1. What is Year over Year growth?
Year Over Year Growth is an important e-commerce metric that gives you an effective way to keep an eye on your company’s performance.
The Year Over Year metric can be tracked only by companies with at least 2 years of activity on the market. This key performance indicator compares a time period with the same period last year so you can see if your company is on an upward or downward path.
Furthermore, depending on the company’s annual goals, this indicator can be used to compare different metrics like Revenue, Conversion Rate, Average Order Value, for two successive years. For easier understanding of how this indicator works, the formula below refers to an aleatory metric, Revenue.
2. Year over Year (Y0Y) formula
The formula is quite simple: Revenue(t-1) ∕ Revenue(t)
It reveals the variation of:
- Conversion rate;
- Average order value;
- Customer lifetime value;
3. How to calculate YoY?
YoY is very useful for a general overview on your company’s performance. It will not give you a detailed analysis on the specific things that have positive or negative impact on your business. It can be easily calculated with Web Analytics tools by reporting the previous year revenues or any other metrics that matter for the analysis (t-1) to current values of the chosen metrics to analyze(t).
For example, you can use Google Analytics to compare the conversion rate on your website, from the same time period, in a different year. In the following example, you will see how the newsletter subscription has changed year over year:
You can see that from November 1-2013 to March 1-2014 has been a lower number of newsletter subscription than the previous year. In November 2012 have been 600 new subscriptions, while in November 2013 have been less than 300.
Furthermore, Google Analytics gives you the exact numbers so you can see the difference. In this case, the result is upsetting: 241 subscriptions between Nov 1,2013-Mar 1,2014 vs. 1319 subscriptions between Nov 1,2012-Mar 1,2013, with a downgrading difference of 81,73%.
Having the results on the table, you can start investigating why you have a negative score. Doing the research, investigating and analyzing your situation can help you find out the problems and come up with the right solution.