In business it would be nice and easy if we all had a predictable and regular flow of customers. However, in all businesses there is seasonality to contend with. Understanding WHEN your clients are ready to purchase can protect you from costly mistakes.
Understanding Sales Seasonality
The graph above represents monthly buying patterns for a company supplying equipment to schools. The most obvious thing to note is the massive September spike.
Congratulations. By simply looking at that graph you have entered the mystical realm of data marketing.
Compare the graph to a chocolate manufacturer where the buying spikes at at valentine’s day, Easter, Mother’s Day and Christmas. This is so obvious you don’t even need to see a graph. it is clear that different markets have different (but somewhat predictable) peaks and troughs when it comes to the buying patterns of their customers.
But what about a chair manufacturer? Or a software reseller? Do they have to worry about seasonality? Well yes, the perhaps surprising, answer is that they do. FYI: Chair sales spike in January, then late Spring and then again at the end of summer. Business software sales peak around March. Games software sales peak in December.
This is important knowledge. Your online and offline marketing budgets should be receptive to when your audience are most likely to purchase. It is as simple as that.
Online Advertising Budget Planning
Here is a handy plan for online advertising. Simply draw a graph of the average sales each month for the last three years. If you have any strange spikes caused by known factors (such as a warehouse fire sale) then remove them from the data. You now have a graph of your customers seasonal buying patterns. However, this also includes the sales you created through your marketing efforts, so where possible reduce the peaks caused by your marketing as far as you can. You will not be able to do this perfectly, but it will help.
Now visit Google trends and type in ‘buy chairs’ or ‘buy software’ or whatever you happen to sell.
Take a look at the resulting graph and see if there is a broad match with your graph.
If they don’t match, think about why that might be. What is it about your business that causes people to purchase at a different time to the herd?
If there is a match, then you can take your graph and use it to calculate a month by month capex for your online marketing.
To do this add together the total height of all the months sales. We are not really bothered about actual numbers here. It is the relationship between the months that concerns us. The total height of all the months added together represents 100% of your capex and each month’s height is the approximate percentage of that total budget you should therefore be thinking of spending for regular campaigns. In doing so you will have factored in the seasonality of your customers buying patterns.
Of course, the devil is in the detail. If you learn more about Data Marketing (and I strongly urge you to do so) you will find literally hundreds of other factors affecting your earnings. The good news is that graphs, charts and computer wizardry can help gain the competetive edge with regard to most of them; and that spells profit.