What does ‘seasonality’ really mean in sales?

When you can’t figure out why your sales have surged in one month and plummeted in another, it’s easy to shrug your shoulders and mark it up to “seasonality.”

Seasonality refers to fluctuations in your sales revenue that are caused by external factors and occur on a predictable schedule around the same time(s) every year.

To be fair, you can’t really control seasonal shifts in consumer behavior, especially when those shifts are permanently tied to the holiday schedule or growing seasons.

Still, if you lead a sales team, you have a responsibility to figure out the root causes of your own company’s seasonality so you can capitalize on your strong cycles and survive your slow periods.

We asked eight sales professionals what “seasonality” means in their business, and how they manage the ups and downs. Plus: Three quick tips on how to get a better understanding of your own seasonal sales trends.

What causes sales seasonality?

Reason #1: A surge of interest at the end of the calendar year.

In some industries, buyers become especially motivated as the calendar year comes to a close. “In real estate investing, the busy period is the end of the year when people want to sell a house before the new year due to tax reasons,” says Corey Chappell, Closing Options Analyst for 181-Close-Now. “Investors buy houses at the end of the year, and when summer rolls around they turn around and resell.”

The key to thriving in a seasonal business like real estate investment is knowing what to do in between your busy seasons. “Having a down-season game plan is absolutely essential,” Chappell told Nutshell. “Maybe it’s focusing on referrals, killer content, or simply growing your brand awareness. These activities lead to more success during your busy season, and they also help set you apart from your competition.”

Just as a homeowner might want to sell their house before the year’s end to assist with tax issues or avoid upcoming tax law changes, health care consumers are more likely to buy at the end of the year in order to take advantage of their insurance benefits.

“When I owned and operated a medical device business, November and December were our busiest months due to insurance periods ending,” says Albert Ho, Founder of Healthcare Heroes. “Patients would want to ensure that they used up all of their benefits before the end of the year, so they’d buy one or two CPAP masks or a new CPAP machine. To prepare for this busy period I would ensure that we had adequate stock of masks and devices ordered by October. I would also ensure that we were fully staffed for the last two months of the year and minimize [my employees’] vacation time if possible.”

Knowing that the summer months were slower due to people being on vacation, Ho says his team would be extra vigilant about confirming appointments in July and August. “We would make sure to remind patients three days prior to their visit, which really helped to reduce missed and no-show appointments,” Ho says. “Slow periods were also good for training new staff as well as other business functions like renovating the office and decluttering.”

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Reason #2: The weather affecting demand of your product/service.

You don’t need to be a fruit grower or resort operator to be affected by the changing seasons. If you’re a B2B company that serves other seasonal businesses, then your sales will naturally follow seasonal patterns as well.

“My company provides digital marketing and people management solutions to small businesses in pest control and lawn care, and because our client base has such a specific seasonality, we have a very specific seasonality,” says Laura Simis, Branding and Communications Manager for Coalmarch.

“All our clients are impacted heavily by seasonality and by weather, so they’re at their busiest in spring and summer.” Simis explains. “Lawn care in particular works on a schedule, so if they’re not getting new customers in March and April and beginning service, they’ve got to work even harder the rest of the year to make up for the revenue they didn’t capture then.”

Simis’s company forecasts their sales goals for the year based around this seasonality, with revenue goals, recurring revenue, and historical performance to predict what interest levels will be throughout the year. And she’s learned a few important lessons from serving a seasonal customer base.

A productive peak season doesn’t come without careful planning and preparation,” Simis says. “During late spring and summer, when clients are bogged down with making sure their season is going well, we spend a lot of time preparing for our busiest season in the fall. So, our team takes advantage of slower times of the year by getting input from our clients and making adjustments to the marketing strategy accordingly.”

“We’ve also gotten a lot better at understanding how our solutions align with specific concerns that our clients might have throughout the year. For example, the beginning of the year is the best time to sell a website project that we can complete before the busy season kicks in. The middle of the busy season is when clients start struggling to keep up with production, and if they need to hire or have to replace an employee, that’s the best time for us to promote our people management software to help them hire and train new people.”

Reason #3: A summer slowdown due to traveling customers or the school calendar

The long, hot stretch of the summer months can bring a painful drought for many sales teams. Buyers become harder to reach and sales cycles start getting longer because potential customers are off vacationing.

As the CTO of a coupon distributor called PromotionCode.org, Mike Catania has seen his company’s revenue consistently dip during the summer. “The most significant cause is that younger people use coupons at a higher rate, and during the summer there are fewer of them in school so we lose many regular customers and parents who are busy managing their lives,” Catania says.

The silver lining to this kind of seasonality is the high degree of predictability. “A decade in, we’re attuned to the rhythm of seasonality and use it to our advantage,” Catania says. “But it did take a few years to work out the cadence of it where we didn’t panic for the three months of the slow season. By June 10th, we see sales plummet, and by July 15th we’re in the heart of the summer doldrums. Come the last week of August, things pick back up, and we buckle down for the onslaught of the retail season.”

