How Are B2C and B2B Sales Different? A Comparative Guide
There are millions of business to business (or B2B) companies in operation throughout the United States and even more business to consumer (or B2C) companies.
Are you interested in launching a business to business sales or business to consumer sales company? Are you unsure of which one is the right fit for you?
Before you make a decision, it’s important to understand the differences between B2B sales and B2C sales. Read on to learn more and find out about the pros and cons of each business model.
First of all, what is B2B sales? Let’s start with a basic B2B sales definition, as well as some B2B sales examples (you’ll get the same for B2C businesses, don’t worry).
As the name suggests, business to business sales involves selling products or services to other businesses. Instead of targeting the average consumer with your marketing tactics, you’re targeting other business owners and their employees.
Examples of B2B products might be things like customer engagement software and customer engagement tools. It can also be products that a particular business might need, such as selling tires to a tire shop.
When you work in the B2B sales world, you spend more time selling to high-level executives and business owners. These people are often aware of traditional marketing methods. As a result, you’ll have to work harder to convince them of what your product or service has to offer to get them interested in making a purchase or signing a contract to partner with you long-term.
Business to consumer sales, on the other hand, involves selling products directly to consumers. When most people think of starting a business, they envision a B2C style company.
In general, the B2C sales cycle is much shorter than the B2B sales cycle. The goal of most businesses is to use specific marketing tactics to convince consumers to make a purchase on the spot.
In B2C selling, you’re usually only aiming to sell to one person. With B2B sales, conversely, you’re often selling to an entire company and have to get a whole team on board.
B2B Businesses Pros and Cons
If you’re leaning toward a business to business model for your company, there are some key pros and cons you ought to know. They include the following:
One of the major pros of B2B sales is the fact that you can often make much larger sales than you can with B2C businesses. This, in turn, can mean earning more money from each sale and building up your business faster.
Conversion rates often tend to be higher in the B2B world compared to the B2C world as well. In many cases, customer intent to buy is higher in B2B sales, to begin with, so it can be easier to close the deal and make big sales. This is why it’s always worth it to build a b2b leads database.
In general, B2B businesses are more trackable than B2C businesses. It’s easier to gather data and measure the performance of your company, and you can make adjustments to optimize your sales and continue bringing in new customers. Thanks to this, many people consider B2B businesses to be more stable than B2C businesses.
This isn’t to say that B2B businesses are without challenges. There’s the potential for larger sales, but your reach is also limited since you’re only targeting businesses that can benefit from the product or service you’re selling. This can make it harder to capture leads.
Since you’re selling to higher-level executives and managers, you also need to have extensive knowledge of your product or service and the benefits it has to offer. Remember, these folks are sharp and won’t fall easily for traditional marketing ploys.
B2C Businesses Pros and Cons
For those who are more interested in B2C rather than the B2B experience, there are also benefits and drawbacks to keep in mind. Here are some of the most noteworthy pros and cons to remember:
One of the greatest advantages of starting a B2C business is the fact that your audience is much wider. You can market your products or services to a larger group of people and cast a wider net. This, in turn, can make it easier for you to build brand recognition and get people interested in what you’re selling.
Yes, it’s true that you’ll likely have a target market or niche group to whom you’re trying to sell. At the same time, though, you’ll still have more opportunities to diversify and reach more people than you can in the B2B world.
There’s more variety in what you can sell with a B2C business, too. Whether you want to sell toothbrushes or time management tools, there’s almost an unlimited number of options available. It’s up to you to decide what you want to focus on for your business.
It’s true that there are more people who have the potential to become your customers when you start a B2C business. You’ll also likely have more competition, though.
With so many B2C businesses out there, it can be hard to separate yourself and stand out from the crowd. You’ll have to have a strong marketing strategy if you want to catch people’s attention and convince them to buy what you’re selling.
It can also take longer for B2C businesses to become profitable as well since you often won’t be selling in large quantities or to large groups at one time.
Which Type of Business Is Right for You?
Now that you know more about the differences between B2B sales and B2C sales, as well as the pros and cons of each business model, do you have a clearer idea of which option is right for you?
If you’ve been thinking of starting a company, keep this information in mind. It’ll help you decide which type of business makes the most sense for you and your goals.
Don’t forget to check out our business blog and business tools, too. No matter what kind of business you decide to run, these resources will help you get it off the ground and ensure it’s a success.