To have a meaningful conversation with buyers it is important to develop the right sales skills. However, to do that it is important to understand the buyer and his needs & challenges. A buyer’s perspective hugely varies with the type of purchase he is doing. Often based on Weather he is buying for the business or for personal use the buyer’s journey and the sales cycle will change. Therefore, it becomes essential for sales reps to understand the difference between business-to-business sales and business-to-consumer sales.
What do B2B and B2C mean?
In essence, B2B/B2C is providing your customers with a solution or some services to fulfill their needs through your business. Although they both seem very similar and confusing there is quite a lot of differences between the two when it comes to strategizing as they have different decision-making process and different level of involvement by the customer. Let’s see how:
What is B2B Sales process?
when a business specifically sells to another business, receives payment from the organization, and does not cater to individual customers directly, they are called B2B. Selling at the organizational level can be broadly classified into 3 different types. For example,
- Supply sales: This can include products required within the organization such as office supplies and equipment. These kinds of purchases are generally done in bulk and often the order requires authorization from the management.
- Distribution sales: Where the seller sells/distributes products in large quantities to another seller for him to sell to consumers. For eg. Manufacturers and distributors to supermarkets.
- Service sale: In service sale, one business provides service to another. Eg. Software, legal, etc.
Examples of B2B Companies: Companies whose customers are other companies or organizations like a hospital buying medical equipment from a manufacturer or an IT company buying office equipment from another manufacturer, an organization buying a salesCRM, etc.
What is the B2C Sales process?
When a business deals with individual customers directly they are called B2C.
These can include direct sellers, online intermediaries, advertising, and subscription models.
- Direct Sellers such as a website of a brand selling its product directly to its customers.
- Online Intermediaries such as Amazon act as a bridge between retailers and customers.
- Subscription-based models such as Netflix, and Hotstar offers paid content
Examples of B2C Companies: every human being who is purchasing something is the end-user for a B2C sale. Examples could be from roadside vendors to high-end car retailers
They both need to deal with the customer directly establishing a unique, memorable experience to create branding and positioning in the customer’s mind.
Comparison of B2B and B2C Sales
B2B or B2C sales at its core is just selling to your customer from business to business or from business to direct customers. However, having a clear idea about business-to-business (B2B) and business-to-consumer (B2C) sales and marketing can help segregate strategies and make better business decisions.
Difference between B2B and B2C Sales
- Average Order Value
As B2B purchase is done at the organization level the order value or the number of users planning to use it is very high compared to the B2C were only one or few individuals plan to use the product as the purchase is personal.
- Sales Cycle:
B2B Sales cycle is long and complicated,as the processes involved in closing a sale are lengthier. There are multiple decision-makers involved and also as the number of end-user and the cost involved is quite high the purchase has to be done after a thorough analysis and understanding of the proposed use. Buyer has to be very sure that the purchase or rather the investment made towards a b2b sale is going to bring a positive impact.
Whereas for B2C it is generally just the customer himself taking the decision. Hence it is fast and less complicated.Generally, all the steps of the B2C sales cycle can be done in one go making it shorter,as the consumer is encouraged to purchase the product on the spot.
- Buying Psychology
A person doing business with another company can often be rational and logical when it comes to B2B purchases, while the same person doing B2C purchases tend to be emotional, impulsive, or illogical.
Therefore, understanding the buyer’s psychology goes a long way when trying to sell to a particular category.
When doing a personal purchase for self or a close family member, where emotions play a stronger role the visual appeal or the experience takes priority whereas while doing a business purchase other factors like value proposition, cost, scalability, easeof use,etcbecome a priority. In B2B making informed business decisions is very important.
The buyer’s motivation or the way they behave might be poles apart in different situations. Therefore, whatever might be the product, the sales pitch will significantly vary based on the targeted buyer’s persona/ psychology.
- No. of Decision-makers and influencers
B2B sales funnel requires multiple touchpoints as you need approvals from high-level executives, managers, finance heads, IT heads, and other roles. Typically, it has 6-10 decision-makers. Each one of them will have their own perspective and can view the product and its intended use differently. To bring the deal to closure all these people must get convinced, whereas B2C involves 1 or 2 decision-makers only.
- Alignment of priorities among buyers
Sometimes the priorities of the buyers are not well defined. Although they feel some solution is needed for their business, they are not very clear about what exactly they need and how to go about it. Whereas B2C customers generally know what their priorities are, they are only looking for a particular product and only need to be convinced about the brand and its quality and that it fulfills their needs.
- Risk perception
As the order value is very high and the decisions are made at the organization level there is a high risk involved. Sometimes the customer is not able to analyze the solution properly or the perceived gain from a solution is not met due to multiple factors involved in the usage and the timeline. This can result in a loss of profit or revenue.
