You’ve heard the buzzword dozens of times, but now it’s time to clear the air once and for all: what exactly does B2B mean? At its most basic, B2B stands for “business-to-business.” It refers to selling products or services to other companies, rather than directly to consumers, also known as business-to-consumer (B2C).
Types of B2B Models
In general, B2B businesses specialize in three different areas: products, services, and software.
A product-based B2B sells goods. They could be office supplies, dental tools, real estate, or any other tangible product. These goods may be resold ― as in a wholesaler-retailer relationship ― or used in the business as would be the case with medical supplies purchased by a hospital.
Service-based B2Bs, on the other hand, provide ongoing assistance or solutions. For example, marketing agencies, financial advisors, or building contractors could all be thought of as service-based B2Bs.
Lastly, software-based B2Bs are exactly what they sound like ― businesses that specialize in software to streamline businesses, for example, customer relationship management tools (CRMs) or marketing automation systems.
Many B2B organizations sell-through sales teams but, with the advent of ecommerce, they can now advance through digital means as well as traditional. This is a huge benefit as businesses can expand beyond their geographic limitations and even use content marketing to aid their sales teams.
However, not all B2B companies are created equal. Varying sizes, industries, and audiences call for different selling methods and, for this reason, B2B ecommerce models can be divided up into a few main categories:
- Supplier-centric model: This method works primarily in settings where there are many buyers but only a few suppliers. The supplier centric model requires sellers (suppliers) to set up a marketplace where businesses and individuals may make purchases.
- Buyer-centric model: The buyer-centric model is essentially the opposite of supplier centric. In this model, there are many suppliers, but few buyers. The buyers are the ones with the marketplaces, and suppliers may bid or be invited to sell their products on the platform.
- Intermediary-centric model: This model works best when there are numerous suppliers and buyers, and an intermediary platform allows both parties to do business together.
How Does B2B Differ from B2C?
Other than a few nuances associated with B2B, is it all that different from selling directly to consumers?
Truth be told, yes.
Selling a product or service to a business requires a completely new mentality. Businesses are concerned about the bottom line, the return that their investment will bring in, and keeping their own customers and clients satisfied. Thus, B2B marketing and sales are far less emotionally driven and much more logic-driven.
In B2B marketing, your messaging will center around the benefits that you can deliver both to the business itself and their customer base. You’ll be selling not just a product or service, but long-term gains like money or time saved.
Since B2B companies often sell high-cost products and services through saturated channels, the name of the game in B2B is customer loyalty.
By targeting and selling to businesses that will continue to purchase products for years to come, B2B companies can reduce their own costs and drive revenue. However, this also means that once a new client is obtained, heavy strides need to be taken to retain them. This requires developing an ongoing relationship that is nurtured both through marketing and regular contact from sales representatives.
B2C, on the other hand, appeals directly to the customer in question, using emotional messaging that shows how the product benefits the individual. Because there are often many businesses vying for the attention of one audience, marketing is often concise and catchy rather than detailed and informative.
Common Challenges of B2B
B2B models aren’t without their challenges, some of which we’ve already touched on. However, we’ll flesh out a few more here to help you head off your own potential B2B issues.
Customer retention is critical in B2B industries. However, to retain customers, relationships need to be cultivated. The easiest way to do this is to call in technology. A CRM helps you keep track of customers and any communications with them, where they’re located in the sales funnel or repurchase cycle, and more. This helps you nurture customer relationships and boost retention and sales.
Marketing and sales alignment
It’s an all-too-common lament: siloed sales and marketing teams cause miscommunications and missed opportunities. However, this B2B issue can be resolved easily through increased communication.Sales teams typically have one finger firmly on the pulse of the customer base while marketers are poised to implement data-driven strategies. However, by encouraging regular dialogues between the two teams, goals and strengths can be united. Stronger internal relationships translate to stronger strategies ― and a growing bottom line.
This challenge spans across all B2B industries: the challenge of generating leads. However, it’s important to focus not solely on the number of leads but on their quality as well.Generating viable, high return on investment (ROI) leads requires you to know your target audience and their pain points intimately. From this information, you can deduce where to find new leads and what kind of messaging will appeal to them. You’ll also need to assess data from your current profitable customers carefully so that you can develop personas that help you target higher-value clients. Set tangible lead generation goals, measure the results of each campaign, and analyze your performance to see where you can improve next time. It’s the scientific way to boost your lead generation.
The Bottom Line
B2B organizations are different in many ways from their B2C brethren, and the complexities of these models only change depending on the industry. However, this overview should be a helpful introduction to the world of B2B, the challenges that are present, and the basics of successful B2B marketing and sales. Through thorough knowledge of your target audience, tight integration of sales and marketing, and evolving strategies, your B2B company can advance and thrive.