The most common business models you’ve probably heard ofare B2B, B2C, subscriptions, and
This post will focus ontheB2B definition andevery facet ofthis business model. So, what does B2B mean? Keep reading tofind out!
Business-to-Business (B2B) Meaning
B2B means
Unlike consumer purchases, B2B transactions are more complicated than asimple purchase inanonline store. They involve larger order quantities, negotiations, andtheshipping anddelivering large amounts ofgoods.
B2B companies keep many markets moving forward. Think about thelast time you purchased anitem from amajor retailer. Regardless ofwhat theproduct was, itlikely came from amanufacturer who sold ittoasupplier. This isatypical example oftheB2B business model.
Even though theconsumer isnot involved intheB2B sale, itdirectly affects their shopping habits andwhat ismade available topurchase instores.
B2B Examples
Ifyou find yourself Googling, What isaB2B company?”Here are some common examples ofB2B companies invarious industries.
- Wholesalers andmanufacturers ofgoods
- Wholesalers andretailers
- SaaS companies selling aservice tocompanies
- Marketing agencies that help small businesses grow
- Payment processing companies sell their services toretailers
- Telecom service providers forbusinesses
Who doB2B Companies Sell To?
- Private businesses
- Wholesalers
- B2C companies
- Government groups andpublic entities
Direct-to-consumer organizations
Defining B2B Sales
This section answers thequestion, What isB2B sales?. Let’s jump in!
In2022alone, B2B ecommerce revenue reached — theopportunities inthis market are substantial.
Traditionally, B2B sales entail much higher transaction amounts, educated buyers (as they work forrelevant companies), , andamuch longer sales cycle.
Business-to-Business Service Challenges
Like anybusiness model, B2B services have their own challenges anddrawbacks specific tothemarket andcustomer base they’re serving. This includes:
- Cash flow management
- Customer loyalty
- Digital presence
- Sales process
- Sales cycle
Cash flow management
Working with other businesses means managing invoices, late payments, andvarious client payment windows. Some B2B companies bill in
Dealing with conflicts related todelayed client payments can beasignificant deterrent forB2B companies. Without cash flow, purchasing inventory, paying bills, paying employees, anddealing with various business expenses ischallenging.
Customer loyalty
Fostering customer loyalty takes time, energy, andconsistency inanybusiness model.
Since many B2B companies are
AsB2B companies showcase their commitment tocustomer satisfaction, customer loyalty builds over time. Whether they’re selling aservice, aplatform, orproducts, improving thefunctionality andquality is
Digital presence
Establishing asolid digital presence online isessential forB2B companies tomarket themselves andsell products orservices.
From acaptivating website tointeractive social media platforms, existing online isnolonger anoption forbusinesses— it’s arequirement. Ifyou want tocompete inthespace, you must participate inthedigital revolution.
Any B2B company should maintain awebsite with information ontheir products orservices sopotential customers can find them. Using (search engine optimization), businesses can increase their search engine ranking amongst their potential customers.
Did you know that utilize social media? They advertise products, interact with customers, andperform lead generation. This shows how valuable adigital marketing strategy isforB2B companies, regardless oftheir industry ormarket.
Organized sales process
The sales process can belong andunorganized formany B2B companies. When relying onmultiple people within anorganization tomake adecision, theprocess isdaunting.
B2B sales reps can combat this long sales process bydoing their research tofind companies who are genuinely inneed oftheir service orsolution. B2B buyers are about 57% into their when they engage with asales team about aproduct, service, orplatform. This leaves quite abit ofopportunity toclose thedeal, but thesales team must bestrategic with atailored solution forthecompany’s unique pain points.
The sales process isbest organized into thefollowing strategic steps:
- Researching potential customers, competitor offerings, andmarket trends
- Prospecting leads forsales pitches, demos, andexploratory calls
- Assessing target customers todetermine ifyour solution provides afix
- Pitching your service orproducts inatailored way
- Winning thesale
- Following upwith
add-ons andother features oftheproduct - Maintaining therelationship with thecustomer forreferrals andadditional business opportunities
How Does aB2B Transaction Work?
Three main types ofB2B sales andtransactions occur, including thefollowing.
1.Supply chain sales
B2B companies sell supplies orequipment toother companies, like wholesalers orretailers. The purchase involves multiple stakeholders rather than aconsumer purchasing one unit atatime.
The buying process may require more authorization, andmultiple people are involved. Supply chain sales include medical oroffice supplies, equipment, clothing, andmore.
2.³DZ
Wholesale suppliers sell products like food andbeverages torestaurants andstores atlow prices. These companies turn around andsell theproducts directly totheconsumer ata
3.Service/Platform sales
From platforms that send SMS messages topayroll software andtask management, B2B platforms andservices are abundant forvarious companies. These purchases involve several organizational people, including aSales manager, CTO, andeven theCEO.
B2B vs. B2C: Key Differences
Now that you know theB2B sales meaning, it’s time toexplore thekey differences between B2B andB2C.
The primary difference between B2B andB2C isthecustomer. Where B2B serves other businesses, B2C involves businesses selling directly toconsumers.
B2C sales typically include lower prices (i.e., when you shop ataretailer like Target), andthebuying decisions come strictly from theconsumer. Some B2C examples include:
- Buying acustom
t-shirt through anecommerce store - Purchasing asmartphone from atelecom provider like Verizon orAT&T
- Buying goods from afarmer’s market
There are endless examples ofB2C interactions, but thebig picture issimple. Any time you asanindividual purchase goods orservices directly from astore orcompany isconsidered B2C.
Other key differences between B2B andB2C include:
Salesperson involvement
With B2B sales, atleast one (if not more) salesperson isinvolved intheprocess. Whether vetting new technology orresearching anew product toadd toyour inventory, B2B requires more involvement onboth sides.
B2C, ontheother hand, doesn’t always require thehelp ofasalesperson. You don’t need theinfluence ofasalesperson when picking upgroceries fortheweek. You may need help when shopping ataclothing store but already intend tobuy, soasalesperson isn’t asnecessary.
Transaction value
Some B2C purchases, like buying ahome, avehicle, orluxury goods like diamonds, have high transaction values. For themost part, thetransaction value ofconsumer purchases ismuch lower when compared toB2B purchases.
Payment methods
B2C transaction, theconsumer pays thebusiness upfront topurchase goods. B2B transaction, thesales andpayment processes are much more drawn out. Potential customers often use theproduct orservice onatrial basis totest thefeatures anddecide whether ornot it’s what their business islooking for.
Final Thoughts onB2B
For more information onB2B, including our highly coveted marketing strategies, explore the51Ƶ ecommerce blog. Weshare tons ofresources, relevant content, and
- What isB2B? Everything About Business toBusiness Model
- B2B Marketing Guide: Strategy, Goals, Tactics
- What isB2B Ecommerce? Platforms, Companies, Trends
- B2B Software: Choosing theRight Software forB2B
- B2B Websites: Best Practices with Examples