Despite the importance of data mining techniques to customer relationship management (CRM), there is a lack of a comprehensive literature review and a classification scheme for it. This is the first identifiable academic literature review of the application of data mining techniques to CRM. It provides an academic database of literature between the period of 2000-2006 covering 24 journals and proposes a classification scheme to classify the articles. Nine hundred articles were identified and reviewed for their direct relevance to applying data mining techniques to CRM. Eighty-seven articles were subsequently selected, reviewed and classified. Each of the 87 selected papers was categorized on four CRM dimensions (Customer Identification, Customer Attraction, Customer Retention and Customer Development) and seven data mining functions (Association, Classification, Clustering, Forecasting, Regression, Sequence Discovery and Visualization). Papers were further classified into nine sub-categories of CRM elements under different data mining techniques based on the major focus of each paper. The review and classification process was independently verified. Findings of this paper indicate that the research area of customer retention received most research attention. Of these, most are related to one-to-one marketing and loyalty programs respectively. On the other hand, classification and association models are the two commonly used models for data mining in CRM. Our analysis provides a roadmap to guide future research and facilitate knowledge accumulation and creation concerning the application of data mining techniques in CRM.

http://cjou.im.tku.edu.tw/bi2009/DM-usage.pdf

Review: Application of data mining techniques in customer relationship management: A literature review and classification

Recommender systems have become an important research field since the emergence of the first paper on collaborative filtering in the mid-1990s. Although academic research on recommender systems has increased significantly over the past 10years, there are deficiencies in the comprehensive literature review and classification of that research. For that reason, we reviewed 210 articles on recommender systems from 46 journals published between 2001 and 2010, and then classified those by the year of publication, the journals in which they appeared, their application fields, and their data mining techniques. The 210 articles are categorized into eight application fields (books, documents, images, movie, music, shopping, TV programs, and others) and eight data mining techniques (association rule, clustering, decision tree, k-nearest neighbor, link analysis, neural network, regression, and other heuristic methods). Our research provides information about trends in recommender systems research by examining the publication years of the articles, and provides practitioners and researchers with insight and future direction on recommender systems. We hope that this paper helps anyone who is interested in recommender systems research with insight for future research direction.

A literature review and classification of recommender systems research

Churn prediction is becoming a major focus of banks in China who wish to retain customers by satisfying their needs under resource constraints. In churn prediction, an important yet challenging problem is the imbalance in the data distribution. In this paper, we propose a novel learning method, called improved balanced random forests (IBRF), and demonstrate its application to churn prediction. We investigate the effectiveness of the standard random forests approach in predicting customer churn, while also integrating sampling techniques and cost-sensitive learning into the approach to achieve a better performance than most existing algorithms. The nature of IBRF is that the best features are iteratively learned by altering the class distribution and by putting higher penalties on misclassification of the minority class. We apply the method to a real bank customer churn data set. It is found to improve prediction accuracy significantly compared with other algorithms, such as artificial neural networks, decision trees, and class-weighted core support vector machines (CWC-SVM). Moreover, IBRF also produces better prediction results than other random forests algorithms such as balanced random forests and weighted random forests.

Customer churn prediction using improved balanced random forests

Computer assisted customer churn management: State-of-the-art and future trends

As churn management is a major task for companies to retain valuable customers, the ability to predict customer churn is necessary. In literature, neural networks have shown their applicability to churn prediction. On the other hand, hybrid data mining techniques by combining two or more techniques have been proved to provide better performances than many single techniques over a number of different domain problems. This paper considers two hybrid models by combining two different neural network techniques for churn prediction, which are back-propagation artificial neural networks (ANN) and self-organizing maps (SOM). The hybrid models are ANN combined with ANN (ANN+ANN) and SOM combined with ANN (SOM+ANN). In particular, the first technique of the two hybrid models performs the data reduction task by filtering out unrepresentative training data. Then, the outputs as representative data are used to create the prediction model based on the second technique. To evaluate the performance of these models, three different kinds of testing sets are considered. They are the general testing set and two fuzzy testing sets based on the filtered out data by the first technique of the two hybrid models, i.e. ANN and SOM, respectively. The experimental results show that the two hybrid models outperform the single neural network baseline model in terms of prediction accuracy and Types I and II errors over the three kinds of testing sets. In addition, the ANN+ANN hybrid model significantly performs better than the SOM+ANN hybrid model and the ANN baseline model.

https://cmapspublic2.ihmc.us/rid=1MYWPTPXN-1JNBJWM-30SD/Tsai_Lu_Hybrid_Neural_Network_2009.pdf

Customer churn prediction by hybrid neural networks

Discovering sequential patterns is one of the most important task in data mining. In this paper we propose an efficient algorithm, called Goal-oriented sequential pattern. It can provide enterprises warning signs soon before they are losing valuable customers and give them reference for decision making. Experiments comparing Apriori showed that Goal-oriented is more efficient, and performs reasonably well for the rules.

http://didawiki.cli.di.unipi.it/lib/exe/fetch.php/dm/sequentialpatterns-bankchurnanalysis.pdf

Goal-oriented sequential pattern for network banking churn analysis

A major concern for modern enterprises is to promote customer value, loyalty and contribution through services such as can help establish a long-term, honest relationship with customers. For purposes of better customer relationship management, data mining technology is commonly used to analyze large quantities of data about customer bargains, purchase preferences, customer churn, etc. This paper aims to propose a recommender system for wireless network companies to understand and avoid customer churn. To ensure the accuracy of the analysis, we use the decision tree algorithm to analyze data of over 60,000 transactions and of more than 4000 members, over a period of three months. The data of the first nine weeks is used as the training data, and that of the last month as the testing data. The results of the experiment are found to be very useful for making strategy recommendations to avoid customer churn.

Cheng-Jung Lin

Papers

Goal-oriented sequential pattern for network banking churn analysis

A recommender system to avoid customer churn

Customer Relationship Management for Network Banking Churn Analysis.