B2B Vs B2C. Which Business Model Should Your Startup Choose?
B2B and B2C are regular terms created by people in the commerce industry. More and more ecommerce startups are being funded daily by venture capitalist and angel investors. Why are they funding ecommerce startups more than entertainment and other startups? The reason is because ecommerce is sales and sales along with numbers mean everything to them. A good b2b or b2c will scale and bring them wealth. At the end of the day your startup has to make money somehow right? Let’s say you have a killer product or in the process of making one. It is a good time to decide whether you want to go B2B or B2C. While you might think that you already have that set, a lot of startups actually change their plans during various stages or do a mix of both.
When it comes to b2b vs b2c, one would think that they are similar and that marketing strategies can be used in the same format. This is only half true. Marketing still applies but the way you market the product, the audience that you target, and your pricing model differs a lot. In B2B your startup is
- Relationship driven
- Closing Sales
- Great knowledge of product
- Higher end pricing (more profit per sale)
- More complex
Generally B2B sales are targeted towards big firms such as Fortune 500 companies or other existing big companies. B2B’s pricing is usually an enterprise level pricing, where the client gets a big amount of licenses for your product. Usually you would need talented sales people that know your product in and out. Bigger deals might require multiple “sales round”, multiple client meetings and updates. B2B’s support usually needs to be top notch. Your startup can’t really just throw up a phone number on your website, instead you want to provide maximum support with support staffs. B2B sounds like hard work, so why pick this model? B2B brings in a lot of revenue. Think of it as selling a house, the reward per sale is a lot bigger than say selling 5 hamburgers. Deals take longer to close, but if your startup is a software based startup then recurring revenue will stack up.
Startups that currently use the B2b model told us that client relationship is extremely crucial in a b2b environment. Along with top customer service skills, you also have to actually approach your clients to follow up. Most CEOs or sales director that use the B2B model told us that it is an extremely awarding model and makes them feel better when they see higher numbers.
B2C should always be impacted and quick sales. B2C is all about keeping up and doing it quicker and better. Usually B2C targets a huge market and b2c models require a lot of updates frequently. For example if your B2C model is selling a SaaS software that helps people retrieve data from social media accounts, you might need to update new features each time a new social media feature is released. If you are a product startup, then you might need to follow up with current trends and change your product accordingly.
- Fast driven sales
- More involved with the community and audience
- Large market size
- Single sale round – quick sales
Read For Fun: 10 Things I Wish I knew Before Creating An App
Marketing Strategies in B2B vs B2C
You should have a different approach when it comes to marketing for b2b vs b2c. Social media such as facebook, twitter and instagram might not be as important for a B2B model, but for a B2C model, social media play a major role. The average age person on Twitter is in their lower- mid 20s. Chances are that this age group might not be willing to spend 2000+$ on a B2B software product. In fact even if they are willing to spend, there isn’t a need for it for them. Now if you were selling indie clothing on your ecommerce startup site, then it is important to use social media for your B2C model. Data and pictures spread like a wildfire on social media.
As mentioned above, B2B is very relationship driven. Most of the B2B professionals would approach niche forums and private linkedin groups related to their niche. The reason why this works better for B2B is because they can communicate directly to people who are interested in their product, narrowing their niche down a lot more. This also allows B2B professionals to land bigger gigs and show off their professional attitude.
Most B2C isn’t Saas based, if it is, it is usually a low cost monthly recurring model. The best place to market any B2C product is using social media like Pinterest, Facebook, Twitter and other direct selling places.
In a B2B model, marketing with flashy pictures and display might not be as important as marketing about the value it can bring to the client. This would include features of the software, how it can help the company generate growth, a strong ROI and many more. B2C on the other hand might be more aimed towards using flashy photos and short descriptions to convince the customers how great their product is.
B2C people tend to focus more on copywriting and call to action buttons to make quicker sales.
Mix Of Both
A lot of startups don’t like to use a single model, many of them don’t like to compare b2b vs b2c. These startups would create a model that has a mix of both b2b and b2c. We see a lot of Saas based startup doing this. For example a project management program might offer a subscription model for a small business with 3 users for a small price, while also offering a bigger model for enterprise companies with a large user database. This allows the business to expand quicker and reach out to a bigger audience.
Employees in B2B vs B2C
Hiring is also very different in a b2b vs b2c model. B2B tends to focus more on hiring sales people that know the software in and out. You don’t want to approach a big client with just a product and a short description. You have to know every little thing about it and great sales skills take a big part of that. B2C tends to hire more community managers, social media experts, and content creators so that they can reach out to the bigger audience.
In the end, you should choose a model that fits your startup’s product. My personal suggestion when it comes to B2b vs B2c is using a mix of both, but that also requires more hiring, more funding, and more work.