Let’s say you’ve started your own business, and you have a product that you want to sell. It could be a home appliance, a kid’s toy, some fresh tomatoes that you grew yourself, or anything else. No matter the product, you are going to have to decide how you want to sell it.
You could either sell it directly to your customers, and focus on marketing to specific niches, or you could sell it to other larger companies, and let them sell it to their customers. These two systems are known as Business to Consumer (B2C) and Business to Business (B2B) respectively, and they have a large impact on your business.
Let’s use Mack Leasing System as an example — a company that offers lease, rental, and contract maintenance agreements for Mack Trucks. They had the option of either offering these agreements directly to customers (people who want to rent a Mack Truck) or to dealers who could rent them out on their behalf. Mack Leasing System decided to go with a B2B relationship by selling their agreements to companies like Nextran, and now has 210 Mack Truck dealers in North America.
This was the right decision for them, but it may not be the right decision for you. Knowing the key differences between the two systems will help you to choose which is right for your company.
The Decision-Making Process
The first key difference is the decision-making process on behalf of the buyer. For example, in a B2B relationship, the decisions are much bigger, and are therefore likely to take longer. There is more to consider, and typically a lot more money at stake. This is different than a B2C relationship, in that a customer will typically only take a few minutes to decide whether or not they want to purchase your product.
In addition to the size of the decision, you are also likely to have more people factoring into the decision with a B2B relationship. With a B2C relationship you only need to convince that one customer, but with a B2B relationship there may be many executives at the other companies that you need to sway. If one person says no, you are back to square one, and this can make closing a deal very time consuming.
The Importance of Relationships
No matter who you are selling your product to, it is important that you have a good relationship with them. However, relationships take on a much higher degree of importance with a B2B setup versus a B2C one.
With B2B, you are consistently working with the same group of people to sell large quantities of your product. This makes it imperative that you establish good, long-term relationships with your customers. When you are using a B2C model however, one customer is likely not going to make or break your sales. It is more focused on short-term relationships, and generating as many of them as possible.
The business relationship path you choose will also play a large role in determining how you market your product. With a Business to Consumer relationship, you are typically choosing a niche that would be interested in your product, and tailoring your marketing efforts to fit that group. This allows you to construct a custom-fitted message, and one that can be altered for each group that you market to.
For B2B setups, there is not as much customization involved. Tailoring your marketing approach is difficult for B2B, as you are primarily focused on selling your product to other companies. The marketing then becomes more about numbers for a specific company, rather than meeting customer needs.
Lastly, we have the things that you will need to do on a routine basis. Deciding between a B2B system and a B2C one will impact much of your daily operations. For example, if you decide to go with a B2B relationship, much of your efforts may be placed in maintaining good relationships, ensuring a high product quality, and meeting customer deadlines.
With a B2C relationship however, you may end up focusing more on your marketing efforts, and attracting new customers. The system you choose will play a large role on the daily operations of your company, which is why it is so important that you take plenty of time before making your decision.
Which Is Best?
There is no consensus pick when it comes to deciding between Business to Business relationships, and Business to Consumer — there is only what is best for your company. Perhaps your company does not have the infrastructure in place to meet the high product demands that accompany a B2B relationship, or maybe your company is best at working closely with its customers, and would therefore be better suited to a B2C relationship.
There are many differences that come along with these two systems, and each should be considered before you choose with path you want to follow. Remember that your decision is not set in stone, and you can always make a switch down the line if you think your company would be better off. You can even try to do both if you think it would be best for your company. Just take plenty of time to weigh your options, and the right answer is likely to come to you.