“With much of Europe taking an extended vacation over the summer, it can be a very difficult time for B2B sales professionals” adds iPresent Sales Manager Josh Dhaliwal. In order to win more deals in the slow months, Dhaliwal suggests the following:

  • Follow up with your leads: Could you be making more of what you already have with better communication and more personalized lead nurturing?
  • Work on your personal brand: Take some time to build your presence on social media platforms such as LinkedIn. Engage in group discussions, interact with your customers’ and prospects’ posts, and develop some thought-leadership content.
  • Do an audit of your messaging: Are your communications working as well as they should? Make sure you’re speaking like a human talking to another human, keep your messages customer-centric and tailor them where you can. A/B testing your email subject lines and CTAs could help you find a stronger message.
  • Invest in video: Video CTAs get 95% better recall than written ones. Use them in email, on social media, and on your website.
  • Spend time on your existing customers: Do something to let them know you’re thinking of them, whether that’s wishing them happy holidays or sharing helpful resources with them.

Reason #4: Holiday spending sprees

For retail businesses, a strong holiday season can make or break your entire year. But not everyone defines the “holiday season” the same way.

“The busiest time for us is the roughly six-week period of Thanksgiving and Christmas,” says Nicole Van Lun, Founder & Creative Director of small-batch artisan skincare company Bubbles and Butter. “However, we begin preparing for the holiday sales season in May/June. This is when we’re communicating with our retail partners on any limited holiday collections and reminding them of our holiday promotions.”

“During the slow season, we strategize on which collections we’ll keep, discontinue, or launch for a special promotional period,” Van Lun says. “We’re also stockpiling inventory for the busy period, and fine-tuning our systems (operations, marketing, fulfillment, etc.) so that we’re a well-oiled machine during the busy season.”

“One way to handle seasonality is to diversify your product offerings,” advises Allen Kaplun, Managing Director of GreenDropShip.com, a B2B supplier of natural, organic, and specialty grocery and body care products. “Our busy season starts a few weeks before Thanksgiving and lasts through Easter, when we experience a healthy flow of orders for baking ingredients and holiday-themed products.

“If that’s all we sold, we would experience a sharp decrease in spring. However, we experience a sharp rise in the order of meltables such as chocolates in May through October,” Kaplun says. “Few other eCommerce retailers are in a position to ship chocolate during the summer. During the back-to-school season we also experience an increase in supplement sales. So, diversification is really key to keep a steady stream of revenue.”

5. Recurring peaks at the end of the month or end of the quarter.

For some B2B businesses like financial services, the peaks and valleys can come a lot more frequently than once a year. “When it comes to finances and loans, the later part of the month and the quarter are when we see the highest peaks,” says Jared Weitz, CEO and Founder of United Capital Source Inc. “Many people look to refinance a mortgage at the close of a month especially in March, June, and September.”

If your team is faced with the stress of frequent busy cycles, it can help to focus the slow periods on employee engagement and culture. “View your slow season as an opportunity to give back to your team and show appreciation for their efforts,” Weitz says. “Enjoy an afternoon away from the office participating in a fun activity or host a meeting to create new goals and projects. You can also use the slow season as a time to evaluate what has been working in your company and what hasn’t, and implement changes that will set your company up for more success when the busy season picks up.”

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How to figure out your sales seasonality in three quick steps

1) Chart your sales data for at least the past three years.

Are there peaks and troughs that occur around the same times each year? How long do they last? Is your best month and worst month always the same?

Most likely, you already have a general sense of your company’s seasonal sales trends. But actually looking at your past years’ sales reports all at once can help you better define your high/low seasons, and might reveal some seasonal patterns that you hadn’t noticed before.

2) Create a seasonal adjustment of your sales data.

The overall growth trend of your business will make your seasonal trends a little harder to quantify. After all, if your sales are growing steadily, then your December sales would be higher than the previous January’s as a result of your overall growth trend.

What you have to do is identify how large your seasonal swings are, relative to your current year’s performance. We highly recommend reading economist Bill Conerly’s simple breakdown of how to seasonally adjust your sales data in order to create an up-to-date snapshot of seasonal impact, and see whether or not your monthly revenue totals are landing above expectations.

3) Make sure you understand all the reasons why your peaks and valleys occur.

Seasonality can be a self-fulfilling prophecy. If you know that your sales are going to dip in the spring no matter what you do, you might be tempted to pull your foot off the gas when March rolls around.

So ask yourself: Are you really putting the same effort into prospecting during your slow season as you are during your busy season? Do you have a marketing budget at the beginning of the year that is nearly tapped out by the end of the fall? Do you always keep the same number of sales reps on your team? When do those reps tend to go on vacation?

In other words, make sure that you’re not just looking at buyer behavior when analyzing seasonal trends. Your team’s behavior can be driving those trends in ways you might not have even considered.

How does seasonality affect your business, and how do you take advantage of it? Tweet us your thoughts @nutshell, or join the Sell to Win private Facebook group and chip in your two cents there!

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