The fourth quarter is the most important quarter for software companies around the world.
We confirmed this by reviewing sales data from over 3500 SaaS and software companies that use our billing platform. We discovered that Q4 is by far the best-performing quarter of the year for both business and consumer sales.
And here’s our question to you: Are you really taking advantage of the quarter? In November, software companies see 11% to 24% over the average monthly revenue. At the end of the year, buyers are ready to spend money on software and subscriptions — are you using your marketing dollars wisely?
In this report, you’ll find:
- Trends in US software sales by month and quarter
- How software sales vary across the globe throughout the year
- A comparison of B2B and B2C sales from quarter to quarter
- Tips on taking advantage of holidays and other seasonal opportunities around the world
About Our Data
FastSpring’s billing platform supports over 3500 SaaS and software companies who have customers found in over 200 countries or territories. In this guide, we’ll be focusing on where the sales happen as opposed to where a company is located.
We’ll also be looking at the average monthly revenue of all sales made in a specific country using a seasonal index, which compares the month to the average revenue of a given year.
Our data suggests it’s worth running Black Friday, Cyber Monday, and other holiday promotions in November and December.
But the “holidays” can be more than Black Friday and Cyber Monday. If you think globally, there are dozens of holidays you can leverage to run promotions and drive revenue.
You just have to know where in the world to look.
US End-of-Year Trends for SaaS and Software Purchases
In the U.S., many industries see a significant lift in sales at the end of the year. For example, hobby, toy, and game stores earn 35% of their total annual revenue around the holidays. But is this true for SaaS and software?
Using five years of data, we looked at the average monthly revenue of all software sales made through FastSpring’s platform to customers in the U.S. We then compared each month to the yearly average.
We see that sales peak in November but continue to be strong through the end of the year.
Average US SaaS and Software Sales
Again, looking at the quarter as a whole, we see the fourth quarter is much stronger than the other three.
US SaaS and Software Sales by Quarter
That’s sales data exclusively in the U.S. But what about global trends?
Global End-of-Year Trends for SaaS and Software Purchases
To understand consumer behavior globally, we looked at SaaS and software purchases across eight major markets, including the U.S., Canada, Germany, Great Britain, India, Brazil, Australia, and China.
Once again, when we looked at October through December revenue compared to the annual monthly average, we did see increased sales in October, November, and December, with sales peaking most in November — and the peak is significantly higher on a global scale.
Average Global SaaS and Software Sales
Remember that these numbers are based on where the customer is located, not the company’s headquarters, suggesting those Black Friday and Cyber Monday deals really do drive a global increase in revenue for SaaS and software companies.
Where Q4 sales were 8% over the annual average in the U.S., when we add another seven countries into the mix, we see a 13% lift from November to December.
Average Monthly Revenue by Country (2016-2020)
When we break down the data further, we see that while Q4 remains the strongest quarter everywhere, the lift varies significantly from country to country. For example, of the countries we compared, China and Germany had the biggest average spikes in November.
B2B Versus B2C End-of-Year Performance
There’s a lot of anecdotal talk about B2B sales slowing down in the fourth quarter. We suspect this is true for sales processes with longer buying cycles or an account-based approach. However, when we look at B2B SaaS and software sales in general, we find that the last quarter is actually the best quarter of the year with an average 114% over the quarterly average.
To compare the performance of B2B versus B2C businesses, we randomly selected 30 FastSpring users that only serve B2B or B2C markets from across the globe. We then looked at their revenue from 2019, 2020, and 2021 to identify trends.
As you can see, the fourth quarter is the clear winner for B2B and B2C businesses.
B2B Versus B2C Quarterly Sales
What do these insights tell us about how SaaS and software companies should approach the holidays? In the next few sections, we’ll offer best practices for end-of-year campaigns. And we’ll show you some extra data to help you find other holiday opportunities to drive revenue — throughout the year.
5 Holiday Strategies for SaaS and Software Companies
1. Consider Different Marketing Strategies per Country or Region
If you run promotions in multiple countries or regions, consider localizing your campaigns.
In many countries, the sales uptick in November probably happens during Cyber Week, which is celebrated by many countries across the globe. This includes Germany, which has the second-biggest November lift of the countries we compared.
But the biggest lift came from China — a country where Cyber Week is not as big a deal as Singles’ Day, which occurs on November 11. Per our data, we found a large increase in sales in China on Singles’ Day.
2. Add Regional and Other Less Competitive Holidays to Your Campaign Calendar
Our data reveals opportunities in other months of the year, as well. For example, while revenue dipped in June in most countries we studied, it increased in China, perhaps due to China’s annual 618 shopping event, the second-largest ecommerce day in the country. Single’s Day is the largest.
Most companies will run promotions around Black Friday and Cyber Monday. But don’t forget that there are dozens of other holidays all through the year you can leverage to drive revenue.
If your product has great adoption in a specific region, it may be worthwhile to create a regional holiday calendar for that area and create a specific regional offer accordingly.
We can’t tell you what will happen to your specific business, but you know your markets. Take a look at your data and see what patterns and trends you can find.
In general, regional data will give you a better sense of your return on investment (ROI) for any marketing campaign you run.
