Data classification is a critical step in machine learning that involves organizing unstructured data into predefined categories or labels. It's essential for building high-quality datasets that can be used to train accurate models. The process of data classification can be challenging, with issues such as inconsistent labels, dataset bias, and scalability problems. To address these challenges, tools like Encord provide a comprehensive suite of features designed to optimize every stage of the data classification process. These features include an intuitive annotation platform, automation with human oversight, collaboration and consensus tools, quality assurance metrics, analytics and insights, and evaluation of the impact of effective data classification on model performance, decision-making, compliance, and security. By using these tools, organizations can improve model accuracy, enhance generalization, streamline decision-making, meet regulatory requirements, and support active learning, ultimately laying the foundation for successful machine learning projects.