A Mekko chart is used to visualize data across two dimensions by using a fixed height y-axis and variable width bars for the x-axis.
Aside from the asestheic pleasure of a completely filled box, Mekko charts allow data to be segmented in two directions adding an extra dimension to analysis.
In our previous article Three Insights from Tracking MRR, we explained the benefits of going beyond “MRR over time” by segmenting the data. Mekko charts take this to another level.
After a brief introduction to Mekko charts, we’ll discuss why it is useful for analyzing recurring revenue. Finally, we’ll show how to set up a Mekko chart in any spreadsheet software such as Excel or Google Sheets.
What is a Mekko Chart?
Also known as a mosaic plot, the chart’s name originates from the Marimekko print, a pattern introduced by a Finnish textiles company.
The defining qualities of a Mekko chart are it’s percentage-based y-axis and variable width x-axis. The end result is a chart where every stacked bar is the same height and each stacked bar has a varying width, which is proportional to the other bars.
We can see the difference by taking a normal stacked bar chart and comparing it to a Mekko-version of the same data.
If this is your first time seeing a Mekko chart, then it may be difficult to read. After all, your entire schooling was most likely based on the opposite: variable height, fixed width.
What pops in a Mekko chart are areas of emphasis. We can identify that the majority of our revenue comes from the intermediate segment, specifically licenses. The traditional stacked bar does not communicate this dominance.
It’s important to note the limitations of a Mekko chart as well. Aside from any initial difficulty reading the chart, it is not an “over time” representation — Mekko charts give you a snapshot of a point in time.
Why Use a Mekko Chart for Recurring Revenue?
Unless your business is a lemonade stand, revenue breakdowns are not so simple. The ability to answer multiple business questions in a single visualization is powerful. Having two dimensions allows a more contextual analysis of the data.
Moreover, Mekko charts excel at highlighting areas of strength and weakness, which lends them to providing actionable insights.
Deeply understanding revenue is critical in validating assumptions about customer segments, market fit, and returns on investment.
Using Mekko charts, we can answer simple questions such as which service tier is most valuable, intermediate questions which tier relies on add-ons the most, and raise new questions such as is it healthy to rely so heavily on professional services at the enterprise level.
How To Set up a Mekko Chart
If you’ve gotten this far then you’re wondering, how can I create my own Mekko chart? Unfortunately, it’s not the easiest task. However, we have a starter template that you can view, copy, and make your own!
Mekko Chart Template
Template for creating a Recurring Revenue Mekko Chart in Google Sheets
Once you have your data set, you’ll need to aggregate it in a table that looks like this.
The secret is that you have to manually control the width of the stacked bars. Do this by setting rows for the boundaries with $0 and also rows for the midpoint of each area.
After setting this up, it’s a matter of ensuring the chart type is a 100% stacked area to have continuous fill and finding a way to label each stacked column.
Some quick notes about the sample template:
- Cell references assume the name of the second sheet is “Data”
- The text matches for segments will need to be manually updated if you change the content
- The x-axis values are dynamic and don’t need to be touched
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