Selling to Consumers vs. Selling to Businesses
To sell products successfully, you must have a clear understanding of the type of market you are serving and the reasons customers buy. There is a difference between selling to consumers, who buy products for personal or family use, and businesses, which purchase products or services to help them create other products for resale to their own customers. In this lesson we outline some of those differences.
In other words, you must choose between two models:
- Selling to Consumers (called Business to Consumer or B2C)
- Selling to Businesses (called Business to Business or B2B)
Your consumer and business customers approach purchasing in two very different ways. To successfully market your business to both types of clients, you need to understand the differences between the consumer and business buying processes. The business processes you use and the kinds of products you offer enter into the way that businesses and consumers purchase your products and view your business.
If you currently face some version of this question, you may be wondering what the differences are in selling B2B or B2C.
Decision Making Process
The way B2B and B2C customers make decisions is quite different:
- B2B - Longer Decision-making Process. If you plan to sell B2B, ensure you are prepared to invest time in cultivating a relationship with your potential buyer. For instance, you may need to formally present your proposal or make multiple telephone calls to more than one person within the company. To return briefly to the above example, Walmart is unlikely to choose an apple supplier on a whim – whoever your prospects may be, persistence will be key to landing them.
- B2C -Shorter Decision-making Process. An apple vendor at a farmers’ market will largely sell to customers who make their purchasing decisions in-the-moment. Compared to B2B, there is a relatively shorter decision-making process in B2C sales – the couple that browsed your GoldRush apples today is not likely to call you in a month to say they would like to buy apples from you. As a result, your in-the-moment marketing is crucial. It is critical to catch your customers’ attention and to generate immediate need and desire for your product. Given this fact, aim for a large pool of prospective purchasers, as there will always be a certain percentage of leads that decline.
Number of Stakeholders
The number of stakeholders involved in a buying decision is much greater in B2B versus B2C:
- B2B - Greater Number of Stakeholders. You will often have to speak to multiple decision-makers when pursuing a B2B partnership. If even one person at any step in this process says, “No, thank you,” you must begin again back at square one or with another business. To minimize the likelihood of this occurring, take the time to learn who the key decision-makers are at your potential buyer, and do everything you can to make it easy for them to say, “Yes,” to your pitch.
- B2C - Smaller Number of Stakeholders. Often, you will speak to one person, or perhaps two at most. The individual in front of you is the person you have to convince to buy your product, which requires you to quickly establish an emotional connection with that party.
Length of Relationship
In general, the relationship between you and a B2B customers is more extensive than with a B2C customer:
- B2B - Lengthier Relationship. Companies typically seek longer relationships than consumers do. For example, it would be tremendously challenging and costly for Walmart to switch apple suppliers each month or each year. The big box business would rather have a reliable partner that it can depend on for the foreseeable future. Consider McDonald’s – the fast food chain became the single largest purchaser of apples in the United States when it added apple slices to its menu. If McDonald’s regularly changed vendors, it would face the logistical nightmare of having to frequently re-stock over 14,000 stores by jumping from supplier to supplier. For you, this relationship development means exploring the fine details of a long-term deal before you meet with companies. Whenever possible, arrive with your ideal terms in mind, rather than allowing your prospective business customer to dictate them.
- B2B - Shorter Relationship. B2C purchases are more likely to be one-off transactions or transactions with more limited time frames. The person who bought a half-bushel of apples from you may not return to your stand next week or next season.
- Smaller Customer Pool. B2B generally involves a smaller pool of prospects when compared to B2C. For instance, Amazon’s consumer-oriented website has a potential customer pool of millions – in essence, anyone with an Internet connection. In contrast, a B2B company, such as a manufacturer who makes infotainment flat screens for automobiles, might only sell to the limited number of car companies in the world. Chrysler, Ford, GM, Honda, and Toyota collectively make up 70% of the U.S. automobile market, so if you sell car parts, your target audience will likely be one of these businesses. Your customer pool is inherently more defined, which can have negatives and positives. On one hand, you already know to whom you should tailor your sales pitch. On the other hand, so do your competitors.
- Higher Level of Product Knowledge. A consumer who is deciding between three brands of potato chips in the snacks aisle is likely operating on a different choice system than an executive who needs to select a payment processing solution for his or her company. The second scenario requires deeper technical knowledge, as well as a clear understanding of the product’s components. The executive must be able to answer the question, “What am I receiving with this purchase?” When selling under a B2C model, your primary concern might be to immediately and simply explain why your product is better than your competitor’s. A B2B model, however, will require you to have a thorough understanding of the technical aspects of your product, as well as everything the customer receives when he or she purchases it.
- Planning. Most purchases made by a business are planned in advance, where the same purchases might be impulse buys for a consumer. For example, a business will plan an employee lunch, choose the menu in advance and have the order in place to be catered on a particular day. A consumer's decision on where to go for lunch is often made just minutes before the lunch break. To be able to accommodate both business and consumer purchases, you need to have a structure in place that allows businesses to plan their purchases while still offering impulse options to consumers.
- Support. Many businesses require support contracts when purchasing certain types of items. For example, if a business purchases a copier then the copier may need to have at least a three-year warranty on the product before the company can finalize the purchase. A consumer is not restricted by support needs when it comes to buying products, but that does not mean that support is unimportant to a consumer. Adequate support for a product can be sufficient to an end consumer as part of the final purchase contract. For a business, the support issues may need to be spelled out in a more comprehensive manner.
Whether you decide to sell your product or service B2B or B2C, you will find that determining your customer’s needs (and meeting those needs) is integral to both models. It is easy to oversimplify B2B as being about cost and features and B2C as being about emotion and brand appeal when both depend on building a strong connection between you and your consumer. Your success ultimately lies in your ability to personalize your pitch to that one prospect – company or individual – in your sights.