B2B and B2C sales operations are the two primary types of sales relationships. A B2B business is dedicated to marketing and selling products to other companies, while a B2C team is focused on marketing and selling directly to consumers. Understanding the difference between these two approaches is essential for getting the best results with your company.
In this article, we'll discuss what B2B companies are, what B2C companies are and how they differ.
What is B2B?
A B2B company, also known as a "business-to-business company," is one in which sales are made with another company. Although that may seem like a restrictive model, there is room for significant sales figures when working with other businesses. Developing a contract with a large company can be lucrative, as it can be relied on as a steady source of sales to keep the company stocked up on all their needs.
Selling in a B2B setting is often a task that relies upon building relationships with the companies you are selling to. Because this is the case, it is important for sales staff to be friendly and likable, as stronger relationships will make clients more likely to stay with your company and to recommend you to other clients.
B2B companies do not always sell physical products to other companies. Many service industries have B2B sectors servicing other businesses. If you own a large company with a fully staffed office, for example, you may rely on an outside company to provide you with your office supplies so that your staff can work, but you can also hire out for tech support or other services that you do not need enough to demand a full-time staff. The tech company is engaged in B2B transactions in that example just as much as your office supplier is.
What is B2C?
A B2C, or "business-to-consumer company," is one that sells products or services to consumers. B2C companies can take on a wide range of organizational structures and mediums. A company that is selling products on a home shopping network is taking advantage of B2C sales, as is a store in your local mall where the store's owner sells products they created.
One area that has led to a massive increase in the number of B2C companies is online sales. The widespread growth of the Internet in recent decades has enabled business-to-consumer companies to form in every industry you can imagine.
From a consumer perspective, a B2C company is often the most affordable way to purchase products, as the lack of a middle company means the buyer can get products at a lower price without removing the seller's profit margins. This is also a perk for the company or salesperson attempting to pitch the products, as lower prices give the company a competitive edge.
B2B vs. B2C
The available tools for marketing and making sales, as well as the expectations and demands of potential customers, vary depending on whether your company is participating in B2B or B2C sales. Although many skills that allow you to succeed in one type of business can be successfully applied to the other as well, there are still many differences that make the two types distinct from each other. Understanding these differences is important for maximizing the effectiveness of your campaigns.
- Pricing flexibility
- Structural flexibility
- Online sales
- Emotional buying
- Depth of research
- Personal relationships
- Convention pitching
When operating a business-to-consumer sales structure, you will likely use a static pricing system. That means that if two customers show up to purchase on the same day, they can expect to pay the same price for the product.
In comparison, in business-to-business sales relationships, special sales rates are more common. Because it is normal to have long-term relationships with clients, it's not unusual for a long-term client to have special deals or expectations with the salesperson who manages their account. While it is in the company's best interest to keep the specifics of the different arrangements secret to each client they sell to, flexibility is an important part of maintaining clients.
Pricing is not the only way that there is more flexibility for a B2B salesperson than there is in a B2C sales setting. While B2B companies that perform the majority of their sales through an impersonal method like an online shop will operate more closely to a B2C business, for companies utilizing salespersons to maintain accounts with clients, more room is given to work out creative sales options.
For example, the seller and buyer may come to agreements where prices are reduced in exchange for increased purchase orders, or where different products are bundled together in groups that result in larger overall sales and profit for the seller at an increased discount for the buyer.
Although some B2B companies now take advantage of online stores, it remains a more common method of making sales for B2C companies. Online stores represent one of the most efficient ways to take a product and put it in front of as large an audience of potential customers as possible. Online stores make selling directly to customers easier and allow a company with access to affordable shipping to reach customers around the country or even the world.
Sales to businesses are often driven more by logic and need, while sales to consumers are driven more by emotions. For direct-to-consumer marketing, fear of missing out is an important and noteworthy tactic. The goal of many B2C marketing campaigns is to present the product being sold as the can't-miss solution to a problem that the buyer needs, even if they didn't realize the problem existed until they saw an ad for the product. It is important to demonstrate how the product can solve a problem in a brief but engaging pitch.
Depth of research
When selling to a B2B client, you will likelybe interacting with someone who has put a lot of time into researching the products or someone who will opt to do more research after speaking with you before committing to a purchase order. Because the purchases made in these settings tend to be larger and the level of discretionary spending lower, there are more reasons for the buyer to devote time to ensuring they are making the best possible purchase.
While an individual is less likely to believe that spending an hour or two researching a small purchase is worth their time and effort, a purchaser from a company deciding on a costly order knows that the time research takes can be justified by the potential savings during the deal or down the line. This means that a B2B seller benefits from having detailed information available to demonstrate the benefits of buying their products, as opposed to the more emotional appeal of a B2C sale that is more likely to rely on short, eye-catching claims.
It is more common in B2B sales for there to be a preexisting relationship between the business selling and the business buying. Many salespeople will maintain the same clients for years or even decades of sales. These unique relationships will often play a part in creating the special deals noted above, and they also serve to build loyalty between the buying business and selling business. In this way, maintaining this long-term relationship can benefit both parties.
One major difference in the marketing initiatives around B2B and B2C companies is the use of trade conventions. Although some B2C companies will sell at themed conventions, it is a more important part of marketing a B2B company. Conventions and trade shows provide an opportunity for the B2B company to display their products and services for representatives from many companies. This can result in significant lead generation for the sales staff to establish new B2B relationships.