How to Deal With Data

By Louise Lee It has never been easier for entrepreneurs to collect information about their businesses.But how do entrepreneurs know what to collect—and how to act on it? For small-business owners strapped for time and resources, sorting through reams of information from social media, website analytics and customer surveys can lead to confusion or paralysis. We asked experts and entrepreneurs for their best advice about dealing with that torrent.Before you plunge into data, keep some important points in mind. First: Whatever numbers you collect, take the long view. Expand your time frame to include the most recent quarters at least, says Hamilton Wallace, an independent consultant in Phoenix. Otherwise, you might mistake a one-time event for a genuine trend. What's more, use software to organize your data into a visual format such as charts or graphs. "It's easier to identify trends if the data are presented visually," says Steve King, partner at Emergent Research in Lafayette, Calif.Beyond that, set a routine. Avoid paralysis by sitting down regularly, perhaps once a week, with your stats so you become more attuned to the rhythms of your business and adept at interpreting information. But don't go to the other extreme of monitoring data all day, every day—it's more distracting than helpful, says Mr. King.As for what data to collect, look at numbers close to home about your regional or local market and your customers, says Mr. Wallace. Broader numbers like industry data or national trends are "too far removed."So, what kinds of stats matter? A good place to start: Use such software as Google Analytics to learn how many people visit your site and when they come so you can see, for example, if a promotion you ran on a certain day brought an upswing in visitors. You'll also want to know whether visitors located you through social media, an advertisement or a search engine, so you can figure out which marketing strategies are bringing you traffic. And look at which pages within your site people visit and whether they tend to leave from one particular page. For instance, Mark Spera, who uses Google Analytics to track Web visitors to his startup BeGood Clothing, has noted that traffic jumps significantly just after the company is mentioned in fashion and lifestyle blogs. So, "I spend a lot of time cold-calling and reaching out to bloggers," says Mr. Spera, chief executive and co-founder of the San Francisco apparel retailer.As for customer data, solicit all kinds of information about individual customers, including age, gender and family size. You can learn customers' geographic locations and purchasing histories, too, from your ordering and fulfillment systems. Then put all of that information into a database program so you can slice and dice it by various criteria. If your data shows a big chunk of customers have large families or live in the suburbs, you can target your promotions and marketing accordingly.But don't try to predict bigger trends in customer behavior on your own, since there are so many variables, advises Gregory Piatetsky-Shapiro, a business-analytics consultant in Boston. Instead, use software that analyzes data and builds a decision tree. For example, if you want to see what might happen if you hold more big promotional events, the software can analyze past sales patterns and customer behavior and map out possible business outcomes.Customer suggestions can be valuable, but you can't afford to spend hours perusing all of them. Some social-media sites let you sort out comments written by those who have large followings or whose comments are frequently posted elsewhere. "Those are the ones that can have an impact," so you read those first, says Mr. King.If your business attracts emailed comments, set up your inbox so that incoming messages from, say, existing customers flow into a high-priority folder. Whether you're reading online comments or emailed ones, search for hot-button words such as "quality" or "complaint," advises Mr. King.Also, look for patterns as you would when analyzing numbers. When software maker Perrla LLC solicited customer input on product ideas in early 2012, it received 1,500 emailed responses. A big cluster of customers demanded a new version of the software for the Macintosh platform. Perrla had been planning to release a Macintosh version but decided to accelerate its effort. Now the Apple version accounts for 25% of Perrla's sales, says Cliff Batson, co-owner of Perrla, based in Nashville, Tenn. Ms. Lee is a writer in Palo Alto, Calif. She can be reached at

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