What is data science and could your business benefit from data science consulting?
Data science can seem like a very nebulous topic for companies who aren’t far along in their data science or analytics efforts. Many businesses don’t have a data science team or a data scientist employed, and oftentimes business owners don’t know where to start learning about data science and how data science consulting could benefit their company.
So what is data science, why would a business need it, and how do you know if your business could benefit from data science consulting?
Data science consulting can be used to solve a surprisingly wide variety of business problems. If your business has a problem and has data related to that problem, then data science could be used to solve it, inform your decision making, and prevent future loss or inefficiencies.
Here’s a quick example before we dive further into what data science is and how data science consulting can benefit your business:
Let’s say a very large banking company comes to a data science consulting company wanting to decrease the amount of people leaving their bank and closing accounts. How can they use data science to solve this? The data science consulting company would assess past transactions and actions of people who left the bank previously and build a logistic regression model that will identify similarities between those accounts and customers. The consulting company may find that a majority of accounts that were closed had a significant decrease in debit transactions, or that all accounts had a consistently low balance. Or the model may show that the tell-tale sign is that the customer merely deposited and then immediately removed the money from the account on a regular basis. All of these trends can be discovered with data science and machine learning, and the bank could use those indicators to rebuild relationships with those clients specifically.
The data science consulting company could also use that past data to create a notification system that alerts the bank to all the customers who are performing similar actions to those that have left previously. The bank can then reach out to those customers before it’s too late. Whether through a new incentive program for maintaining a minimum balance, a customer service rep reaching out to the customer personally, or any number of chosen reparative actions, having this information sooner rather than later allows the bank to choose a remedial course of action and prevent loss.
This is just one example of how a business problem can be alleviated with the help of data science consulting and machine learning. Data science consulting companies can help businesses identify the variables around the problems they’re trying to solve and then apply data science methods to those problems to change outcomes.
Now that we’ve given a quick example, let’s get to some basics about data science and how you can use it for your business.
What is data science?
As put perfectly by Towards Data Science, data science is the practice of using automated statistics in the form of models to classify or predict outcomes.
In the case of classifying outcomes, data science consulting companies help a business identify or target key groups or customers, as in the previous banking example. The bank needed to classify a group of at-risk customers who might leave soon. The consulting company uses data science methods and possibly machine learning to assess all the data surrounding the situation and discover with a high degree of accuracy which customers would fit in the classification of “about to leave” and who as a result would be critical to deepen relationships with. The consulting company would help the bank build an accurate model to make sure that they’re targeting the right customers based on the data.
In the case of using data science in a predictive way, the consulting company could use historical data to predict the exact probability that a client is going to leave based on certain indicators in the data and account actions. Or they could project how many customers could leave the bank by next fall if no action is taken by combining data on past seasons where people left the bank with data from current account transactions.
Predictive information like this is extremely useful when presenting a case for new initiatives or programs to stakeholders. With data science you can present with convincing accuracy exactly what’s at risk for your company if you don’t take action.
With the help of a data science consulting company you could even use predictive data science to show stakeholders what your chance of success would be if you perform certain actions to remediate the problem. You can present that with option A, we think this will save X number of customers. And with option B, this should save Y number of customers. A data science consulting company can help you use data to strengthen your case for change and give you greater certainty when moving forward with any course of action for your business.
Here are a few more examples of how data science consulting can benefit a business:
- Forecasting sales volume
- Aiding in product development efforts with accurate surveys and views of response data
- Effective ad and audience targeting
- Knowing if you should launch a product or not and when is optimal
- Personalizing customer experience
- Fraud and fault detection in machinery or programs
- Customer behavior prediction
- Identifying and predicting customer pain points
- Optimized supply change management
- Assessing the impact of potential business purchases/investments and hiring decisions
- Predicting when or how often certain business problems could come up in the future
When you start working with a data science consulting company to apply data science to every possible area of your business, you ensure that you make the right decision more often, and that can have a big impact on your bottom line. Data science consulting can help you better prepare for the future as a company, ensure efficiency in your operations, and mitigate risk in everyday decision making. If you collect the right data to make more informed decisions, executives won’t have to rely on gut-feel or intuition when deciding what’s best for their customers, employees, and stakeholders.
Intuition can take you pretty far. But is it far enough?
Gut feel and intuition can take a business only so far. When a business grows and has more data about their customers, machinery, accounts, and operations more and more variables are involved, using only intuition is a less reliable option. With so many variables behind customer decisions, employee effectiveness, and market influences, intuition doesn’t do enough to protect a company from risk or outperformance by competitors.
