Data visualization is a fundamental step for successful data analysis. By giving your information a visual context, you make it more understandable and prepared to identify trends, patterns, or problems. 

There are many chart types available and each one of them plays an important role in a professional BI dashboard. To choose the perfect mix of visualizations, you need to know exactly what story you want to tell with your data and what visual tool will be the best to do so. In this post, we will introduce you to one of the most straightforward types of data visualizations, the gauge chart.

If you are interested in learning how this type of chart can boost your data storytelling, then you’ve come to the right place. This complete guide will cover every aspect of gauge charts, from the definition, its benefits, steps to create them, and a list of practical examples that will help you visualize how this chart type works in real business scenarios.

Let’s dig in with its definition! 

What Is A Gauge Chart? 

A gauge chart is a type of data visualization often used to display a single data value with a quantitative context. With a shape that resembles a speedometer, this chart aims to track the progress of a KPI in comparison to a set target or to other time periods. 

The advantage of this chart lays in the fact that it’s easy to interpret. It uses various colors to divide a scale into segments that represent different values of the same metric, and it uses a needle to point at a certain value over the pivot point. In most cases, these colors usually show the maximum, the medium, and the minimum value of the data being displayed in order to quickly visualize its performance based on a trend. 

The gauge chart is a suitable chart for executive dashboards. And it proves particularly useful in situations where the expected value of the data is already known, this way business departments, managers, or employees can easily understand where they stand with that specific metric just by looking at the chart. 

Benefits Of Using Gauge Charts 

Gauge charts are very effective graphics that manage to capture the attention of an audience fast and efficiently. To put the power of this type of visualization into perspective here we leave you some of the main business benefits:

• Easy to create: The fact that this chart type is mostly used to display one metric at a time, makes it a straightforward visualization. With the right online data visualization tools, you can create a professional chart with just a few clicks. We will go a bit deeper into this point further in the post.  
• User-friendly: One of the aspects that makes gauge charts popular is that people are usually familiar with them thanks to their resemblance to a car speedometer or a  temperature indicator. This makes them a great chart to display performance metrics and show them to non-technical viewers that will be able to easily understand the value that is being displayed in the chart.  
• Easy to interpret: Following the user-friendly interface of this type of chart is that they are quite easy to interpret. The sequence of colors, usually from green to red, makes them intuitive and immediate to understand. Business executives use them because they are able to transmit an important metric simply and clearly. 

When To Use A Gauge Chart 

Because gauge charts are easy to create and understand, they can be applied in many business scenarios. However, it is important to consider that due to the fact that this type of visualization is mostly used to display one single value, they are not the best choice if you want to extract deeper insights from your data. For this reason, it is important to identify the best scenarios in which your business can benefit from this chart type, here we tell you some of them: 

• For progressive information: If you have a linear metric and you want to display how it changes, a gauge chart is the way to go. You can monitor your metrics based on a time period to understand how the values changed over time and see if you accomplish your original goal. You can also compare the performance to a different time period, for example, a year, and see if there were any improvements.  
• For target metrics: Another popular use of this chart is for target metrics. Using them in this context will help you understand the performance of a specific KPI based on a target you pre-defined. For example, if you want to visualize sales KPIs that track the total revenue for a specific period based on a target, a gauge chart can easily display the percentage of the goal that has been achieved until a specific period of time.
• For project progress or deadlines: Gauge charts tracking project progress or deadlines play an important role in a business dashboard. The chart is used in this particular scenario by taking all the tasks and deadlines involved in a project and reflecting them in a percentage to understand if you are late or advanced to meet the deadlines and completion of the project. 
• For comparing two datasets: Another popular use of this visualization is to compare two datasets. This can either be done in the same chart using multiple needles to differentiate the performance of the two values or by using two different charts displaying the same value with a different benchmark. For example, you can compare the revenues of one month with the total revenues based on a yearly target. This way you could understand how much each month contributes to the final goal. 

How to Create A Gauge Chart 

By now, we’ve covered the definition of gauge charts and a few benefits and scenarios in which your business could take advantage of them. Now it’s time to start considering what steps are important to create a successful gauge chart that will benefit your data storytelling process.

1. Define your metrics

The first step is to define the metrics you’ll want to visualize. As we just mentioned recently, due to their simplistic nature, gauge charts cannot be understood without context and are not useful if you want to extract deeper insights from your data. Additionally, they take more space than an average number chart in a business KPI dashboard, therefore you need to be careful and smart when picking the metrics you’ll want to visualize with this type of chart. Make sure you choose KPIs that are not complex or wide, stick with performance metrics that will give an extra value to your overall report.

After defining what metrics you’ll use, you need to come up with a scale to define the range that will measure how the data value changes over time. The range can be either a maximum value, or divided into thresholds of low, medium, and high performance. This is usually done with the colors red, yellow, and green as they represent positive or negative outcomes. 

2. Chose the right type of chart

Gauge charts come in different shapes and forms depending on what type of metric you want to represent. We already mentioned the different scenarios in which your business can benefit from this type of visualization. For this reason, after you pick the KPIs metrics you’ll visualize you need to pick the best type of gauge chart for them. Here we leave you a quick definition of 3 commonly used types: 

• Speedometer: One of the most popular types is the speedometer. Its name comes from the chart that measures a car’s speed and it is often used if you want to compare longer ranges of a metric thanks to its circular shape. This type of gauge chart can use one or multiple needles to point at a certain value based on a goal or benchmark.  
• Linear Gauge Chart: The linear chart is used to indicate a numeric data value on a linear scale. The values are usually displayed in a vertical or horizontal bar with colors that differentiate the ranges of data alongside a pointer to indicate the data value on the scale.
• Angular Gauge Chart: The angular chart is the same as the speedometer chart but it displays only half of the circle. It is often used to display a range that is limited or when you want to visualize the performance of a metric based on a positive or negative outcome.  

