While itís easy to see the value in data analytics, many business owners struggle to be data-driven. The good news is you donít need to be a data scientist to think like one.
Data science is more of a mindset than a technical aptitude. While both are important, what separates good data scientists from great ones is a way of approaching data.
If youíre new to data science, consider the following five easy ways you can start thinking like a data scientist:
- Clean your data ó Data scientists know the value of having clean data. Cleaning data, or wrangling data, is the process of finding errors in your dataset and fixing them in preparation of analysis. This includes:
- Mislabeled items
- Incomplete information
Like a good data scientist, itís important to be vigilant with your data. By putting the time and effort into ensuring your data quality is reliable, you will garner the best results. Your output is only as good as the data thatís going into it.
- Think†critically†ó Ever hear of the spurious case of divorce and margarine? Weird correlations exist and good data scientists will be able to recognize the difference between correlation and causation. Are most of your customers really from the 90210 area code? A good data scientist would be able to think critically and ignore these types of faulty data.
When analyzing data, keep the following questions in mind:
- Are there other variables that account for this outcome?
- What was the size of the sample used in this dataset?
- Is this a correlation or a causation?
- Avoid analysis paralysis†ó Itís easy to get overwhelmed with data and then do nothing with it. You need to start somewhere, right? To prevent inaction, start with the low-hanging fruit. Decide on at least three insights you want to capture from your data and use SAP BusinessObjects Cloud to create a story.
A good mindset to have is to be curious. Data scientists love to follow hunches, discover insights, and answer questions. Once you have your story visualized, itíll be easier to take the appropriate action.
As a business owner, here are five common visual ways your data can come to life with SAP BusinessObjects Cloud:
Profit/Loss ó Is your business profitable this month? If so, how much? And how do profits compare with previous months?
Sales revenue ó Where are yours sales coming from? Who is your largest customer segment? What are the key influencers driving sales? Start with a chart that combines your sales revenue as a measure and time as a dimension. You can also establish parent-child hierarchies to drilldown deeper in your data.
Expenditures ó What are your top five expenses this quarter? How do they relate to previous quarters? Are there ways to cutback on certain costs to maximize profits? Create a chart that shows months as a time dimension and expenditures as a measure.
- Customer acquisition ó How much does it cost to acquire a customer? Create a†chart that shows your total marketing spend over time and the total number of customers acquired over that same period. You can then add a calculation as a new measure showing your customer acquisition cost (i.e. total marketing spend / the number of customers acquired in that period).
- Churn ó Is your customer base growing or shrinking? And by how much? To calculate churn rate, take the number of customers at the beginning of a given time period, subtract by the number of customers at the end of that period, then divide by the total number of customers from the beginning of that period.
- Blend datasets ó By blending†datasets†from different sources, you can establish a broader understanding of your business and find valuable insights. Start by importing all your different data sources across your business into SAP BusinessObjects Cloud, then create a series of charts with the KPIs for each business function. By seeing your organization as a whole, you may discover insights that may have gone unnoticed before.
- Design your dashboard ó Data science is more than just analysis, itís about presenting your findings in clear and compelling stories. Choose the best charts and graphs†that will tell your story. Visual communication†is also a great way to convey complex information to an audience.