Graphs and charts are tools that you just cannot be without.
They are not just for those who are involved in statistics or business, but for every person who needs to understand data.
Whether you’re comparing a company’s sales or planning your monthly budget, a clear graph can show you mistakes and opportunities, and help you make better decisions.
But which graph to choose? How to create effective graphs?
On this page:
- What is a graph? Definition and meaning.
- Top 10 graphs (with pictures and examples) used in statistics and business.
- When to use different types of graphs and charts?
- How to create clear and effective graphs and charts?
- The best tools to create professional graphs, charts, and diagrams.
What is a graph? Definition, meaning, benefits
A graph is a visual element (such as a line graph, bar chart, pie chart, etc.) that is used to represent information and data.
Data hides a story (like a trend and pattern).
By using graphs and charts, you can easily see and understand trends, outliers, and patterns in data.
They allow you to get the meaning behind figures and numbers and make important decisions or conclusions.
Each industry benefits from using graphs and charts for data visualization. Government, marketing, finance, sales, science, consumer goods, education, sports, and so on.
As all types of organizations become more and more data-driven, the ability to work with graphs and charts isn’t a good plus, it’s essential.
Before start creating and using graphs and charts, you must know how to create clear and effective ones.
How to create effective graphs and charts?
Using graphs and charts is one of the most important skills for the modern-day worker.
However, it’s not enough to see your data in easily digestible visuals to get real insights and make the right decisions.
- First: to define the information you need to present
- Second: to find the best possible graph to show that information
Don’t start with “I need a bar chart/pie chart/map here. Let’s make one that looks cool”. This is how you can end up with misleading visualizations that, while beautiful, don’t help for smart decision making.
Regardless of the type of graph, its purpose is to help you see a pattern or trend in the data being analyzed.
The goal is not to come up with complex descriptions such as: “A’s sales were more than B by 5.8% in 2018, and despite a sales growth of 30% in 2019, A’s sales became less than B by 6.2% in 2019.”
A good graph/chart summarizes and presents information in a way that enables you to focus on the most important points.
Let’s go through the top 10 graphs with examples and pictures, outline their features, and explain how and when to use them for the best results.
Top 10 graphs in business and statistics
1. Line Graph
The line graph is the most popular type of graph with many business and statistics applications because they show an overall trend clearly and concisely.
What is a line graph?
A line graph (also known as a line chart) is a graph used to visualize the values of something over a specified period of time.
For example, your sales department may plot the change in the number of sales your company has on hand over time.
Data points that display the values are connected by straight lines.
When to use line graphs?
- When you want to display trends.
- When you want to represent trends for different categories over the same period of time and thus to show comparison.
For example, the above line graph shows the total units of a company sales of Product A, Product B, and Product C from 2012 to 2019.
Here, you can see at a glance that the top-performing product over the years is product C, followed by Product B.
2. Bar Chart
At some point or another, you’ve interacted with a bar chart before. Bar charts are very popular visuals as they allow you to easily scan them for valuable insights.
And they are great for comparing several different categories of data.
What is a bar chart?
A bar chart (also called bar graph) is a chart that represents data using bars of different heights.
The bars can be two types – vertical or horizontal. It doesn’t matter which type you use.
The bar chart can easily compare the data for each variable at each moment in time.
For example, a bar chart could compare your company’s sales from this year to last year.
When to use a bar chart?
- When you need to compare several different categories.
- When you need to show how large data changes over time.
The above bar graph visualizes revenue by age group for three different product lines – A, B, and C.
You can see more granular differences between revenue for each product within each age group.
As different product lines are groups by age group, you can easily see that the group of 34-45-year-old buyers are the most valuable to your business as they are your biggest customers.
3. Column Chart
If you want to make side-by-side comparisons of different values, the column chart is your answer.
What is a column chart?
A column chart is a type of bar chart that uses vertical bars to show a comparison between categories.
If something can be counted, it can be displayed in a column chart.
Column charts work best for showing the situation at a point in time (for example, the number of products sold on a website).
Their main purpose is to draw attention to total numbers rather than the trend (trends are more suitable for a line chart).
When to use a column chart?
- When you need to show a side-by-side comparison of different values.
- When you want to emphasize the difference between values.
- When you want to highlight the total figures rather than the trends.
For example, the column chart above shows the traffic sources of a website. It illustrates direct traffic vs search traffic vs social media traffic on a series of dates.
The numbers don’t change much from day to day, so a line graph isn’t appropriate as it wouldn’t reveal anything important in terms of trends.
The important information here is the concrete number of visitors coming from different sources to the website each day.
4. Pie Chart
Pie charts are attractive visuals. At a high-level, they’re easy to read and used for representing relative sizes.
What is a pie chart?
A Pie Chart is a circular graph that uses “pie slices” to display relative sizes of data.
A pie chart is a perfect choice for visualizing percentages because it shows each element as part of a whole.
The entire pie represents 100 percent of a whole. The pie slices represent portions of the whole.
When to use a pie chart?
- When you want to represent the share each value has of the whole.
- When you want to show how a group is broken down into smaller pieces.
The above pie chart shows which traffic sources bring in the biggest share of total visitors.
You see that Searches is the most effective source, followed by Social Media, and then Links.
At a glance, your marketing team can spot what’s working best, helping them to concentrate their efforts to maximize the number of visitors.
5. Area Chart
If you need to present data that depicts a time-series relationship, an area chart is a great option.
What is an area chart?
An area chart is a type of chart that represents the change in one or more quantities over time. It is similar to a line graph.
In both area charts and line graphs, data points are connected by a line to show the value of a quantity at different times. They are both good for showing trends.
However, the area chart is different from the line graph, because the area between the x-axis and the line is filled in with color. Thus, area charts give a sense of the overall volume.
