It’s important for you to check in on your marketing performance from time to time. A great way to do this is to benchmark your efforts against yourself: to compare metrics from different periods of a year, or across multiple years, and analyze what you’re doing well and how to improve in comparison to your past activity. There are many ways to segment time periods for comparison – so how do you know, for example, when to compare quarter-on-quarter (QOQ) versus year-over-year (YOY)?
Defining QOQ and YOY
Quarter-on-quarter analysis compares the current quarter (ex: Q3 2018) to the previous quarter in the same year (ex: Q2 2018). This is essentially the same as month-on-month, or more generally, comparing the previous period – even a period as short as day-by-day.
Year-over-year reporting, in contrast, compares metrics from one period of one year to the same period of a previous year. For example, you could look at how Q3 2018 compares to Q3 2017, or you could look at metrics from the winter holiday season during one year versus another year.
When to use QOQ (or previous period) analysis
- To measure progress towards goals/benchmarks set for that year
Comparing to the previous period helps you look at the progress you’ve made towards your goals and adjust your methods accordingly. What did you do differently in each period, and how did that affect your outcomes? How are your customers behaving differently – where are they active, what are they searching for? Use QOQ comparisons as a “health check” on your progress and to figure out what you might want to do differently – if anything – in the next quarter.
- To monitor short-term changes or identify seasonal trends
Customer behavior often varies between quarters, and keeping their attention or reaching new customers can depend on this fluctuating activity. Staying on top of short-term changes helps you stay relevant and meet your goals. If the QOQ changes you noticed hold true for previous years, it’s probably a seasonal or cyclical trend you should consider when deploying marketing initiatives in a particular quarter. For example, a shoe store would probably fare better marketing sneakers in the summer and boots in the winter.
- To do any comparative analytics possible
Maybe you don’t have YOY data yet and comparing to the previous period is your only option. That’s perfectly okay! Some comparison is better than nothing, even if you can’t account for seasonality yet. Whether you’re comparing quarters or days – however you choose to segment your time – there are always benefits to comparing and analyzing whatever data you have.
When to use YOY analysis
- To understand general, holistic, long-term organizational health and performance
Seasonal variances mean that what may appear to be a downward trend QOQ may actually be an industry norm. If your QOQ performance is down by 10%, but your YOY performance is up by 5%, your business is actually doing better by a yearly comparison. Taking industry cycles into consideration allows you to compare your big-picture profits and growth more accurately. In the shoe store example, if you’re comparing boot sales between periods, it might look like your sales are doing much worse in the summer than in the winter. Comparing winter sales from different years will give you a better sense of how you’re doing.
- To analyze major fluctuations for abnormal behavior and trends to keep an eye on
If your metrics vary dramatically between quarters, it might be seasonal – but if they vary dramatically between years, it might be something to look into. Did you try a new sales tactic and see your sales drop? Maybe it’s time to change tacks again. Did the same spike or drop happen the year before? It might not necessarily be cause for concern.