B2B, which stands for business-to-business, is a process for selling products or services to other businesses. On the other hand, a B2C sells directly to its consumers.
- Introducing the difference between B2B and B2C
- B2B vs. B2C: target customers
- B2B vs. B2C: distribution strategy
- B2B vs. B2C: complex vs. simple sales
- B2B vs. B2C: product development
- Welcome to the era of B2All
- Leverage a B2B2C approach
- Connected Business Model Types And Frameworks
Introducing the difference between B2B and B2C
While this might seem a trivial distinction instead, that is a fundamental shift in how your business will look like.
Depending on whether your business is a B2B or B2C might change the physiognomy of your business. Let’s then consider the primary differences in B2B vs. B2C by looking at three key aspects:
- target customers
- distribution strategy
- complex vs. simple sales
- product development
B2B vs. B2C: target customers
The first primary difference between B2B and B2C is based on who’s your target customer.
In B2B, you’ll sell directly to another business. While in B2C, you’ll sell directly to consumers.
Keeping this simple distinction in mind is extremely important because you will also need to understand the different purchasing intents of each of those segments.
For instance, if you sell software as a service, and you sell it to another business, the reasons why those businesses, which are your customers are buying from you, are entirely different from the reasons why consumers might buy from you.
This will also fundamentally change your distribution strategy and the way you think about your product.
B2B vs. B2C: distribution strategy
This distinction can help you also understand what type of distribution strategy is better suited for a B2B rather than a B2C.
Indeed, in the former case, your final customer will be more sophisticated and usually will also require a different kind of support, and assistance, besides needing your service or product in bulk.
This will allow you to sell a product at higher prices and, in some circumstances, at higher margins.
You might also need a complexto tailor the offering to the specific business clients’ needs.
This means you will thrive with a highly diversified and tailored product that requires more support and assistance from dedicated accounts that follow the client.
Yet it is essential not to confuse simple and complex sales based on how high is the price of the final product.
Another critical element to understanding B2B vs. B2C is the type of transaction involved.
B2B vs. B2C: complex vs. simple sales
Prada is an Italian luxury brand that sells high-priced products.
As a luxury brand, it sells mostly directly to consumers via its retail stores. However, its products are quite expensive and not affordable for anyone.
This might make you think the sale is complex, yet it’s not – I argue.
Even though Prada spends massive resources (45.8% of its revenues) on selling costs compared to adverting and communication costs.
Source: Prada 2017 Annual Report
My argument is that those selling costs incurred are more as a marketing expense.
When a salesperson deals with a customer to sell her a high-priced bag worth a few thousand dollars, that is still a sale to a consumer (even though a wealthy one).
Its primary selling strategy will be based on hiring skilled salespeople to support business clients throughout the process.
For instance, in 2017, Salesforce spent over $3.9 billion in sales and marketing, a good chunk through a direct sales force, which is comprised of:
- Telephone sales personnel based in Salesforce regional hubs.
- And field sales personnel based in territories close to the customers.
Sales representatives support the telephone sales and field sales personnel to bring leads across a qualification and closing process.
A complex sale might imply multiple touchpoints, and a sales force able to identify the key contact points to close the deal is a critical resource for B2B business success.
B2B vs. B2C: product development
As B2C sales processes take a completely different turn.
They also imply a different product development schedule. Indeed, in a B2C sale, you can sell the same standardized product or service to most of your customers.
Even though B2C has changed in the era of tech giants like the FAANG, some fundamental truths still differentiate it from B2B product development.
Think, for instance, about how Netflix has changed the way people consume by offering a personalized and customized list of to consume.
This also applies to Spotify in the music industry.
In this scenario, most of the resources for those organizations will be spent in two areas: technology and original.
Those two resources are meant to shape the way the service is provided.
With original, those B2C companies are pretty competitive. And with a significant investment in technologies, they can deliver a customized experience to millions of people across the world.
Regarding product and service development, Netflix ad Shopify are thinking in terms of “what millions of consumers around the world would love?”
Welcome to the era of B2All
In an article entitled “The End of B2B and B2C Sales: Why It’s Now B2All” Colleen Francis points out:
Selling used to fall into one of two groups: B2B (business-to-business) and B2C (business-to-consumer). Each had its own set of rules. Selling to businesses took place in a fact-driven, risk-averse environment. Selling to consumers was a much more impulsive, emotionally driven exercise.
Today, B2C is having a major influence on B2B. And vice versa. It’s creating the democratization of the marketplace, or as I like to call it, B2All (business-to-all). Everyone is equal in this new way of selling, whether you’re a business or a customer.
The article opens up a few critical points.
With the digitalization of the business world, keeping a rigid distinction between B2B and B2C has become harder.
Therefore, an organization that can tap into a few key ingredients can both access businesses and consumers. This can happen especially if the organization focuses on three aspects:
Use product development as a marketing tool
When your product has built-in features that allow it to leverage virality and network effect, a B2B can tap into consumers.
We saw that with the freemium business model.
Also, if you’ve focused on improving the product based on customers’ feedback, that will make it successful both as a B2B and B2C.
Indeed, your enterprise client might be the best suited to allow you to create an excellent product quickly.
Make your brand irresistible
If consumers hear about your product and service repeatedly, they will be the first promoters of it.
Thus even if another business might be an intermediary between you and your final consumer, it will be the same consumer suggesting the business provide your service.
Have a multichannel approach
In a digitalized world, it becomes critical to tap into several channels to connect with businesses and consumers.
Leverage a B2B2C approach
In a B2B2C approach, you can leverage the best of both worlds (B2B and B2C) by using a B2B player to reach potential customers.
Take the case of a partnership where you amplify your brand and product by leveraging a third-party platform.
You do it to amplify your distribution while keeping the focus on building your brand through the B2B player.
As an example, imagine the case of an established e-commerce brand that also leverages Amazon to amplify its reach and demand.
The e-commerce-owned platform will still be where you sell the core products.
However, you might list a portfolio of products worth to give you max amplification.
Thus making your brand known to a plethora of customers that otherwise would not be able to reach you through your e-commerce platform alone.
For instance, imagine a fashion brand selling high-priced bags and making lower-priced accessories.
You list them on Amazon to expand distribution and bring these customers back to buy bags!
In this scenario, you leverage a B2B platform (Amazon e-commerce) to reach a wider audience of consumers while making your brand known with a product (accessories) thought to enhance distribution without cannibalizing the core product.
Related: What Is A B2B2C Business Model?
Connected Business Model Types And Frameworks
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