Year Over Year (YoY) Growth Formula With Examples

Growth. 🌱 It’s the lifeblood of any business, project, or even personal endeavor. But how do we truly measure this progress in business? That’s where Year-over-Year (YoY) growth steps in, offering a great way to analyze performance and identify trends over time.

In this article, we will explain what is YoY growth, where it’s used, and the tools to calculate this metric. Whether you’re looking for a quick fix or trying to implement this metric in your business, this article will empower you to:

1. YoY definition
2. Year-over-year formula
3. How to calculate in 2 simple steps
4. Steps to calculate growth in Excel
5. Calculate YoY in Ajelix BI
6. Similar formulas
7. Good YoY rate

What does yoY mean?

YoY, or Year-over-Year, is a metric used to assess percentage change in a specific value compared to the same period one year prior. It’s an easy way to analyze growth, performance, or decline over a yearly timeframe.

Year over year growth chart from Ajelix BI, screenshot by author

Imagine you’re tracking your website traffic. Instead of just looking at the raw numbers for January 2020, YoY compares it to January 2021. This tells you whether your traffic increased, decreased, or remained stable over the past year.

YoY is a valuable metric because it can provide a standardized and easy-to-understand measure of progress or change. It cuts through the noise of raw numbers and gives you a clearer picture of the data.

Year-Over-Year (yoy) growth formula

Year to year formula is straightforward:

(Current value - Previous year's value) / Previous year's value x 100

how to calculate year-over-year growth?

By comparing a current value to its corresponding value from the previous year, you can express YoY growth as a percentage. This way you can have a clear and standardized measure of progress. Calculate YOY in 2 simple steps:

1. Gather data for calculation

Current value: This is the number you want to compare, for example, your website traffic in January 2024.

Previous year’s value: This is the same number from the same period one year ago, like your website traffic in January 2023.

Screenshot example from Excel comparing website traffic from previous year, image by author

Once you have values you can calculate YoY for your website traffic. Just like in the example above, to learn the formula please continue reading the next chapter.

2. Yoy calculation

Use this formula to calculate metric:

(Current value - Previous year's value) / Previous year's value x 100

Let’s say your website traffic in January 2020 was 4,500 visitors and in January 2021 it was 6,000. Plug it in:

(6,000 - 4,500) / 4,500 x 100 = 33%

Screenshot from Excel with yoy growth metric calculation, made by author

3. Additional examples:

• Sales growth: You made $10,000 in sales this month, compared to $8,000 last month. Your YoY growth is (10,000 – 8,000) / 8,000 x 100 = 25%.
• Social media followers: You have 5,000 followers today, and you had 4,000 a year ago. Your YoY growth is (5,000 – 4,000) / 4,000 x 100 = 25%.

Remember, a positive YoY growth indicates improvement, while a negative shows a decline. The bigger the percentage the better the growth.

how to calculate yoY growth in Excel?

Additional Tips For Excel Users:

• Conditional Formatting: Highlight positive and negative growth with different colors for easy visual identification.
• Charts and Graphs: Create visually appealing charts to present YoY trends and comparisons.
• Multiple Years: Use the OFFSET function to calculate YoY growth compared to different previous years.
• PivotTables: Analyze YoY growth by different categories or segments within your data.

how to calculate yoY in Ajelix BI?

Ajelix BI can be a helpful in reporting process as well as calculating different KPIs. This BI platform is created for business owners and managers to ease the data visualization process. Let’s take a look how non-technical teams can easily use Ajelix to calculate YoY and create a more trustworthy reporting process.

1. Prepare your data

Step one is to prepare your data in Excel table or Google Sheets file. Here’s an example of how your data should look if you want to measure growth for specific period in current year and previous year.

Screenshot from Excel with tabular data table, picture by author

2. Upload Your Data

Once you have the data ready you can easily upload it to Ajelix BI platform. Simply go to dataset upload page click upload data and pick the file.

