B2C

What is B2C?

Business-to-Consumer (B2C) is a business model where products and services are marketed and sold directly to the end user. 

The B2C business model stands in contrast to the business-to-business (B2B) model, in which a company sells its products and services to another company or business entity.

In the Software-as-a-Service (SaaS) world, some applications are developed to solve a particular business problem while others are made to provide entertainment or facilitate social connections. Applications that solve problems for businesses will be marketed B2B, while those that satisfy human needs like socialization and entertainment will be marketed B2C.

 

B2C vs B2B – Comparing Business Models

Suppose you invent a widget that solves some problem for your target customer. After an initial production run, you have an inventory of 10,000 widgets and you’re ready to go to market.

Now that it’s time to market and sell your products, you’ll have the possibility of choosing between a B2C or B2B business model.

If you choose a B2C approach, you’ll want to set up an eCommerce storefront where you can make sales, accept payments, and coordinate fulfillment. You could hire a paid media agency to run PPC advertisements on Google or launch a content marketing campaign to generate traffic to your website. You can run conversion rate optimization (CRO) experiments like a/b testing to identify high-performing landing page designs that drive on-page conversions.

You might even open a bricks-and-mortar store (“Widget Mart”) where your target market can physically purchase your product.

If you choose a B2B approach, you’ll be acting as a wholesaler and selling your widgets in bulk to one or more retail partners, who will sell them on to the end user. You’ll need to identify, contact, and initiate partnerships with retailers who might be interested in selling your widgets.

Although your product is the same in either case, your choice of B2C vs. B2B determines who your target customers will be, which has a huge impact on your overall go-to market strategy. 

It’s also true that businesses and consumers tend to follow different decision-making processes and have different motivations when it comes to making a purchase. The task of marketers is to understand the purchasing habits and needs of their target customers, and to build customer journeys that cater to those needs.

 

B2C vs. B2B – Key Differences

Marketing professionals face different challenges when marketing products and services in a B2C vs. B2B business model. These challenges are shaped by the characteristic differences between B2C and B2B outlined here.

 

Target Customer

The characteristic difference between B2C and B2B is the target customer. If you’re selling directly to the end user, that’s B2C. If you’re selling to a company or another business, that’s B2B.

 

Buyer Motivation

In the B2C model, buyers are focused on the emotional benefits of purchasing a product. For this reason, B2C marketing often hones in on the change in emotional state that occurs after making a purchase.

In the B2B model, purchasing decisions are usually more heavily based on the specific features and value a product can provide for the business. As a result, B2B marketing places more emphasis on quantifying the business outcomes that a solution can provide.

 

Decision Process

In the B2C model, the target customer is the key decision-maker, the payer, and the end user of the product or service. As the sole stakeholder, individual consumers can make carefully considered decisions or act entirely on a whim when making a purchase.

In the B2B model, the target customer is a business or a company that includes multiple different stakeholders. The decision-maker, end user, and the payer may all be different people, who will need to do research, look at market alternatives, and build consensus around a product before a purchase happens. As a result, the decision-making process takes longer and can be more complex.

 

Volume and Deal Sizes

SaaS products that sell B2C generally seek to reach a wide audience at a low price point, while products for businesses target a much narrower audience at a higher price point. 

 

3 B2C SaaS Companies You Already Know

B2C SaaS is an extremely profitable, high-scale business model in the 21st Century. To prove it, here’s a short list of the top three B2C SaaS companies you already know. 

 

Netflix

You might not think of Netflix as a B2C SaaS company, but it sure is! A monthly subscription fee of $9.99 gives users access to the Netflix streaming app and the ability to stream movies and television shows from Netflix’s vast content library. Netflix has grown to over 200M subscribers with its high-scale, self-service sales and access model.

 

Spotify

Spotify is basically Netflix for music. Users play a monthly subscription rate and get unlimited streaming access to the Spotify music library.

 

Duolingo

Duolingo is a B2C SaaS application that helps users learn a new language. Duolingo can attribute its growth to a product-led growth strategy where users are offered a 14-day free trial to start working on their language learning goals. The lengthy trial option gives users enough time to make genuine progress and encourages them to keep going with subscription fees starting at $6.99/month.

 

Directive Hot Take: There’s No Such Thing as B2B

Since the emergence of the B2B SaaS business model, there’s been a perception that B2C marketing is based on emotion while B2B marketing is based on rational facts and business value.

While it’s true that businesses often have stronger controls around purchasing, it isn’t true that purchasers in the B2B world are robotic beings who make decisions about products by objectively calculating their business value. 

So while it’s right for B2B marketing to focus on demonstrating business value, it’s equally important for B2B marketers to treat customers like they’re people first and strive to deliver emotional and inspiring customer experiences.

As part of our Customer Generation methodology, we help our B2B SaaS clients build emotion-driven campaigns that drive real results while changing expectations of what B2B marketing should be.Ready to learn more?

Book an intro call with our team or Join Society and connect with our knowledge-sharing group of SaaS marketing professionals.

 

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