we read in the data (I have hosted on my GitHub repo for this project).
|7590-VHVEG||Female||0||Yes||No||1||No||No phone service||DSL||No||Yes||No||No||No||No||Month-to-month||Yes||Electronic check||29.85||29.85||No|
|5575-GNVDE||Male||0||No||No||34||Yes||No||DSL||Yes||No||Yes||No||No||No||One year||No||Mailed check||56.95||1889.50||No|
|7795-CFOCW||Male||0||No||No||45||No||No phone service||DSL||Yes||No||Yes||Yes||No||No||One year||No||Bank transfer (automatic)||42.30||1840.75||No|
|9237-HQITU||Female||0||No||No||2||Yes||No||Fiber optic||No||No||No||No||No||No||Month-to-month||Yes||Electronic check||70.70||151.65||Yes|
|9305-CDSKC||Female||0||No||No||8||Yes||Yes||Fiber optic||No||No||Yes||No||Yes||Yes||Month-to-month||Yes||Electronic check||99.65||820.50||Yes|
2.0 Skim the Data
We can get a quick sense of the data using the
skim() function from the
There are a couple of things to notice here:
customerID is a unique identifier for each row. As such it has no descriptive or predictive power and it needs to be removed.
Given the relative small number of missing values in TotalCharges (only 11 of them) I am dropping them from the dataset.
3.0 Tidymodels Workflow - Generalized Linear Model (Baseline)
To show the basic steps in the
tidymodels framework I am fitting and evaluating a simple logistic regression model as a baseline.
3.1 Train/Test Split
rsample provides a streamlined way to create a randomised training and test split of the original data.
Of the 7,043 total customers, 5,626 have been assigned to the training set and 1,406 to the test set. I save them as
recipes package uses a cooking metaphor to handle all the data preprocessing, like missing values imputation, removing predictors, centring and scaling, one-hot-encoding, and more.
First, I create a
recipe where I define the transformations I want to apply to my data. In this case I create a simple recipe to change all character variables to factors.
Then, I “prep the recipe” by mixing the ingredients with prep. Here I have included the prep bit in the recipe function for brevity.
Note - In order to avoid Data Leakage (e.g: transferring information from the train set into the test set), data should be “prepped” using the train_tbl only.
Finally, to continue with the cooking metaphor, I “bake the recipe” to apply all preprocessing to the data sets.
3.3 Machine Learning and Performance
Fit the Model
parsnip is a recent addition to the
tidymodels suite and is probably the one I like best. This package offers a unified API that allows access to several machine learning packages without the need to learn the syntax of each individual one.
With 3 simple steps you can:
Set the type of model you want to fit (here is a logistic regression) and its mode (classification)
Decide which computational engine to use (glm in this case)
Spell out the exact model specification to fit (I’m using all variables here) and what data to use (the baked train dataset)
If you want to use another engine, you can simply switch the
set_engine argument (for logistic regression you can choose from
parsnip will take care of changing everything else for you behind the scenes.
There are several metrics that can be used to investigate the performance of a classification model but for simplicity I’m only focusing on a selection of them: accuracy, precision, recall and F1_Score.
All of these measures (and many more) can be derived by the Confusion Matrix, a table used to describe the performance of a classification model on a set of test data for which the true values are known.
In and of itself, the confusion matrix is a relatively easy concept to get your head around as is shows the number of false positives, false negatives, true positives, and true negatives. However some of the measures that are derived from it may take some reasoning with to fully understand their meaning and use.
The model’s Accuracy is the fraction of predictions the model got right and can be easily calculated by passing the predictions_glm to the metrics function. However, accuracy is not a very reliable metric as it will provide misleading results if the data set is unbalanced.
With only basic data manipulation and feature engineering the simple logistic model has achieved 80% accuracy.
Precision and Recall
Precision shows how sensitive models are to False Positives (i.e. predicting a customer is leaving when he-she is actually staying) whereas Recall looks at how sensitive models are to False Negatives (i.e. forecasting that a customer is staying whilst he-she is in fact leaving).
These are very relevant business metrics because organisations are particularly interested in accurately predicting which customers are truly at risk of leaving so that they can target them with retention strategies. At the same time they want to minimising efforts of retaining customers incorrectly classified as leaving who are instead staying.
Another popular performance assessment metric is the F1 Score, which is the harmonic average of the precision and recall. An F1 score reaches its best value at 1 with perfect precision and recall.
4.0 Random Forest - Machine Learning Modeling and Cross Validation
This is where the real beauty of
tidymodels comes into play. Now I can use this tidy modelling framework to fit a Random Forest model with the
4.1 Cross Validation - 10-Fold
To further refine the model’s predictive power, I am implementing a 10-fold cross validation using
rsample, which splits again the initial training data.
If we take a further look, we should recognise the 5,626 number, which is the total number of observations in the initial train_tbl. In each round, 563 observations will in turn be retained from estimation and used to validate the model for that fold.
To avoid confusion and distinguish the initial train/test splits from those used for cross validation, the author of rsample Max Kuhn has coined two new terms: the analysis and the assessment_ sets. The former is the portion of the train data used to recursively estimate the model, where the latter is the portion used to validate each estimate.
4.2 Machine Learning
Switching to another model could not be simpler! All I need to do is to change the type of model to
random_forest, add its hyper-parameters, change the
set_engine argument to
ranger, and I’m ready to go.
I’m bundling all steps into a function that estimates the model across all folds, runs predictions and returns a convenient tibble with all the results. I need to add an extra step before the recipe “prepping” to maps the cross validation splits to the
assessment() functions. This will guide the iterations through the 10 folds.
Modeling with purrr
I iteratively apply the random forest modeling function,
rf_fun(), to each of the 10 cross validation folds using
I’ve found that
yardstick has a very handy confusion matrix
summary() function, which returns an array of 13 different confusion matrix metrics but in this case I want to see the four I used for the glm model.
random forest model is performing in par with the
simple logistic regression. Given the very basic feature engineering that I’ve carried out, there is scope to further improve the model but this is beyond the scope of this post.
One of the great advantage of
tidymodels is the flexibility and ease of access to every phase of the analysis workflow. Creating the modelling pipeline is a breeze and you can easily re-use the initial framework by changing model type with
parsnip and data pre-processing with
recipes and in no time you’re ready to check your new model’s performance with
In any analysis you would typically audit several models and
parsnip frees you up from having to learn the unique syntax of every modelling engine so that you can focus on finding the best solution for the problem at hand.
If you would like to learn how to apply Data Science to Business Problems, take the program that I chose to build my skills. You will learn tools like
H2O for machine learning and
Shiny for web applications, and many more critical tools (
recipes, and more!) for applying data science to business problems. For a limited time you can get 15% OFF the 4-Course R-Track System.
The full R code can be found on my GitHub profile.
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