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    Paid Media
    Data Science

    Seasonality and Profitability

    Nov 22, 2023 |
    Written by:
    Daniel Watts

    As a high-growth DTC brand, how do you view seasonality?

    Our Co-founders sat down to discuss.

    Most businesses look at reports daily of how they’re doing versus the day before. Or how they did versus last week or last month.

    But actually, the most useful lens for the seasonality of the business is year-on-year so that you can control for as many variables as possible.

    What a lot of businesses fail to recognise is that each day, each week, each month, has its own “micro seasonality”. And if your seasonal swings on any of those time frames are significant, then you should plan for and expect your revenue swings to be significant too.

    So as soon as you’re looking at things week on week, say you’re comparing last week of the month to the week before, you might think that performance is way better and question what you’ve changed.

    When in reality you’ve changed nothing. It’s just people now have more money in their pockets, or spent more time browsing, or need to gift all of a sudden, or any number of things.

    So this is where looking at the same time period year on year would actually be quite a useful lens.

    That said, it’s a slightly different approach for brands who are in hyper growth mode and annual comparisons just don’t cut it because of course they’re up year on year.

    In that case, going a step further and looking at your profitability metrics year on year, is a good place to dive into.

    Are you seeing the same trends, just X% up?

    Could you actually spend more now, based on your margin and profitability goals to make hay whilst the sun’s shining?

    Do you need to?

    Could you even just take more profit at the slower time of year and then reinvest going into new product lines?

    These are all questions you should be asking vs trying to perfectly compare what are fundamentally two different states. Look at your seasonal trends, absolutely, but don’t allow yourself to become frustrated by them and change tack when invariably there are predictable periods with different levels of demand.

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