Seasonality in a Global SaaS Business

Seasonality is something that affects many businesses, but what if you’re delivering your product with a software-as-a-service (SaaS) business model? Tomasz Tunguz shared a really interesting post on his blog in which he looked at data from ~40 of the largest public SaaS companies. His conclusion was that seasonality doesn’t matter much, at least, not based on that cohort. But what if your SaaS business isn’t quite that big yet?

My take is that by the time your SaaS company goes public and is among the world’s largest, you’ve probably already figured out most seasonality issues related to geography and have accounted for them in your operational cadence and annual planning process. After all, one of the greatest benefits of having a global SaaS business is that your geographic diversity enables you to underperform in some geos in a given month or and quarter while you overperform in others. Meanwhile, you can keep hitting your global targets. The geographic seasonality eventually gets baked into your operating model, and from the outside looking in, it’s quite a beautiful and harmonious thing.

But what to do if you’re much earlier in your journey? If you’re still in scaling mode and have a good portion of your business coming from international markets, seasonality can sometimes interfere with your ability to hit your numbers unless you plan strategically for it in advance. You should take into account seasonality by geo, especially as it relates to hiring salespeople, training and ramping them up, and figuring out their quotas along with your quarterized revenue plan. Sales cycle length, in particular, can be affected by seasonality by geo.

Here are some local seasonality-related events that you should plan for in any global business that is still in scaling mode, but especially if you derive a significant portion of your revenue from any one of the geos mentioned below. They vary in terms of the scope of potential impact, so I’ve ordered them from “most” to “least” likely to cause problems for your business. These suggestions, where a given quarter is mentioned, also presume that your business follows the normal calendar year which starts in January and ends in December.

Europe: Summer Months

Keep an eye on things in late Q2 and early Q3 if you have a large concentration of business in Europe. The summer months (in the Northern Hemisphere) are the ones that tend to cause most problems because large number of people go on vacation in various European countries. Keep in mind that many things shut down in France during the month of August, so if you have a high percentage of revenue from that market, it can be something to look out for. In most other European countries, vacation time is spread more evenly across June, July, and August.

The reason summer months can be dicey and important to plan ahead for with annual planning is that many Europeans take vacation for multiple weeks at a time. Fortunately, they are not always the same weeks across the entire population, although France tends to be more likely to have larger percentages of the population out in August. If you sell mostly small numbers of large, big deals (e.g. $100K or greater) with longer sales cycles, this seasonality can be high-impact. The lower your ASP and the larger your volume of deals, the better shielded you are, and the less impact this is likely to have on your company.

If you have a large dependency on revenue coming from the Nordics, know that Sweden, the largest economy in the Nordics, sometimes has more time off in June to celebrate the Midsummer holiday. However, if you have business in many European markets, you shouldn’t feel a major pinch unless you’re highly dependent on a single country. It’s just helpful to plan ahead as your sales numbers in certain markets might dip during those months.

Summer is also when you’re most likely to see translation quality take a dive. If your global go-to-market motion is content-heavy and therefore localization-dependent, it’s advisable to align your localization plans to ensure you don’t have any major dependencies that hit over the typical summer holiday times in Western and Northern Europe in particular.

Asia: Lunar New Year

Lunar New Year festivities take place across many countries in Asia, and in China, typically last for a couple of weeks. Because this is often a multi-week celebration, it’s important to plan around this period. Western companies are notorious for doing global launches during this period without realizing their chances of success will be lower during that time, as it’s hard to capture consumer attention during that period, much like Christmas in many Western countries. It’s important to plan around Lunar New Year for your sales targets, but also, many companies feature local marketing campaigns based around this holiday.

Latin America: Semana Santa

Holy Week and Easter are typically the biggest seasonal events to watch out for with your Latin America teams. Brazil notably celebrates Carnaval, and in general these are times when many people take vacations and have time off work. So, some businesses see a dip in their revenue in Q2 due to losing a week of productivity. With Brazil being the largest economy in Latin America, if you have a big portion of business there, you’ll definitely want to factor it in.

