Year-over-year trends are better predictors of the future.Year over year analysis helps uncover the real potential of a month.
In a monthly analysis, you may think that February underperformed relative to January, but its possible that February lived up to its potential while January fell short of its total potential. Rather than compare two months whose potential is different, year-over-year trends look at months with similar potential. Year-over-year trends neutralize seasonality. This is one of the great advantages of this approach: some months naturally have more potential to perform well than others.
While monthly trends will show seasonality, seeing the same trends in multiple years helps identify that the fluctuations are seasonal. B2B service or SaaS businesses often see a decline during the summer when decision-makers are more likely to be on vacation. E-commerce stores, for example, often see a seasonal lift in December. But most businesses experience some levels of seasonality, just to a lower degree. Some businesses are obviously very seasonal (for example, a website that sells Halloween costumes).