Characteristics of B2B vs. B2C

At least eleven characteristics differ between B2B and B2C… and each has important implications for business decisions.

Filter all business advice with the question, “Does this make sense for B2B?”

1. Use the B2B filter for everything

Throughout your career, you will receive mountains of business advice… from books, seminar speakers, consultants and business colleagues. You will do yourself a great service if you process all these recommendations through a B2B filter. Ask yourself, “How does this apply to B2B?”

For instance, imagine someone reminded you of Henry Ford’s famous quote, “If I had asked customers what they wanted, they would have said a faster horse.” Of course, Mr. Ford was creating a consumer product and—since he and his colleagues were consumers themselves—already had a keen understanding of customers’ needs. So if you work for a consumer goods company, producing autos, phones or razors, you already know exactly how your products are used… and probably have some ideas how you would like to see them improved.

 

In contrast, B2B suppliers often have far less insight into what their customers’ needs are. So it could be argued that B2B VOC may be more important than B2C VOC. At the same time, B2B VOC can be much richer since B2B customers are often highly knowledgeable, interested and objective. This is just one example, but without a B2B filter you’ll run the risk of being led astray in many areas.

2. How is B2B different than B2C?

It’s helpful to explore eleven characteristics to understand the differences between B2B and B2C. For each characteristic below, you’ll see a comparison and its implication… why this matters to B2B suppliers.

1: Knowledge of customers

Comparison: B2B customers understand their subject matter better due to education, training, and considerable time spent on the job.

Implication: Knowledgeable B2B customers are able to help suppliers design better products. Advanced B2B

VOC skills should be used to access this knowledge.

2. Interest of customers

Comparison: B2B customers often seek innovation from outside their company, which can add value and make them a hero at work.

Implication: Interested B2B customers are willing to help suppliers design better products. B2B suppliers should use this interest to thoroughly understand customers’ needs.

3. Objectivity of customers

Comparison: Company procedures, group decisions, and accountability force B2B customers to be more rational in their decisions.

Implication: Because B2B decision-making is rational, it is understandable; B2B suppliers should use advanced probing to uncover root causes of customer desires 

4. Predictability of decisions

Comparison: Because B2B customers are motivated more by economic than emotional factors, their decisionmaking can be predicted.

Implication: B2B suppliers should use VOC interviews and facility tours to understand the economics driving customer decisions, and model such decisions with value calculators 

5. Market insights by supplier

Comparison: Unlike B2C suppliers, B2B suppliers seldom use their own products, which limits their insights into customer needs.

Implication: Since most B2B suppliers lack deep market insights, a competitive advantage can be achieved by gaining the skills needed to capture these insights.

6. Number of buyers per market

Comparison: Many B2B markets have tens, hundreds or perhaps thousands of potential buyers… not millions as in B2C markets.

Implication: B2B suppliers can often conduct VOC in a way that favorably engages a large percentage of the total market buying power, “priming” them to buy later.

7. Length of sales cycle

Comparison: B2B buyers typically take longer than B2C buyers to begin purchasing a product once they become aware of it.

Implication: B2B suppliers often wait for customer evaluation after a product launch. It’s better if engaged customers evaluate the product concept in parallel with development.

8. Number of decision-makers per transaction

Comparison: B2B purchasing decisions often involve multiple people, while end-consumers often decide to buy on their own.

Implication: B2B suppliers should conduct quantitative VOC with all relevant job functions in the same interview, to capture the natural decision-making of the entire company.

9. Buyer position in value chain

Comparison: B2C products serve only immediate customers, but B2B products can affect customers’ customers’ value.

Implication: B2B suppliers should interview down the value chain to the last business, designing their product to especially meet the needs at the most influential point in the chain.

10. Pricing insights by supplier

Comparison: B2C surveys can ask for point-in-time price decisions, but B2B suppliers can better understand price decision-making.

Implication: B2B suppliers should forego price surveys; instead they should gather economic data during interviews and tours, to model customer price decision-making later.

11. Total revenue per product

Comparison: Since many B2B products are used to make a single B2C product, total revenue of each B2B product tends to be smaller.

Implication: B2C suppliers can afford significant external help (e.g. market research) to develop each product, but B2B suppliers should hone internal, cost-effective means.

3. Impact on the front end of innovation

Many of these characteristics lead to one critical point: The B2B supplier that invests heavily in understanding customer needs—before creating solutions—is well rewarded. Notice that most of the above characteristics deal more with the nature of the customer than the supplier. These customer characteristics are generally persistent across a broad range of B2B industries. For this reason, a methodology designed expressly for B2B—such as New Product Blueprinting—can usually be applied with few modifications in businesses that seem quite dissimilar… except that they are all B2B 

e-Learning Module 3: The B2B Advantage

New Product Blueprinting: The Handbook for B2B Organic Growth Pages 11-20

Q1. Why aren’t these differences between B2B and B2C discussed more often?

One possibility is that most business school education revolves around consumer goods marketing, not B2B. B2C marketing may also attract more attention because it is more publicly visible, with larger budgets. As a result, many B2C practices, e.g. the Four P’s of Marketing, are “handed down” to B2B marketers.

Q2. Is this good or bad news for the B2B supplier?

It’s wonderful news! Most of the B2B vs. B2C differences are actually advantages in the B2B supplier’s favor. Someday, these may be recognized and applied by most B2B firms, but today a B2B supplier can reap an enormous competitive edge by putting these advantages to use.

Q3. What’s the connection between these B2B vs. B2C differences and New Product Blueprinting? Blueprinting was designed “from the ground up” expressly for B2B. So how many of these eleven characteristics impact the New Product Blueprinting methodology? Every single one. Take a look.


 


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AIM Institute - WikiBlue »AIM Institute - WikiBlue
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Differences between B2B and B2C »Differences between B2B and B2C
Characteristics of B2B vs. B2C
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