Heatmap – A Creative and Useful Way to Analyse Data

It’s likely that any business owner is familiar with the concept of “Heatmap” – a highly effective and valuable tool for data analysis within business intelligence in recent times. Originally conceived in the mid-90s by Cormac Kinney, an American entrepreneur and software developer, Heatmaps initially served as aids for securities traders to outperform the market. Nowadays, they are widely utilized to visualize data using a spectrum of colors. What exactly are Heatmaps, and how do they contribute to data analysis? Let’s explore these topics together in this blog, particularly from the perspective of a software development company.

What is a Heatmap?

A heatmap can provide a visual summary of information by the two-dimensional representation of data, in which values are represented by colours. There can be a number of ways to display heatmaps, but they all share one thing in common – they use colours to draw the relationships between data values that would be much harder to understand if presented in a sheet of numerical values.

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  What is a Heatmap

  Read more: How Machine Learning and AI will transform business intelligence and analytics?

Businesses or organisations can use as a means to describe their sales, customer’s usage of products, websites or financial data in a visual format instead of looking at a long, boring numerical sheet of data. Heatmaps can not only show businesses what their current results look like geographically but they can also spot opportunities. In the most simplified examples: what would you do, as an online store owner, if you know the areas where most of the visitors look at on your website? Perhaps you should put a Call-To-Action button in that area.

Here are some of the solution that Heatmap can offer:

• Enhancing marketing activities’ efficiency
• Spotting underserved markets by seeing the “cold” and “warm” areas
• Defining target customer segments by analyzing where the majority of customers reside and assessing regional demographics.
• Optimizing product lineups by understanding which products are selling in different regions

Benefits of Heatmaps

As heatmaps are incredibly user-friendly and can give new and useful perspective on the existing data, they can bring various benefits and opportunities for business-driver, if fully exploited and utilized. There are 5 key benefits of Heatmap for business:

Improving company-wide communication

People love visualized things than pure, boring numerical things. Being able to take boring, hard data and represent it in a visually appealing way can help a company to get more insights, understanding of what is happening with their business. Generally, sales and marketing professionals are more creative or visual types. By presenting these teams with heatmaps, is a more effective way to communicate the business’s current financial or operational situation and makes it clear what improvements need to be made

Understanding Time-Based Trends

One of the most impressive things about heatmaps is their ability to represent changes in time using a visual representation – Companies can see how their sales or other data have improved or declined over time and in which areas. This allows companies to tailor their sales and marketing efforts accordingly.

Boosting Sales Funnel Activity

Sales results rely on filling up the funnel with leads and opportunities to close deals. By assessing which areas have gone cold that were once active, sales teams can boost customer engagement and sales activity that otherwise would have been lost.

Creating Competitive Advantage

Data analysts can also use heatmaps to draw a competitive landscape. Businesses can gain a competitive advantage by using promotions or targeting underserved markets by using numeric data such as competitor sales volumes, competitor locations and known competitor service areas.

Enhancing Territory Sales Efficiency

For companies with large outside sales teams, heatmapping is an excellent way to divide up designated territories. Heatmaps can reveal the number of customers in any given area and the sales volume within certain areas. This helps companies better understand factors like rural/urban divides and customer opportunities so that areas can be evenly divided among representatives. Sales teams also use heatmaps to update sales territory boundaries as the business environment changes.

Heatmap applications in data analysis

Heatmaps can analyse the current data of your business and find areas of intensity that might reflect where the majority of customers live, where there’s a risk of market saturation, or where areas have gone cold and need a boost. In other words, heatmaps give us access to better understanding different aspects of the company’s performance. In this blog, Savvycom would like to show you two most popular applications of heatmaps in life.

In Retail: Merchandising Strategies

Heatmaps offer an innovative, creative way to deliver important information to team members or clients. The truth is, heatmaps can collect and show businesses how they should use data for improving the operations, financials, sales and customer service or marketing effectiveness. Therefore, they have been bringing about apparent effects on the Retail industry.

Stores are not just interested in what people buy, they also want to know how people shop.
In a recent project with one of the top-notch fashion brands in Vietnam, Savvycom is building a system of in-store cameras which can help retailers track visitors activities: what they touch, where they walk, what are they liking and ignoring, so the shop owner can optimize the shop layout. Multiple surveillance camera streams are integrated to gather continuous and up-to-date in-store customer positions.

Let’s have a look at the heatmap below. The colours on the floor corresponding to foot traffic during a particular time period. Red areas had higher traffic, while green spots had lower traffic. The small splotch of blue in the centre suggests barely anyone went there.

Heatmap in security cameras & surveillance systems

Savvycom has helped this fashion brand to collect data of customers’ footprints and behaviours. Gathering shopper flow is extremely useful for them to optimize their store layouts and to strategically plan where to place popular – unpopular and expensive – cheap merchandise. Meanwhile, knowing what people touch in your clothing store is also particularly helpful as Some studies have shown that touching items increases the likelihood of consumers making a purchase. The data can also help pinpoint pricing problems. For example, if lots of people are touching an item but few are actually buying it, that suggests the price is too expensive.

With the implementation of the heatmap, the company revenue has grown by 10% in 2018.

In Software Development: UI Design Optimization

The key problem every business has to solve when they want to monetize their traffic is how to optimize the conversion rate, which is affected significantly by the website design.

In fact, there have been a number of websites that make a “random” change on their website without any analysis to obtain surprising results: lower traffic and conversion rates; sales decrease.

Every change should be made based on in-depth data analysis to achieve the best result. Perhaps people are so familiar with Testing A/B that they don’t know that it will be better when combining Heatmaps and A/B Testing to optimize their websites.

• Related post: 10 Signs Your Business Needs an Optimization Software

Heatmaps can provide you data when you want to measure engagement: When you post an article on your website and want to know whether the content is good or not, a heatmap can show you where your visitors stop scrolling, and where they interact with your site most. If the area you put CTA button displays the cold colour on the heatmap, it’s time to make a change.

A heatmap can tell you if you should change CTA button position

After collecting data from the heatmaps, you will make changes to your website. To measure the effectiveness of these changes, you should use A/B testing. The final step is to choose the highest performing solutions.

Savvycom demonstrates a strong interest in undertaking heatmap-related projects for clients, recognizing heatmap’s transformative impact on the retail industry and businesses overall. Heatmaps offer valuable insights not easily obtained from other analytics tools. When used appropriately and with caution against drawing conclusions from limited data, heatmaps can serve as powerful tools to enhance business performance in today’s technology-driven era. This highlights the significance of heatmap projects for software outsourcing companies.