Customer Churn Prediction Approach Based on LLM Embeddings and Logistic Regression

Abstract

Nowadays, predicting customer churn is essential for the success of any company. Loyal customers generate continuous revenue streams, resulting in long-term success and growth. Moreover, companies are increasingly prioritizing the retention of existing customers due to the higher costs associated with attracting new ones. Consequently, there has been a growing demand for advanced methods aimed at enhancing customer loyalty and satisfaction, as well as predicting churners. In our work, we focused on building a robust churn prediction model for the telecommunications industry based on large embeddings from large language models and logistic regression to accurately identify churners. We conducted extensive experiments using a range of embedding techniques, including OpenAI Text-embedding, Google Gemini Text Embedding, bidirectional encoder representations from transformers (BERT), Sentence-Transformers, Sent2vec, and Doc2vec, to extract meaningful features. Additionally, we tested various classifiers, including logistic regression, support vector machine, random forest, K-nearest neighbors, multilayer perceptron, naive Bayes, decision tree, and zero-shot classification, to build a robust model capable of making accurate predictions. The best-performing model in our experiments is the logistic regression classifier, which we trained using the extracted feature from the OpenAI Text-embedding-ada-002 model, achieving an accuracy of 89%. The proposed model demonstrates a high discriminative ability between churning and loyal customers.

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