The business-to-business environment is constantly evolving, presenting challenges to newcomers and experienced professionals alike. Understanding the definition and working reality of this ecosystem is vital for many reasons. This can be improving your own implementation or making better B2B purchase decisions. B2B can refer to organizations, transactions, and more. You apply these operational definitions, strategy, and software to your unique use case.
What is B2B?
B2B refers to organizations, transactions, or products designed with a focus of interacting directly with other customers. This is different from B2C, or Business to Customer. B2B has its focus on interactions with individual, personal customers.
One confusing aspect is that both B2B and B2C organizations sell products and services. What changes is the target audience. In a B2B environment, they are selling to other businesses, and thus other businesses are the customers. B2B companies still have “customers” in a sense, they are just professionals and organizations rather than personal consumers.
B2B buying and selling exists in all kinds of industries. One of the easiest to understand is in the tech industry, where TrustRadius reviews are focused. A vendor creating Human Resource Management software is not marketing this at a store for individuals. No individual has HRM software on their shopping list.
This is an example of a product and vendor creating a product, marketing it, and undergoing a transaction entirely with another company. Perhaps Toyota wants to manage its employees differently, so they purchase a SaaS (software-as-a-service) product from UKG. This is a prime example of a B2C company undergoing a B2B transaction.
It is important to stress that B2B is more than a label for a company. It can be used to describe individual transactions, marketing strategies, and more. In this software example, UKG is a B2B company. Their marketing strategy is tailored for a B2B environment, and their product is a B2B product. While the term is often used as a label for companies, it can also be a descriptor of events and ideas.
In some areas, the line between B2B and B2C can be less clear. In manufacturing, companies sell raw materials in bulk to other companies, in order for the receiver to make their product. If we take the product of a car as an example, we can more easily understand the difference between B2B and B2C.
The B2B company sells Toyota the steel, rubber, and electronics needed to make the Rav-4. Toyota produces the car, which is then bought by the consumer (the author of this piece). Toyota is demonstrating itself as a B2C company in this focus, whereas the steel providers, etc. are performing B2B functions.
It is important to remember that B2B transactions can happen multiple times in a product life cycle. The steel foundry that sold the material to Toyota likely bought their raw material from a mining company. This is another example of a B2B transaction. Some companies are not purely B2B or B2C. Toyota may turn around and sell 1,000 trucks to the mining company for transportation of raw iron.
With an understanding of what B2B is, it becomes clear that there are practical differences in the way B2B companies and services are run compared to B2C.
It is important to remember that B2B and B2C marketing both ultimately focus on the same goal. People still are the ones making these purchase decisions, at least until auto-writers and AI get to the point where the author of this piece no longer has a job anyways.
B2C sales can be more impulsive and whimsical than B2B. For example, a company would never impulse purchase a Learning Management System in the same way we do Taco Bell at a lunch hour.
B2C tends to be driven more by emotion than its B2B counterpart. B2B purchasing cycles are generally longer and more analytical in nature. This means strategies that take advantage of impulsive or emotional decision-making are less effective. You’re a lot less likely to see strictly emotion-based marketing in B2B environments.
B2B must also make sure to target the purchasing person. Unlike most B2C, this may be different from the person who will actually be using the product or service.
Building on this idea, B2B marketing tends to be far more informative than B2C. This leads to the popularity of content marketing, or the creation of genuinely helpful, informative material that does not expressly sell the product.
Content marketing can help inform the potential buyer of the market environment, use-cases, and technical requirements that they need. Much of the time B2B buyers already know what they need. B2B marketers’ purpose is to persuade them why they should use your product. In B2C, need generation is more common. These are not mutually exclusive but are a relevant trend.
As mentioned, the buying process for B2B tends to be far longer. In addition to this, the costs tend to be far higher. It is not uncommon for larger companies to drop tens of thousands of dollars with relative ease. These transactions are less common in the B2C world, no matter how much Taco Bell one ends up getting at their lunch hour.
As a result of the different marketing strategies and purchase scope, the process for buying tends to be rather different as well. B2C purchases usually can happen quickly and simply. Online transactions are a great way to compare the different experiences a buyer may have.
A B2C customer may simply browse an online commerce platform, select the product they want, and check out. With B2B, this is less frequently the case, particularly with larger organizations. Manufacturing requirements may need complex shipping and regulatory rules. In the tech scene, installation, customization, and data transfer can be vastly complicated.
As a result of these things, sales reps tend to have to be extremely knowledgeable in B2B systems. The purchasing process will often involve installation, shipping, logistics, or HR specialists as well as salespeople.
Tools for B2B Organizations
B2B organizations use a variety of tools to take advantage of their unique market positions. A few of the most common and useful ones are listed below.
Customer Relationship Management is core to many B2C businesses and is not unique to the B2B world. With that said, it is potentially even more vital in B2B situations. With the size of purchase orders and specificity with which products can be targeted, souring customer relations can be extremely damaging. CRM software can help with lead generation and management.
Search Engine Marketing helps with some of the most important factors of B2B marketing. As mentioned, many B2B buyers already know what they want. Companies must therefore make sure that these prospective clients are aware of their products’ existence and merit early in the search process. SEM helps to drive website traffic. This can be towards your content marketing or directly to a product page.
Cloud Storage is another area not unique to B2B, but particularly useful to the area. Many B2B organizations hold vast amounts of data. Much of this may have high-security requirements, file transaction needs, or are critical to the organization’s operation. Cloud storage software addresses these concerns, often for a relatively affordable price. Those who want to learn more can check out our breakdown on Cloud Storage Pricing.
More About B2B
Those looking to learn more about B2B should check out the videos below. The first outlines the ways in which B2B may change in the coming years. The second gives a quick overview of exactly what B2B is, for the visual learners out there.