Data classification: Why it matters to business strategy

You might have heard about the concept of classification under different names like ‘segmentation,’ ‘categorization,’ or ‘hashtags.’ Classification is basically the process of chunking up or organizing your data into different groups or under different labels so that you can use it to better support your business strategy.

In practice, this enhances your ability to do things like target email marketing to a specific demographic, court different types of non-profit donors, and check on your business pipeline by a particular product or salesperson. How?

It does this by helping you quickly isolate and bring together all of the things that belong to a group so that you can do something with that group: monitor it (as part of a metric), investigate it, work with it, or plan with it.

You can think about the pieces of your data as pieces of a puzzle, each one giving a clue to a bigger picture if only you can place it correctly.

randomly grabbing puzzle pieces

If that data has not been strategically organized and classified, that’s the same as dumping out all of your puzzle pieces from all of your puzzles into one big heap and then throwing out all of the boxes. It’s going to take you a lot of time to sort through all of those pieces just to find the pieces that you want to put together.

Are you able to find all of the pieces?

Did you accidentally use a piece or two from a different puzzle?

To prevent these types of quagmires, we use classification strategies:

  • We keep all of the pieces of a single puzzle in that puzzle’s box.
  • When we’re ready to work on the puzzle, we separate pieces into edge pieces and inside pieces. That is, we separate by role.
  • We classify pieces according to parts of the puzzle, like making a separate pile of the sky pieces that we come across. That is, we separate by type of thing.
  • When our eyes get tired, maybe we move to a different side of the puzzle to see if changing perspective helps us see things differently and make better progress in figuring out how the pieces fit into that bigger picture. That is, we change perspective and (double) check ourselves.

Your data requires that same type of attention and systematicity, and you and your business strategy deserve it.

If you track your business sales by different products or different services, then you’re already doing this to some extent. The more you have things broken down into reliable classifications, the more usable those things are. So what makes a classification reliable?

As much as possible, think in terms of clean dropdowns of choices instead of free text for everything.

As an example, let’s talk about geographic data. I’ll use a village in Western New York called Blasdell. Some folks pronounce it Blaze-dell, some folks pronounce it Blas-dale, and so on. Taking a look at the screen capture below, you can see all of these different pronunciations play out in the different ways people have typed them into a free text field. Not a problem, right? If you’re familiar with the village, then it’s obvious that all of these entries are variations on the theme of Blasdell.

Blasdell spelling variations, including Blaizdell, Blasdale, and Blasedale
Misspellings of ‘Blasdell’

Here’s a second screen capture of a summary I created from a dataset that contains all of these spelling variations.

Summary tallies of different spellings of Blasdell, showing the correct spelling with only 10,972,951 entries versus the 11,451,430 total that should be captured
Data summarized by misspellings of Blasdell

You can see that there’s a grand total of roughly 11 and a half million. If I look at the correct spelling of Blasdell, you can see that only about 11 million entries have been accounted for. If I’m searching through this dataset using only the correct spelling of Blasdell, that leaves about 500,000, or a half a million things from this data set, unaccounted for.

I don’t know how your business runs, but, in my business, I can’t afford to lose track of a half million of anything!

So we have a problem.

There are different ways to address these types of problems, like cleaning up after the fact, but I like to get ahead of them by figuring out what classifications make sense for you and your business, and then, as necessary, putting into place processes and tools and training that help you get what you need when you need it and in the format you need it.

Regardless of the technology, that requires answering this question:
How do you need things to be grouped for what you’re trying to accomplish?

Using the puzzle metaphor, I’ll return to the example of email marketing, which I’ll simplify a little bit to help make my point.

I have all of my contacts in a client management system, which I can use like a master distribution list. However, if I use that entire list as the basis of my email marketing, it would come off like spam to a lot of the recipients, because they’re not all interested in everything I have to offer.

Instead, just like with puzzles, I use the idea of boxes to classify my master list.

  • People that have taken workshops from me are collected together into one “puzzle box” labeled workshops.
  • I can further classify these “workshop puzzle pieces” into people that have taken an Excel workshop or a strategic metrics workshops or a dashboard workshop or a database workshop, and so on.

If I have a new Excel tip, I can email that out now to just the people that have taken my Excel workshops.

Now I know that I’m working with the dataset that I need, and, if I’ve been systematic with my classifications, then my email marketing will reach the people that are actually interested in the things I have to offer. I won’t have overlooked anyone, and I won’t have blindly spammed anyone either.

Of course, unlike puzzle pieces, these people and other data might legitimately fit into more than one “box” at the same time. Additionally, while it’s a bit more complicated than the examples I’ve given so far, you can also do this with free text data like customer reviews to help you uncover things like the customer experience as it relates to different products or services you offer.

The trick is to apply this to meet your needs. Classification for the sake of classification is just busywork.

How have you used data classification to support your business strategy? I’d love to hear about in the comments!


This blog post is a reworking of the transcript of a video on the Blou Designs YouTube Channel. If you would like to “watch” this post, you can find it at:
https://youtu.be/TGri-bBWBhM (new window)

If you prefer video content, don’t forget to subscribe to the Blou Designs YouTube Channel so you can get a notification each time we release a new video there!

Author: Barbara

Barbara is the Managing Member and Primary Consultant of Blou Designs LLC

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