Holidays or Major Shopping Days of Note
Here are a few to think about. There will be many more in specific areas, and we encourage you to look into events in the regions you market to.
- Chinese New Year/Spring Festival — Always falls between January 21 and February 21
- Celebrated in China and countries with significant Chinese or Sinophone populations
- International Women’s Day — March 8
- National holiday in 27 countries throughout West, Central, and East Africa, Eastern Europe, Germany, China and North Korea
- Singles’ Day — November 11, an Anti-Valentine Day holiday
- Celebrated in Southeast Asia and Western Europe
- Diwali — The 15th day of the Hindu month of Kartik (Usually late October or early November)
- Celebrated in South Asia, Southeast Asia, Caribbean
- Click Frenzy — Second Tuesday of November
- Black Friday — Last Friday in November
- North America, much of Western Europe, China, much of Africa, Brazil, and Mexico participate
- Cyber Monday
- Most countries that participate in Black Friday are also interested in Cyber Monday
- Christmas — December 25
- North America, most of Easter and Western Europe, Australia, Colombia, Venezuela, Brazil, Pakistan, India, Japan, Hong Kong, most of Southeast Asia, South Africa
- Boxing Day — December 26
- Celebrated in Great Britain, Australia, New Zealand
- International Workers’ Day or Labor Day — May 1 in much of Europe, Russia, Africa, Central and South America; the first Monday in September in the U.S. and Canada; and the first Monday in October in Australia
- Widely celebrated throughout the world
3. Promotional Efforts Can Roll Into Q1
While software sales slow down in the first quarter of the year, the drop may not be as steep as you expected. In January, sales remained solid (above 90%) in the US, Great Britain, Germany, and Canada. The bigger drop occurred in February.
Many sales and marketing teams take it easy in the first quarter to regroup or recharge. But there’s also an opportunity to stand out in a less competitive season.
When you run campaigns during the fourth quarter, you’re not just competing against your direct competitors. At the end of the year, people’s inboxes and social media feeds overflow with holiday promotions. More than any other time of year, you’re competing for attention.
January and February may be the perfect time to try something new or big.
4. Track Your Sales Using a Seasonality Index
Track the success of your campaigns year-over-year to make sure that an increase in spend doesn’t exceed the increase in revenue.
Month-over-month (MoM) and year-over-year (YoY) growth tells you much, but those aren’t the only way to examine performance.
A seasonality index, such as the one we used in this guide, shows how a given month compares to the average month in a year.
We recommend tracking annual campaigns YoY and comparing the results against other campaigns you run throughout the year.
Keep in mind that a monthly increase in revenue may not give you the full picture of the success of a campaign. For instance, depending on time zones and when purchases are processed, Cyber Monday sales may extend into December. If you only look at November sales numbers, you may not see the full picture.
As you’re planning your promotions, here are a few other KPIs we recommend tracking.
5. Focus on Customer Appreciation
Even if you’re not doubling your revenue at the end of the year, the holidays are the perfect time to work on customer relationships, especially if you have a SaaS product.
Use the holidays to show appreciation to your existing or VIP customers through extra generous promotions, gifts, giveaways, or personalized offers. Here are a few ideas that other SaaS and software companies have successfully used:
- Run a “Holiday Bundle” promotion with your most popular add-ons or even a complementary training.
- Offer a great discount on a subscription plan or software upgrade.
- Run a gift promotion encouraging customers to buy subscriptions or software for their friends and family.
- Run a “Treat Yourself” promotion encouraging customers to buy something for themselves during the holidays.
- Give away an annual subscription or upgrade to those in a loyalty or referral program.
- Do something special for email newsletter subscribers.
4. Reward Your Affiliates
Many affiliates, whether they’re individuals or companies, may be planning to push hard throughout the holidays, which makes it a good time to reward them with a larger commission rate or a particularly good deal that they can promote.
Check out our blog post on preparing affiliates for the holidays for a full list of holiday affiliate program ideas.
How FastSpring Can Help
Here are a few ways FastSpring’s full-stack commerce platform can help you during the holidays and beyond.
1. Support Inquiry Management
If you expect a large increase in orders during the holiday season, is your customer support team prepared for it? FastSpring can manage purchase-related support inquiries on your behalf, saving you hours and budget that can be focused on driving more sales during the holiday season.
2. Localized Languages, Currencies, and Payment Methods
To compete and win in the global marketplace, your business must offer a localized shopping experience that accommodates a broad range of languages, regulations, and local preferences.
The preferred payment methods vary by region. If you can see a trend of popular regions in your website analytics, you can narrow down payment methods you should automatically offer to global shoppers. This includes digital wallets like PayPal, credit cards, and wire transfers. By offering the preferred payment method, you will be able to reduce cart abandonment and payment declines.
FastSpring offers a localized checkout experience that automatically converts your product’s pricing information to your customer’s local currency and preferred language and offers a wide variety of payment options.
3. Global Tax Management and Regulation Compliance
Global shoppers don’t want unexpected tax or regulatory requirements, which can be extremely disruptive to the purchase process.
FastSpring automatically calculates taxes, VAT, and GST in the checkout and ensures regulations such as GDPR and PSD2 are automatically applied for impacted transactions.
Contact us to learn more about how we can increase your revenue while reducing the complexities of selling around the globe.