3. Pick the right colors 

It has been proven over and over that humans are more likely to take in new information if it’s in a visual format. In fact, studies say that the human brain processes visuals 60.000 times faster than text or numbers. This is because visuals are more intuitive and more likely to stay in your memory for a longer time. 

This makes picking the colors for your gauge charts a fundamental step in the design process. As we said, this type of chart is often used to display performance metrics, therefore colors are usually associated with poor, satisfactory, and good results. For example, the green color will always be associated with excellent or high performance, yellow can mean average or normal, and red can mean alarming or bad outcomes. 

On the other hand, if you are using gauge charts that just aim to show the progress of a metric you need to make sure you pick a color that is easy on the eyes but that still pops up and highlights the graph.  

4. Use professional tools

Our final tip to help you create a successful gauge chart is to use a tool that will allow you to create a professional business chart easily and efficiently. Since this type of chart performs better when placed on a business dashboard, it might not be the smartest or fastest choice to use excel to create them. Instead, you should invest in a tool that will give you the freedom to create different charts with colors and shapes that will enable your data to tell its own story. 

datapine is a business intelligence software that offers an interactive and user-friendly dashboard creator. Thanks to its drag & drop feature you can create professional gauge charts with just a few clicks. Additionally, the dashboard tool gives you full control over the design of your visualizations, this way you can pick the size and colors of your charts so that they can match your brand identity and complement your other metrics for further analysis. 

Top 6 Gauge Chart Examples 

For the final portion of this guide, we present you with a list of 6 gauge chart examples in different business contexts that will help you visualize how your organization can benefit from this powerful chart type.

1. Sales Target Growth 

Our first gauge chart example is a high-level marketing KPI measuring sales target and growth. As we mentioned before, this type of chart can be used to compare the same value over a different benchmark. In this example, we can see two gauges that compare the sales performance with the previous month as well as to a set target. By tracking these metrics on a monthly basis and setting realistic sales targets, businesses can ensure stable growth and viable revenue. 

2. Hospital Readmission Rate

Our next example is the hospital readmission rate, one of the most important healthcare KPIs to track. This metric aims to monitor what percentage of patients returned to the hospital within a short period of time after being released.  A gauge chart is useful here since it allows hospital managers to quickly understand if the readmission rate is high or low. It is important to consider that this chart alone would not allow for further conclusions about why the readmission rate could be high. In order to get this information, it would be necessary to dig deeper into other aspects like hospital management, materials available, quality of the staff, and others. 

3. Maintenance Cost 

This manufacturing KPI aims to monitor the maintenance costs of a business. The chart here works as a type of alert for users to quickly understand how the costs are going. In this case, we see a message saying that the maintenance costs are above the average, this means further action needs to be taken in order to avoid budgeting issues. By keeping track of this metric, you can make sure you optimize your costs over time and save money for other future investments in your equipment.  

4. Gross Profit Margin 

The gross profit margin is a key metric to include in a professional financial dashboard. This KPI aims to track the total revenue minus the cost of goods sold or service delivered and divide it by your total sales revenue. To put it simply, this metric displays the percentage of total sales revenue that you get to keep after accounting for all the costs associated with production and labor. By tracking the gross profit margin, you can understand how effective is the production of your company, a higher gross profit means a higher income. In this case, the gauge chart aims to do just that, by looking at this percentage, business executives can understand at a first glance the financial health of the company. 

5. Net Promoter Score

Our next example is a customer service KPI tracking the net promoter score. This metric is a great indicator for a customer service report since it aims to evaluate customer loyalty and satisfaction. In this case, the chart displays the results to a simple question: to grade, from 0 to 10, how likely they would recommend the brand. The results are displayed in a speedometer shape where the needle points to the current NPS score. Paired with this, the color green represents the target range from 40-100 which means a positive net promoter score, yellow represents a medium score, and red represents a really negative NPS lower than -20. 

6. Overall Project Progress IT

As we mentioned before, a popular use-case for gauge charts is to track project progress. This metric aims to monitor how much of a project has been completed based on a target date on which all the work needs to be completed. By looking at this chart, anyone in the team can understand if the schedule is going as planned. Colors can also be used in this type of scenario, for example, if the project were mildly delayed it could use yellow, and if it’s strongly delayed it could use red. 

Key Takeaways Of Gauge Charts 

As we reach the end of this practical guide, we expect you to be more aware of how gauge charts can add extra value to your data storytelling. We went through its main benefits, saw some tips on how to use them and build them, and gave you a list of quality real business examples in which you can apply this type of visualization. 

Remember to keep in mind that in order to extract actionable insights from your metrics, your data needs to tell a story. Your dashboards need to be as interactive and complete as possible with a varied mix of visualizations that will enable anyone in your organization to work with the data. Gauge charts alone will be nothing without other metrics to look at the whole picture. 

If you are ready to start creating stunning gauge charts with the help of a professional dashboarding software, then try our 14-day trial completely free and start benefiting from quality data visualizations today! 

The post Discover The Power Of Gauge Charts: Definition, Best Practices & Examples appeared first on BI Blog | Data Visualization & Analytics Blog | datapine.