Screenshot from Ajelix BI with data upload, image by author

3. Create calculation

Once you have the file uploaded you will be able to create report and open editor. Go under “Create KPI or metric” tab and click “Add new measure”. Now you have the pop-up window where you can enter the YoY formula by simply picking the column names, like in the example below:

Ajelix BI metric creator example with YoY formula, screenshot by author

4. Create chart

Now you have created new column with “YoY” metric. The next step would be to visualize this column in a pretty chart.

1. Go to “Report Editor”
2. Pick the “Smooth Line Chart” or other element
3. Add title “Website traffic growth YoY 2020-2021” or other title
4. Set number formatting to 0%
5. Pick category “Month”
6. Add new created “YoY” as a data field

Now you have created a chart that you can share with others and update regularly.

Ajelix BI settings for creating YoY chart, screenshot from author

Similar formulas to yoY

While YoY growth offers a valuable snapshot, its analysis can sometimes paint an incomplete picture. Here are 4 similar formulas that you can use for data analytics:

1. Quarter-over-Quarter (QoQ) Growth
2. Compound Annual Growth Rate (CAGR)
3. Month-over-Month (MoM) Growth
4. Week-over-Week (WoW) Growth

Let’s dig deeper in each formula on the next chapter.

1. Quarter-over-Quarter (QoQ) Growth

• Focus: Analyzes changes within the same year, offering insights into shorter-term trends and potential seasonality.
• Formula: (Current Quarter Value - Previous Quarter Value) / Previous Quarter Value x 100
• Example: Track website traffic growth throughout the year to identify seasonal peaks and valleys.

2. Compound Annual Growth Rate (CAGR)

• Focus: Measures average growth rate over a longer period (e.g., 5 years), smoothing out fluctuations and providing a big-picture perspective.
• Formula: More complex, requiring specialized functions like XIRR or RATE.
• Example: Analyze the average yearly growth of a company’s revenue over the past five years.

3. Month-over-Month (MoM) Growth

• Focus: Similar to QoQ but for even shorter periods, offering insights into highly dynamic situations.
• Formula: Same as QoQ, replacing “Quarter” with “Month”.
• Example: Track daily active users of a mobile app to identify usage patterns and optimize engagement strategies.

4. Week-over-Week (WoW) Growth

• Focus: Useful for highly volatile data or situations requiring immediate attention.
• Formula: Same as MoM, replacing “Month” with “Week”.
• Example: Monitor website traffic fluctuations during a marketing campaign to assess its effectiveness in real-time.

The best formula depends on your specific needs and the timeframe you’re interested in analyzing. Each formula offers a unique lens. Combining YoY with other formulas paints a richer picture, enabling you to make informed decisions based on a deeper understanding of your data.

What is a good YoY rate?

There is no specific number that is considered good or bad for YoY metric. As the metric depends on industry, company size, internal policies, and other factors. To understand what is a good rate follow 4 principles:

1. Focus on internal benchmarks: Track your own YoY growth over time and identify trends within your company. That will provide a more meaningful context for your performance.
2. Industry reports and averages: Research industry reports or publications for average YoY growth rates specific to your industry. This can offer a general context for your own performance.
3. Competitor analysis: Analyze your direct competitors’ publicly available data cautiously for trends and insights, but avoid direct comparisons.
4. Focus on specific metrics: Compare relevant metrics within your industry and business goals (e.g., product category growth, customer acquisition cost) instead of overall YoY growth.

Remember, YoY growth is valuable, but it’s just one piece of the puzzle. Consider a multi-faceted approach using industry context, internal benchmarks, and specific metrics for a more nuanced understanding of your performance and potential.

Conclusion

YoY is a metric used to assess percentage change in a specific value compared to the same period one year prior. It is a valuable metric because it provides a standardized and easy-to-understand measure of progress or change.

By comparing a current value to its corresponding value from the previous year, you can express YoY growth as a percentage. For more successful data process in your company pick tools that can help you create digital dashboards and analyze data in the long run.

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