B2B vs. B2C: where they differ
Imagine you’re an apple farmer with a large orchard. You have a decision to make between two business models. You can take your produce to the local farmers’ market, where you will likely sell small batches of your apples to a revolving door of customers, or you can partner with large outlets like supermarkets.
Selling to supermarkets will guarantee a purchase of large quantities of apples, but it also means providing a consistent supply at a fixed cost, as well as delivery. There’s a higher demand which leads to a higher upkeep, as well as hiring staff, and plenty of other costs associated with running a B2B business.
Selling your apples at your local farmers’ market is a very simplistic form of the B2C model. You’re taking the apples you’ve grown and selling them directly to people within your community. When you choose to sell your apples to the larger corporations, not only are you selling business to business, but you’re most likely taking on larger costs.
Let’s dive deeper on the discrepancies.
B2B sales come with a higher price point. It’s all part of the territory. You have to consider the buying and selling entities, and what they signify. In SaaS, you’re selling an essential piece of software, likeHubSpot, to another business. HubSpot is going to be this business' primary CRM and marketing platform.
Now depending on the number of users or data the CRM will hold, HubSpot will charge a premium for their service and platform. The purchasing business is buying something that it needs to solve a problem, and they’re willing to pay for it. Remember, your price is the exchange rate on the value you’re providing, so don’t skimp on it.
Analyzing and understanding data to know what your customers or target customers value will ensure price optimization, but it is an ongoing process.
B2C sales are transactional and are generally at a low price point that an individual can afford. Purchasing a car or a house comes with a greater price point, but we see most B2C sales happen between an organization and one person with decision-making ability.
The B2B sales cycle will last longer, includes multiple touchpoints, and multiple stakeholders need to be considered throughout each step. As mentioned before, a B2C sale is very transactional and usually consists of one stakeholder. When making a purchase for an entire organization, not only do people able to make a purchasing decision have to be brought in, but also the people who will use said product/service.
There’s an incredible amount of emotion that goes into B2C sales. Consider small businesses selling their product for the first time, or the first time someone buys a car. There is so much riding on that one transaction because it’s based more on emotion.
B2B sales can be rather cut and dry—strategic and rational. There is a strategy in place to ensure the sale happens, and again, there’s multiple stakeholders on each side to help move the buying process along.
As mentioned in the beginning, B2B sales is entirely based upon selling to a business entity, rather than a single consumer. Identifying the correct buyer personas, and marketing to them correctly is crucial in B2B sales. You are providing a solution to an entire company, not just to a single consumer.