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When you’re entering into e-commerce or business in general, you’ll encounter two terms frequently — B2B and B2C. You may have wondered what these terms mean or how you can leverage your understanding of the differences between them to ensure the business that you set up runs effectively.
In this article, we’ll take a look at some key differences between the B2B and B2C business models and how they affect approaches taken in sales, marketing, and customer acquisition, and customer relationship management strategies.
Grasping the crucial differences in B2B and B2C buying cycles, customer lifecycles, buyer and chains of command, will allow you to make the right decisions for your business and apply effective strategies that enable your business to meet its long-term goals.
Table of Contents
B2B is a form of commercial transition or business model that is short for “Business-to-business.” This refers to businesses that primarily sell their products or services to other businesses as opposed to end consumers.
This means that all marketing and sales strategies are targeted toward individuals or procurement officers who make product purchases on behalf of the companies they represent, rather than making these purchases for themselves.
Examples of B2B commerce:
B2C is another business model that stands for “Business-to-consumer” and refers to the process of selling products or services directly from a business to individual consumers. This process typically bypasses third-party retailers, wholesalers, or other middlemen to engage directly with the end consumer.
When it comes to marketing and sales approaches, all efforts are targeted toward getting the attention of these end users and providing products and services that can be considered solutions within their everyday lives.
Examples of B2C commerce:
Now that we have an idea of what B2B and B2C mean, let’s take a closer look at the differences between these business models and how they present themselves in various business functions such as sales, marketing, and customer relation management.
The way marketing is conducted for B2B and B2C is quite different. Marketers not only have to engage with audiences differently, but at times, they use different channels altogether.
For instance, because targeting is directly to customers, B2C companies can target customers on social media platforms such as Facebook, Instagram, and Twitter as they will be able to find their customers there. However, to reach B2B customers, brands may have to use platforms that are targeted toward professionals such as LinkedIn where they will likely be able to reach procurement officers or other company representatives.
There are differences also within the marketing content itself. When it comes to B2B marketing, brands need to market themselves as reliable, whereas for B2C they need to market themselves as relatable.
B2B customers are usually seeking to make high-volume purchases and at times, to sign long-term contracts. Because of this, they will be looking to engage with companies that are seen as having strong knowledge in their area of specialization and high credibility to ensure that they are capable of delivering on the high-value purchases.
When selling to the B2C end user, customers seek out brands that relate to them and have brand messages and identities that are seen as congruent with the customer’s own. This is because customers are increasingly seeking to make emotional connections with brands as opposed to merely transactional ones.¹
B2B businesses tend to have a limited niche market when it comes to their customers, as opposed to B2C businesses that have a larger-scale market. As a result, B2B businesses need to have a full understanding of their target markets and the specific demographics and purchasing habits associated with them.
Lead generation is highly important to these businesses so marketers will build lead generation strategies that have a top-of-funnel prospect list with customers looking to be educated about a product before purchase.
B2C businesses use the approach of following the entire marketing funnel. They work with larger-scale markets and so the target is a little more spread out. Customer acquisition strategies will put emphasis on driving advertisements that are emotion-driven, product-driven, and attention grabbing as opposed to educational.
One obvious difference between B2B and B2C businesses is that they have very different chains of command. This is very important to know as it influences their respective purchasing decisions.
The B2B chain of command is much longer and could include entire departments such as procurement, accounting, and their different department heads or the CEO for approvals to be made for purchases.
This is different from the B2C that usually involves the individual end user, or at most, their immediate family members and friends. Because of shorter chains of command, B2C customers will likely be able to make very quick purchase choices. marketing to one person is certainly easier and less complex compared to marketing to entities where multiple stakeholders are involved.
Following from the point on differing chains of command, different amounts of information are required for the two types of customers. B2B customers tend to want to be educated about a product before they make a purchase.
This means that marketing communications need to appeal to logic and have detailed specifications, detailing what the products will do for the B2B customer’s business and what they can’t do. B2B customers want to have a firm grasp of the reaches and limits of products so they feel they have made well-informed, logic-based decisions when purchasing.
Conversely, B2C customers need to feel emotionally good about the products before they make a purchase. As these customers are looking for relatability, they will want to know how their needs will be met and how their pain points will be alleviated, thus B2C marketers have to use emotional and personalized solution selling when compelling customers to make purchases.
B2B and B2C buying cycles are also different because of different decision-making processes. The B2B buying cycle is typically much longer compared to the B2C one because a lot more lead nurturing is required for B2B.
B2B salespeople have to pay special attention to user experience because the purchasing decisions made for the products are often made in consideration of the potential customer's company-wide long-term goals.
This means that specific content needs to be created to address the different stages of B2B buying cycles, and patience has to be employed throughout as this process may take up to months.
B2C buying cycles are often much shorter with conversions being made quite quickly. This puts a lot of weight on the effectiveness or return on investment (ROI) of marketing content. There is also greater emphasis on immediacy with direct calls to action made for customers to urgently “PURCHASE NOW!” or “GET YOURS NOW!”
When B2B customers procure products, they tend to want to use the same supplier over a long period of time so as to keep their expenses consistent over their financial periods. Due to this, supply contracts that can last anywhere between months and years are signed.
This leads to the establishment of long-term relationships between vendors and B2B customers. Customers have longer lifecycles as repeat buyers due to contractually established loyalty to vendors.
This is different for B2C purchases which are made by individuals who typically make low-volume, one-off purchases. Individuals often have a wide range of retail options to choose from and can easily and quickly switch to another brand, thus shortening their lifecycle.
B2C marketers need to work to establish customer loyalty and encourage repeat purchases. This is done by using customer retention strategies such as loyalty programs to keep customers buying with the brand.
Another key difference between B2B and B2C comes in the way relationships with customers are managed over time. B2C businesses tend to offer customer service while B2B companies offer account management.
Because B2B customers typically have contracts with the vendors and engage with them on a long-term basis, personal relationships are built. Customers are considered accounts that are managed or nurtured by designated Account Managers who are often known by the customer and know the customer by name.
With B2C, things are a little different. While purchasing decisions are emotionally driven, the relationships established with customers tend to be transactional. Because of their larger market and customer bases, B2C companies cannot always know customers by name and will use customer relationship management (CRM) software such as Salesforce to manage post-sales queries from customers generically and impersonally.
Knowing the key differences between B2B and B2C helps you make the right decisions for your business. The answer to the question of which of the two is better comes down to you.
Looking at the differences, you will need to consider your capacity for managing each of the different functions required to run a successful B2B or B2C enterprise.
Go through all the differences and see how your business stacks up to get an idea of which direction to go and what tools and strategies to employ.
Alibaba.com is one of the biggest global B2B ecommece platform The ecommerce platform has an extensive product range, making it a great place for small businesses to source their supplies from manufacturers and retailers. Retailers can easily set up their stores and manage their pricing and order fulfillment to get their products to customers.
Now that you have an idea of the key differences between B2B and B2C, you will have better insight into the different approaches that can be considered and applied when it comes to your business.
It’s important to know what type of buying cycle, customer lifecycle, and chain of command your customers have as this will inform the marketing approach, customer acquisition strategy, and customer relationship management model applied to your business.
Successful application means that you’ll be able to establish longer, meaningful relationships with your customers, with knowledge on how to meet their needs and cultivate loyalty. Now you’re ready to start selling! Find out more on how you can start selling on Alibaba.com today.
References:
1. https://www.business.com/articles/emotionally-connecting-with-customers/
2. https://seller.alibaba.com/
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