It’s not that everyone in Latin America takes that time off, but many do. It’s also just one week out of an entire three-month quarter. So, it’s not like you’ll see this affect the quarter in a really significant way, especially if you are selling at a lower or mid-range price point. However, you might want to plan for 11 out of 12 weeks of full-sail execution that quarter, versus 12/12. Indeed, if you’re staffing your sales teams in the same countries where your customers reside, those folks will naturally take time off with the same cadence unless they’re incentivized not to.

Japan: Golden Week

If you haven’t heard of Golden Week before, it hits in Q2 and usually falls somewhere in late April / early May. It’s the longest single period of time off that people take in Japan and various holidays are celebrated then. If you have a large amount of business in Japan, this is an important week to reflect in your Q2 plans, similar to Semana Santa in Latin America as mentioned above. Again, because it’s not very long, it’s unlikely to have major impact on your business. That said, you’ll want to account for it in your overall hiring and onboarding plans, especially for revenue-impacting functions like Sales. Just as with Semana Santa, assume you’ll have one less week of full productivity and execution in Japan during the quarter in which it falls.

North America – Christmas

Businesses that have the majority of revenue coming from the United States and Canada are fortunate in that they are shielded in some ways from any major bumpy spots that seasonality in other big economies can create. It’s well-known that people take time off at Christmas in North America. As a result, most businesses plan for this.

However, people in North America don’t generally take much time off over Christmas compared to other parts of the world. In the U.S., Christmas is really just one day, while in other countries, it’s viewed as a longer period, and can represent multiple weeks of time off work. Some countries don’t actually go back to work until after January 6th, so if anything, Christmas is more likely to affect your business in Europe than it is North America where things don’t slow down very much, ever.

ASP and Deal Volume Can Help Mitigate Geo-Based Exposure

If your ASP is very high and you have a low deal volume, chances are you’re already used to seeing quite a bit of spikiness from month to month and quarter to quarter anyway. Depending on your business, you might be able to play around with local packaging and pricing, in order to intentionally lower ASP while increasing volume in order to reduce that kind of exposure. That’s a more advanced SaaS pricing and packaging play, but something to keep in mind, especially because often, that’s a good path to explore in order to ensure you’re offering the right pricing and packaging for your local markets anyway. I mention it here because it’s an important consideration to keep in mind if you’re seeing local seasonality wreak any havoc within your overall metrics.

One more caveat. While I’m talking mostly about risks to watch out for in this post, it’s important to flag that some SaaS businesses have other seasonality factors to consider, and some might actually benefit from marketing campaigns and sales performance incentives that are tied to holiday activities in given countries. If you’re in B2B SaaS, that’s not as likely, but many SaaS companies with a B2C focus can actually take advantage of holidays to tout their wares, drive special promotions, fill up the top of their marketing funnel, arm their sales teams with special time-bound discounts, and so on. It’s important to consider all of these pieces when doing your annual planning.

In summary, go into new markets with your eyes wide open and plan ahead for local seasonality. Work the key seasonal events by geo into your sales hiring and onboarding plans, your marketing campaigns and product launch timing, in order to smooth out your metrics better. Or if you’re OK with a bit of spikiness, you’ll at least be able to better explain some of the geo-driven fluctuations that show up in your data.

And lastly, while we’re talking about data, make sure your data is actually structured in a way that enables you to easily spot country and language-based differences to begin with. (More advice here on how to do that.)

Nataly Kelly

Nataly leads localization at HubSpot and has previously held diverse roles in marketing, international operations and strategy, research, and product development. Her latest book is "Found in Translation" (Penguin). She writes for Harvard Business Review on topics of international marketing and global business. Nataly works remotely from New England, having lived in Quito (Ecuador), Donegal (Ireland) and the rural Midwest where she grew up.

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