Blow-dryers will work but can be time consuming, and ends up heating up the whole battery (not good). Heat guns heat a lot faster, but they also heat a lot of surface, and can be awkward, even dangerous as they do put out a LOT of heat.
What I found works best is a little soldering pen (butane) with extra heads, one head being for heat, and it works amazingly well. It provides lots of instant heat so it can be concentrated on the wrap, but you need to take the time to balance a proper distance to "activate" the shrinking and not melt it.
My little kit looks like one of these (link provided for example only) :
Iroda SOLDERPRO 50 Cordless Butane Soldering Iron 4 in 1 Kit )
Tips:
1) cut the old wrap at the bottom and slide it out at the top. You should never go anywhere close to the positive with any tools. A wrap once cut or broken is very easy to pull off or apart. Make sure that the insulating ring stays on or ensure that you don't lose it. Try not to touch the top where the positive end is as this is when your battery is vulnerable. If the ring is damaged in any way, replace it. I have some that have a sticky side, which I prefer as it ensures that it'll stay in place.
2) measure your wrap first, cut it if needed, cutting extra length that would be in the way afterwards is a pain and can result in an "opps" and wrecking/wasting the wrap. You should have the wrap long enough to cover the two ends by a couple of millimeters as it folds.
3) The goal is to heat the wrap fast so that the shrinking happens while not heating the battery itself ( or as least as possible), nor end up burning the insulation ring.
4) The higher the heat source, the faster you should move it, you do NOT want to melt the wrap, nor exposed the battery to the heat. Start on the top end where you should make sure that you have the insulation ring in place, shrink the wrap so that it holds the ring in place, then start moving downwards, spinning the battery evenly as you do it. Once you figure out the correct speed to rotate the battery while figuring out the distance from the heat source, you'll balance things out and get to the bottom area where you'll flip your fingers to hold the battery from the top, and finish the bottom. The important part here is learning to spin the battery as you do it as you want the wrap to be evenly shrunk.
5) you need to ensure that the wrap is snug, as if loose, it can rip a lot easier.
