Customer churn prediction in the online gambling industry: The beneficial effect of ensemble learning

The online gambling industry is one of the most revenue generating branches of the entertainment business, resulting in fierce competition and saturated markets. Therefore it is essential to efficiently retain gamblers. Churn prediction is a promising new alternative in customer relationship management (CRM) to analyze customer retention. It is the process of identifying gamblers with a high probability to leave the company based on their past behavior. This study investigates whether churn prediction is a valuable option in the CRM palette of the online gambling companies. Using real-life data of poker players at bwin, single algorithms, CART decision trees and generalized additive models are benchmarked to their ensemble counterparts, random forests and GAMens. The results show that churn prediction is a valuable strategy to identify and profile those customers at risk. Furthermore, the performance of the ensembles is more robust and better than the single models. (C) 2012 Elsevier Inc. All rights reserved.