With the explosion of data in the business world, it has become imperative for businesses to find ways to harness and interpret this data to make informed decisions. One way a business can accomplish this is through a combination chart. These versatile chart types are especially useful in business analytics for comparing and illustrating distinct yet connected data sets. Below, we’ll delve into what combination charts are, how they can be used in business analytics, different types of combination charts, steps to create them, and real-life applications of these charts in various business scenarios.
Understanding the Concept of Combination Charts
Combination charts, as the name suggests, combine two or more chart types into one, providing a versatile method to display data. They are incredibly useful when businesses want to display more than one related variable or data set at the same time.
A combination chart provides additional context to the data, giving depth and allowing complex interrelationships to be understood more easily. Each chart type within the combination usually visualizes a different aspect of the data, letting the viewer gain insights from multiple angles.
A combination chart is often used when one dataset is significantly larger than another, allowing both datasets to be displayed on different scales but within the same chart area.
Necessity of Combination Charts in Business Analytics
Combination charts are essential in business analytics primarily because they allow for a more in-depth interpretation of multiple data streams. This is especially critical in industries where multiple operational factors interact with each other in complex ways.
Combination charts are especially useful when the data streams being compared have different units or measures. By incorporating different axes, they allow businesses to compare unlike metrics, such as revenue (in dollars) against units sold, on the same chart.
Different Types of Combination Charts and Their Implementations
There are many types of combination charts, and the choice of chart largely depends on the type of data you’re dealing with. A common choice includes the line-column chart. The line-column chart is used when you want to highlight trends or changes over time.
Another popular type is the line-area charts. Line-area charts are particularly useful for displaying two different measures—one counted by the line, and the other represented by the area. For instance, this can be profit versus sales over time.
Lastly, combo charts that include a scatterplot are also utilized. These are especially vital when you want to highlight the relationship between two numerical variables and show the distribution of data points. A scatterplot can help observe any existing correlations between these variables.
Steps To Create Effective Combination Charts
Creating effective combination charts might seem complex, but with an understanding of your data and several steps, it can be simplified. First, you must clarify the objective for your analysis—knowing what you wish to achieve with this data visualization is key.
Next, determine the type of combination chart that will best help you achieve this goal. While choosing, consider the kinds of data you’ve gathered, the scales of measurement, units, and the relationships you wish to portray.
After deciding what type of chart to use, conduct data cleansing and processing. This process ensures your data is accurate and ready to be represented in a chart. It may include removing duplicates, errors, and irrelevant data.
Business Applications of Combination Charts
Combination charts are used in various business scenarios. For example, in sales, a company may use a combination chart to track sales over time (line chart) while also tracking the number of sales representatives (column chart) for the same period.
In marketing, a combination chart might be used to illustrate the relationship between marketing spend (line chart) and resultant sales (column chart). It provides a visual guide to how effective the marketing strategies are in driving sales.
Big corporations may use combination charts to present revenue and net income over time. The revenues could represent the column chart while the net income could be represented with the line chart. These charts help companies illustrate how revenue correlates with net income.