Area charts emphasize a trend over time. They aren’t so focused on showing exact values.
Also, area charts are perfect for indicating the change among different data groups.
When to use an area chart?
- When you want to use multiple lines to make a comparison between groups (aka series).
- When you want to track not only the whole value but also want to understand the breakdown of that total by groups.
In the area chart above, you can see how much revenue is overlapped by cost.
Moreover, you see at once where the pink sliver of profit is at its thinnest.
Thus, you can spot where cash flow really is tightest, rather than where in the year your company simply has the most cash.
Area charts can help you with things like resource planning, financial management, defining appropriate storage space, and more.
6. Scatter Plot
The scatter plot is also among the popular and commonly used graphs in statistics and business. It has other names such as a scatter diagram, scatter graph, and correlation chart.
Scatter plot helps in many areas of today’s world – biology, social statistics, data science, data-driven marketing, etc.
What is a Scatter plot?
Scatter plot is a graph that represents a relationship between two variables. The purpose is to show how much one variable affects another.
Usually, when there is a relationship between 2 variables, the first one is called independent. The second variable is called dependent because its values depend on the first variable.
But it is also possible to have no relationship between 2 variables at all.
When to use a Scatter plot?
- When you need to observe and show relationships between two numeric variables.
- When just want to visualize the correlation between 2 large datasets without regard to time.
The above scatter plot illustrates the relationship between monthly e-commerce sales and online advertising costs of a company.
At a glance, you can see that online advertising costs affect monthly e-commerce sales.
When online advertising costs increase, e-commerce sales also increase.
Scatter plots also show if there are unexpected gaps in the data or if there are any outlier points.
7. Bubble chart
If you want to display 3 related dimensions of data in one elegant visualization, a bubble chart will help you.
What is a bubble chart?
A bubble chart is like an extension of the scatter plot used to display relationships between three variables.
The variables’ values for each point are shown by horizontal position, vertical position, and dot size.
In a bubble chart, we can make three different pairwise comparisons (X vs. Y, Y vs. Z, X vs. Z).
When to use a bubble chart?
- When you want to depict and show relationships between three variables.
The bubble chart above illustrates the relationship between 3 dimensions of data:
- Cost (X-Axis)
- Profit (Y-Axis)
- Probability of Success (%) (Bubble Size).
Bubbles are proportional to the third dimension – the probability of success. The larger the bubble, the greater the probability of success.
It is obvious that Product A has the highest probability of success.
8. Pyramid Graph
The Pyramid graph is interesting, visually appealing, and one of the most easy-to-read visuals.
What is a pyramid graph?
It is a graph in the shape of a triangle or pyramid. It is best used when you want to show some kind of hierarchy. The pyramid levels display some kind of progressive order, such as:
- More important to least important. For example, CEOs at the top and temporary employees on the bottom level.
- Specific to least specific. For example, expert fields at the top, general fields at the bottom.
- Older to newer.
When to use a pyramid graph?
- When you need to illustrate some kind of hierarchy or progressive order
Image Source: Conceptdraw
The above is a 5 Level Pyramid of information system types that is based on the hierarchy in an organization.
It shows progressive order from tacit knowledge to more basic knowledge. Executive information system at the top and transaction processing system on the bottom level.
The levels are displayed in different colors. It’s very easy to read and understand.
Treemaps also show a hierarchical structure like the pyramid graph, however in a completely different way.
What is a treemap?
Treemap is a visual used to display a hierarchical structure with nested rectangles.
Data is organized as branches and sub-branches. Treemaps display quantities for each category and sub-category via a rectangle area size.
Treemaps are a compact and space-efficient option for showing hierarchies.
They are also great at comparing the proportions between categories via their area size. Thus, they provide an instant sense of which data categories are the most important overall.
When to use a treemap?
- When you want to illustrate hierarchies and comparative value between categories and subcategories.
Image source: Power BI
For example, let’s say you work in a company that sells clothing categories: Urban, Rural, Youth, and Mix.
The above treemap depicts the sales of different clothing categories, which are then broken down by clothing manufacturers.
You see at a glance that Urban is your most successful clothing category, but that the Quibus is your most valuable clothing manufacturer, across all categories.
10. Funnel chart
Funnel charts are used to illustrate optimizations, specifically to see which stages most impact drop-off.
Illustrating the drop-offs helps to show the importance of each stage.
What is a funnel chart?
A funnel chart is a chart that shows the flow of users through a sales or other business process.
It looks like a funnel that starts from a large head and ends in a smaller neck. The number of users at each step of the process is visualized from the funnel width as it narrows.
A funnel chart is very useful for identifying potential problem areas in the sales process.
When to use a funnel chart?
- When you need to represent stages in a sales or other business process and show the amount of revenue for each stage.
Image Source: DevExpress
This funnel chart shows the conversion rate of a website.
The conversion rate shows what percentage of all visitors completed a specific desired action (such as subscription or purchase).
The chart starts with the people that visited the website and goes through every touchpoint until the final desired action – renewal of the subscription.
You can see easily where visitors are dropping out of the process.
Best tools to create professional graphs and charts
There is a wide range of software tools that allow you to make fascinating graphs, charts, and diagrams in no time.
They vary from BI (Business Intelligence) tools with robust features to more simple software for just creating graphs and charts.
Here we’ve collected some of the most popular solutions. They can help you create graphs in a way that facilitates understanding and decision making.
The graph/chart is the best method to display relationships in the data in an easy-to-understand manner.
A good graph shows information clearly and can grab the attention of the audience.
It is a simple visual that allows readers to focus on the main points.
No matter if you are a student or professional, a graph can organize your information and guide you to the solution to many problems.