Whereas B2C purchase is done only for personal use which results in much lower order value and hence low risk.
- Sales motion
B2B seller needs more thorough knowledge about the product as they need to actively engage, educate and drive the conversation with their target customers. They need to build strong business relationships for long-term collaboration and to get more referrals.
For B2C strong marketing and branding in the customer’s minds is more important. They are not dependent on the seller’s knowledge of the product.
- Buying Process
B2B buying process and B2C buying process vary significantly. B2C is very simple and impulsive. The customer may not even have a real need to buy a product but might end up buying it just because of its market positioning or branding or just to fulfill a status or lifestyle need like a branded Car or phone. They might even do a purchase for emotional needs if the brand has placed itself as fulfilling a positive emotional need. A customer just meets the salesman, clarifies his doubts without needing any data, and makes a purchase.
Whereas B2B is more logical. It needs data for each step along with positive and supportive reviews that meet its business needs. They review a solution multiple times, perform exhaustive research, compare various options in more detail and then proceed with a decision. All this can make the process very lengthy. However, if done properly it can yield more results for the seller in terms of getting referrals and positive feedback in the market.
As evident from this study, the B2B buying process can be explained through an elaborate series of steps., like
- Need recognition
- Solution Exploration
- Requirement Specification
- Supplier Identification
- Taking Action
- Need fulfillment
B2C customers who are financially capable consumers will not hesitate to purchase an expensive brand if it matches their aesthetic preferences or fills a need for maintaining social status — even when less costly but equally functional alternatives are available.
Whereas B2B customers’ needs are not about social status or aesthetics, it is generally more about functionality and real-time need fulfillment enabling better time, money, and resource management ultimately contributing to profitability.
While B2Cs targets millions of consumers at once, B2B has a narrower reach. Most of the time sales reps need to pitch in to convince the buyer and also present supportive data. B2C mostly depends on the customer perception of the product which is also dependent on the branding. Hence very strong marketing and branding are required.
- Market focus
B2B serves a niche market, whereas B2C has a larger consumer base. This means B2B services need to plan their sales and marketing strategies specifically for their target customer while B2C strategies can be more generic. On the flip slide for B2B sales deal closing profit margin and Order-value is much higher.
- Sales Methodology
B2B sales funnel involves multiple reviews and evaluations before purchase. As there are many decision makers and many departments and approvals involved, the whole process can take a lot of time. Even approval of the budget might be a lengthy process. The sales team might have to address multiple queries from different departments, and therefore should have in-depth knowledge of the product. While in B2Csales funnel there is only one decision-maker. If satisfied the next step is to purchase where the sale cycle ends. Sales reps do not need that much knowledge of the product.
- Lifetime value of customer (LTV)
B2B buyer takes more time to evaluate a product before purchasing. There are multiple levels of buying process with a lot of investment in terms of time and money.
After putting in so much of effort if a decision goes wrong, it can drastically affect an organisation’s ROI. There are long-term contracts and the cost of migration is high. From the seller’s perspective,all this can result in a loss of referrals and a negative image of the product/ business in the market, which can result in further loss of leads. B2B, buyer may or may not return for a purchase depending on his need.
Hence, for the seller, it becomes crucial to develop and nurture a good customer relationship while the buyer needs to be confident of the purchase.
B2C do not need data to support their purchase every single time. These purchases are often impulsive and do not require havinga good customer relationship.
- Customer Engagement
Customer engagement impacts the business much more in a B2B setup than in B2C.
The buying cycle in B2B sale is an opportunity to showcase your business ethics and practices. Converting new customers to repeat customers and repeat customers into brand ambassadors is the essence of good B2BSales CRM. With the ability to connect with your intended audience, you will be able to differentiate your business from your competitors and build your brand.
Business-to-consumer companies favor efficiency and, as a result, spend very little time getting to know their customers, which leads to an extremely transactional relationship. Its primary goal is to sell the product, and most of the time here is spent ensuring high-quality products are delivered quickly.B2C review collection is also easy, often done through store credit, like “Give us your feedback and get10% off next purchase!” When you provide extra value to your customer, you can increase future user experience and create brand ambassadors.
What are similarities between B2B and B2C?
- Regardless of their length, both B2B and B2C sales require a unique sales process with a clearly defined strategy.
- B2B and B2C sales both require a strong marketing alignment with proper communications. The lack of these can make sales suffer in both cases.
- Customer service is vital for both businesses. It is vital for the customers to be able to connect with the service team easily and get attended to at the earliest.
- The focus has to be on solving customers’ needs.
- Through the optimum use of different mediums, both of these types of businesses need to build customer trust.
B2B and B2C both have their own challenges. No matter which business you are in efficiency at selling will always reap benefits. Focus on building customer trust and providing good value in the product and service offered. Happy Selling!