By Rebecca Riserbato

Last November, my husband and I were on our honeymoon in Maui. One of the main activities we wanted to do was a hiking tour near the waterfalls. We dreamt of swimming in the cascading water at sunrise.

When you hear the word “waterfall,” that’s typically what you imagine. However, today, we’re going to talk about a different kind of waterfall — the waterfall chart.

Waterfall charts are a data visualization resource that can help you gather and track important data such as traffic goals and lead generation. Below, let’s review what a waterfall chart is, how to read one, and how to create one.

In marketing, a waterfall chart could display the number of leads, traffic sources, or blog views over a period of time. More specifically, you could use a waterfall chart to showcase how your blog traffic has increased or decreased in the last year, giving values month over month.

You could potentially use line charts, bar charts, and even bullet graphs to show this type of data. But waterfall charts have the advantage of showing your gains as they’re impacted by losses over time.

Why use a waterfall chart?

You should use a waterfall chart instead of other types of charts when trying to visualize data that experiences both gains and losses. It’s especially useful if you want to see how a loss affects a subsequent value.

One of the reasons that waterfall charts are effective in marketing is because they give context on the data it’s reporting. Most data visualizations suffer from ignoring circumstances that result in a fall or rise in numbers, such as seasonality.

For instance, let’s say you create a waterfall chart of your Twitter followers over time. Rather than using a line graph that shows your total number of users over time, a waterfall chart shows how many you lost — and how that impacts subsequent figures.

At first glance, these charts can be difficult to read. Below, let’s review how to read a waterfall chart.

How to Read a Waterfall Chart

Reading a waterfall chart will seem foreign at first if you’ve never done it.

However, it’s important to remember that you’re reading it sequentially, from left to right.

For instance, let’s say you’re tracking blog traffic from month to month. On the far left, you’ll have the total traffic from the previous year. Then, you’ll include the gains and losses month over month for the entire year. At the end of the chart, you’ll see the total traffic for the year.

Here’s what that looks like:

Notice how each value ends either where the previous value ended or began. In January, there was a gain of 5,000 visitors, but in February and March, there was a loss of 2,000. April’s traffic value takes that into account by starting from the -2,000 figure and going up from there.

Essentially, a waterfall chart is supposed to show you where you started and where you ended up, with …read more

Source:: HubSpot Blog

Author: Aaron