The Difference Between a B2B and B2C

If you are a business owner, there are two kinds of customers you could be catering to: other businesses or consumers. If it’s the former, you own a B2B business, but if your target audience is the mainstream consumer then you have a B2C business. It is really that simple, but having said that B2B and B2C businesses differ in several ways. Let’s break down the difference between a B2B and B2C to see how they function and how marketing strategies differ.

What is a B2B Business?

B2B stands for Business-to-business. In a B2B setup, the products and services are sold to other businesses. To give an example, Maersk Line, a global shipping company that operates over 600 vessels, is a leading B2B business. Its diverse customer base includes exporting and importing companies.

A B2B transaction occurs when a business needs to source raw materials for its production process or when it needs operational assistance. Let’s take a look at two examples. A baking company may transact with a business that produces emulsifiers for its products. As for operational assistance, a retail company may engage a human resource management (HRM) software vendor to streamline its hiring process.

Yet another example of a B2B transaction is when a business resells the goods and services of another business. An example would be when a retailer buys products from a food manufacturer to resell it at its chains.

What is a B2C Business?

A B2C, or Business-to-consumer company, is one that sells products and services directly to the consumers. Restaurants, retail chains, housekeeping services are all examples of B2C businesses.

The term B2C became popular in the late 1990s when online retailers started making the most of the dotcom boom. Thanks to the internet, people could buy anything they wanted in a matter of minutes. The dotcom boom eventually went bust, but online retailers like Amazon.com and eBay gained immense popularity in the B2C space.

How are B2B and B2C Different?

By now, it should be clear that B2B and B2C businesses differ greatly because their target audiences are different. Let’s explore the specific areas where these two models contrast.

Purchasing Process

In a B2C transaction, the purchasing process is shorter and often simpler. A consumer knows what he wants, browses the net, finds the item he is looking for and makes the purchase. A B2B transaction is far more complex than that.

In B2B settings, purchase decisions are not taken by a single person. The decision making group often includes people from different departments and function areas. As a result, it takes a longer time to reach a consensus. What makes the purchasing decisions more time-consuming is also the fact that the money involved is typically greater than what a consumer pays to a B2C company, so the risk is also high.

Brand Loyalty

Businesses seek long-term commitments when they engage with other businesses. Brand loyalty, therefore, tends to be higher in a B2B settins. As the relationship has significant impact on processes, operational systems and costs, businesses foster B2B partnerships.

In a B2C setting, however, brand loyalty is quite less because the purchase does not have a lasting impact on the buyer. The costs are comparatively much less and consumers have a host of other options to choose from.

Let’s look at two examples. A chemical company engages a CRM software vendor to upgrade its analytics. The vendor and the company spend time and resources to understand the need for a customizable solution, assess its performance with several stakeholders and finally implement the solution after three months.

In another case, a 35-year old graphic designer buys a pair of headphones after browsing the net for 15 minutes.

Who do you think will be more loyal to the business? The chemical company or the graphic designer?

Product Knowledge

B2B customers have more knowledge of the product or service they are buying. B2C customers, on the other hand, do not usually have an in-depth understanding of the solution they are purchasing.

A digital manager at an organization will be more aware of the reason why he/she should invest in the right email marketing tool than a consumer buying a pack of gums. The difference in the level of understanding is also triggered by the significance of the decision that needs to be made.

An email marketing tool means big bucks for the company and a strategic decision that impacts its user engagement. For a consumer, making purchasing decisions is not necessarily always that significant.

Marketing

Understandably, marketing for B2B and B2C products and services differs in several ways. To begin with, B2B customers are generally very clear on what they need to make logic driven decisions. The B2C audience, on the other hand, makes emotionally triggered decisions.

B2B customers are also more detail oriented than their B2C counterparts. The Chief Technology Officer (CTO) of an engineering firm will expect a thorough explanation of how a solution works before making a final decision. For such customers, it’s important to prepare highly detailed content to market the solutions.

Thought leadership and proven expertise matter a lot to the B2B buyers. That’s why using whitepapers and case studies is a clever way to market solutions in this space. In the B2C domain, consumers are more interested in what the product or service can do for them. A brand’s reputation matters when it comes to making a second purchase, but it’s not as critical as it is for the B2B buyers.

Companies Successfully Juggling the B2B and B2C Worlds

While it’s not always easy, many well-known brands have proven that companies can achieve success in both B2B and B2C segments. Take Amazon, for instance. Over the years, the online retail giant has carved a special space for itself in the B2C domain by offering everything from watches to groceries to its large customer base.

The company is also emerging as a force to be reckoned with in the B2B space. It successfully launched Amazon Business, its online platform to attract business customers last year. It has also made foray into the handmade goods segment with its newly launched online store.

Another success story is Facebook. The social networking giant has proved its critics wrong by continuing to stay relevant. It started out as a B2C platform aimed at young users who found it both interesting and engaging as a social networking platform. The company began focusing on targeting businesses soon after it tasted phenomenal success across the world. Today Facebook for Business is a money-spinner for the company that is still immensely popular among users.

These companies have become successful in both spaces because they understand what the customer wants. So whether it’s a business or the end user, they have the right strategy in place. By following in their footsteps, small businesses can also achieve success.

B2B/B2C Photo via Shutterstock

This article, "The Difference Between a B2B and B2C" was first published on Small Business Trends