You can’t possibly know every customer and be sure your actions directly represent what’s best for them. You have to be able to dive into the data and take all variables into account in order to target effectively and truly connect with your customers. That is where data science consulting comes in.
Complex business problems usually have complex data involved, and a data science consulting company can help business owners sort through all of the data behind a problem, predict outcomes, and find similarities in the data that wouldn’t be easily noticeable or apparent through intuition. If your company has data, then a data science consulting company could help you use it to your advantage. Whether you use your data to mitigate risk or to develop better products for the future, you can go into just about any decision more informed and sure of your success if you have the data behind it and already know your probability of success.
Can’t we just use the analytics tools we already have?
So if your company already has data and maybe even data analytics tools, why can’t you just use those analytics tools for assessment? Why do you need data science consulting?
Let’s give the example of a company who wants to know what the probability is that they’ll make a certain amount per month and how often they might make that amount in the coming year. Where analytics might be able to identify past occurrences- how many times in the past year the business made that amount- the company needs data science and the help of a consulting company to build an accurate, tested model. The data science consulting company can come up with a projection that takes all variables into account.
With data science and maybe even the help of machine learning, the data science consulting company might discover what’s called a prior - an additional factor that altered results. In this case, the prior could be that in every previous month that the company hit the amount of revenue they’d like to make, they ran a sale. The sale is the prior that affected their total sales.
Simple analytics wouldn’t always make this obvious, but a consulting company would be able to build a model that would help them find these priors and become aware of all possible variables. Likewise, the model built by the data science consulting company would help the business project the probability of a certain level of performance while taking into consideration X, Y, and Z variables for their business (such as a sale, the closing of competitor stores, etc.).
Without testing a model and applying data science consulting methods, it would have been easy to assume that because the business made that amount twice before, they could make that same amount again. But when working with a data science consulting company they would find out that they wouldn’t make that amount if a sale wasn’t involved. Creating a model using data science ensures more accurate forecasting and risk assessment.
Where to start with data science for your business.
You would think we’d say to start by hiring a data scientist or data science consulting company. But there are other important steps for your business to take before that. After all, the point isn’t to use data science just for the sake of it. The point is to use data science because you have a problem to solve, and because data can help you do whatever you need to do better.
Start by identifying the problem you want to solve with data science.
Before you do anything with your data, start by identifying the problem that you need to solve or identifying decisions that you need to further inform. And then look to see if you have the data to support it. If you have the data, great. If you don’t, you can start gathering data pertinent to that problem.
If you have already been gathering data around your customers, business operations, etc. for a while, don’t just start with the data you have and find a use for it. That’s not an efficient way to get results from your data. Start by thinking about the problem you’re trying to solve, and then assess how to use your data as a result. (If needed, the data you already have can help you identify what problems are of the greatest importance for your company, and that’s in fact a good business practice for a data-driven organization.) Look at your company or customer’s biggest pain points, then work with a data science consulting company to start collecting the data you need to solve those problems and further inform your decision making.
Data science consulting or even machine learning is not a magic bullet solution. In some cases using data science or machine learning isn’t necessary for solving the problem at hand or may not be able to be used based on the data you have. Once you clearly identify the problem you’re trying to solve, though, it will be much easier to tell if you need data science and to begin preparing your data toward that purpose.
Does My Business Need Data Science Consulting?
You shouldn’t have to navigate this process of using your data to its greatest potential on your own. Data science consulting helps businesses who don’t have a data science team or data scientist on staff with risk mitigation, accurate decision-making, more effective targeting, and establishing those important failsafes that could spare your company money and mishaps.
A data science consulting company can walk you through the process of using data science most effectively for your business. By working with a data science consulting company, you can make sure that you have a clear focus for why you’re using your data and use it effectively to make important changes for your company. Data science consulting companies take the guesswork out of gathering data and are able to help you find immediate applications for data science.
A data science consulting company can help you specifically:
- Identify the most important/urgent problems for your business based on the data (accurately assessing areas of weakness, rather than just guessing or putting out fires)
- Gather the right data that pertains to the problem you’re trying to solve and assess when you’ll have enough data to begin solving problems with data science
- Choose from the numerous analytics solutions options and set up analytics for your company
- Project/classify your data with data science models and machine learning if needed
- Visualize and present key findings to stakeholders
Make better decisions with your data.
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In our next article, we’ll share more about the exact process that data science consulting companies use to predict and classify your data, what to look for when choosing a data science consultant, and important tips for working with a data science consulting company.