Businesses have been undergoing a massive transformation in recent years. Competition is increasing, customer demands are changing, and new technologies are emerging every day. Therefore, businesses have started the shift towards the fourth industrial revolution, where data is regarded as an asset. Here is what data science is and the reasons why it’s important for businesses.
What Is Data Science?
Data science is all about using advanced technologies to gather and analyze data in order to make rapid decisions. Thus, professionals who have gotten a master of data science online or from reputable traditional universities often explain that, in other words, data science is about collecting and analyzing data and finding useful patterns so that you can be proactive instead of reactive.
There are four main elements that constitute data science:
Creating Data Products
This part is all about taking the data you have and creating something useful, such as a predictive model or a machine-learning algorithm. To illustrate the importance of this element, think about how you would be able to improve your business if you could predict what people are going to want next.
Data Science Models
While the first part addresses the process of creating something out of data, which essentially results in a product, the second part is concerned with developing models that help find the most accurate insights. For example, think about how you would be able to develop a credit score if you could predict what your customers are going to spend in future.
Bias of Data Scientists
The third part of data science is examining the biases that exist in the decision-making process and analyzing how they influence the outcome of your analysis. This is especially important because biases often lead to erroneous assumptions and incorrect conclusions.
Deployment of Data Products
This element focuses on what happens with the product you create in the first part: it helps determine how your data products will be used within a company or organization, such as forecasting sales reports or improving customer service.
Here are the ways in which data science is important for any type of business.
Marketing
The abundance of information and the competitive nature of business require businesses to analyze data faster than ever before. Therefore, companies that use data analysis tools such as Google Analytics can track customer behaviour and preferences more closely and enhance their marketing strategy.
To illustrate, when you visit a website, Google Analytics develops an anonymous cookie ID so that it can track your movements through the site. It then saves your data in log files and groups users who have similar patterns (i.e., belong to the same demographic) into segments. Businesses will then use this information to see what their customers like and dislike, and thus can use it to attract more customers through targeted marketing.
Another illustration of data science as used in a marketing strategy is through SEO marketing. For example, imagine that you are opening a business. To attract customers, your most effective method is to rank high on search engine results pages (SERPs). However, if your website doesn’t have any backlinks, it will be unlikely for anyone to discover it among hundreds of thousands of others. Thus, you can use data science to find backlinks through searching tools like Google and can use those links to drive traffic.
Strategic Analysis and Planning
Businesses need strategic analysis in order to determine where they are now, where they want to be, and how they’re going to get there. This is the most important part of any business, since it helps companies plan out their strategies so that they can make more informed decisions.
Businesses can use data science to track their daily activities, determine what they are doing right and wrong, and identify future trends for planning purposes. To illustrate, imagine that you own a clothing store. You want to start selling sneakers, but are concerned about your ability to keep up with demand for this popular item, which can be difficult because of the amount of stock you need to carry at any given time. However, if your data science team has access to AI systems, they can use it to predict how many sneakers you will sell in the coming weeks so that you’ll have an accurate estimate of how much stock you need to order.
Human Resources
Most businesses struggle with finding and retaining talent. However, data science can help resolve this problem by providing companies with tools that help them find talent online. To illustrate, if your restaurant is looking for a new chef, you can search online to find people who have experience and relevant skills (i.e., worked in the industry, attended culinary school) and then use tools like Google Maps to track their location.
Data science can also help businesses determine why employees are leaving by showing how long they’ve stayed, their responsibilities, and other related details.
Data scientists can help human resources managers make better strategic decisions, such as determining the best ways to compensate employees (i.e., retirement savings plan) or create an incentive structure that encourages productivity.
Customer Relationship Management
Customer relationship management (CRM) has been an essential tool for businesses since it helps them identify and retain their customers. Data science can provide companies with the tools to track customer information so that they can learn more about their preferences, demographics, interests, etc. For example, if your company’s database is not very current or comprehensive, data science can help you find better information about your customers.
Accounting
The majority of businesses use accounting software in order to keep track of their daily transactions, but the data analysis that they receive may be limited. Data science can provide detailed reports that are made specifically for each business in an easy-to-understand format so that company owners know where they stand financially.
To illustrate, let’s say that you own a restaurant and use accounting software for keeping track of your income. Your data science team can develop algorithms to show how much money is coming in and compare it with expenses to determine your cost per meal (CPI). This information allows business owners to easily identify the areas they need to improve upon.
In conclusion, data science works by helping businesses generate reports that allow them to understand how they operate and identify areas that need improvement. In addition, data science can be used as a competitive advantage because it puts businesses ahead of the competition. For example, if you use AI software to predict customer trends, this allows your business to stay connected with customers and earn more loyalty.
