The Differences & Similarities Between B2B and B2C Markets and Selling

Size of markets –  One of the big differences between B2B and B2C marketing is the size of the markets. Consumer markets are typically much larger than business markets, which them more susceptible to mass marketing techniques. But the size of the market is product related, because consumer markets can be as small as or smaller than B2B markets depending on the product. Generally B2B markets are small, focused target markets and B2C markets tend to be large target markets.

Shorter and more direct channels of distribution – The B2B marketing process may entail shorter and more direct channels of distribution to the target audience, which is typically much smaller than the consumer audience for a given product / service. There are exceptions. Very high end consumer products may appeal to a very small segment of the general population based on income and or lifestyle.

Sales prospects – The B2B sales prospects are very different from B2C. B2B sales prospects are found in small vertical markets require consultative selling and take longer to sell. B2B sales are "higher ticket" sales driven by a rational sales approach that requires developing personal relationships.

Brand value – Brand identity in B2B markets is created through personal relationships and consultative selling. Brand identity in B2C markets is created through repetition and imagery in advertising and now social media.

Sales process – B2B sales require consultative selling (selling based on understanding a client's needs and developing a relationship of trust). B2C sales are usually direct to the consumer or involve a retailer. The sales approach is a traditional product sell of "convincing the consumer" they need the product or service being sold

Buying process – The B2B buying process tends to be more complicated. The process is complicated by the number of people involved. It is also complicated by the nature of the product or service being purchased. Some B2B purchases may involve not just a large number of individuals, but also different divisions, groups, or departments in the organization, such as R&D, engineering, finance, etc.

B2C marketing efforts are directed at the general population or to individuals who are the final decision makers. B2B sales typically involve multiple roles and decision makers in the buying process. You have users, buyers, information gathers and influencers, gatekeepers and deciders. In the normal B2C transaction all of these roles are wrapped into one individual and sometimes the family and or friends network. The marketing mix is affected by the complexity of the products and services, the nature of the sale and the number of individuals involved.

Generally the B2C buying process is a single step.

Buyer behavior – Consumer purchases tend to be emotionally driven. B2B purchases involve rational decision making. Emotional factors may play a large part in a consumer's decision to purchase a product. B2B purchases tend to be more rational, less emotional and more task-oriented. Business customers tend to look for specific product attributes that will deliver efficiency, productivity, and quality. B2B purchasing decisions are more rational than consumer decisions, since organizational purchases require more money and more risk for the organization.

Buyer seller relationship –  The buyer-customer / seller relationship is typically different. There is far more emphasis on developing strong buyer / seller relationships in B2B sales. The B2B selling process can involve numerous meetings between the buyer and seller, whereas the bulk of the consumer's interaction with the seller typically happens via advertisements, promotions, or transactions. The buyer / seller relationship in the B2B sales processes involves developing a high level of trust between buyer and seller.

Purchase decision – The decision to purchase in B2B sales is generally driven by need and budgets therefore; it tends to be a very rational decision. B2C purchase decisions tend to be made based on want more than need or a budget and therefore are triggered by more emotional decisions. B2C purchasing decisions tend to be product driven, while B2B purchase decisions are relationship driven.

Purchasing process – B2B sales typically have a purchasing process that is usually defined in months and the sale is complex, often taking additional months to complete. B2C sales have a short purchasing period of anywhere from a few minutes (the impulse buy) to a few days and is a simple sale consummated immediately.

Rational vs. emotional buying decision – B2B buying decisions are based on business value. The B2B buyer is sophisticated, understands your product or service, in some cases better than you do, and wants or needs to buy products or services to help their company stay profitable, competitive, and successful. B2B buyers are using more rational thought when selecting a product or service for their company. They are motivated by saving money, increasing productivity or raising profitability. The bottom line is that the difference between B2B and B2C marketing comes down to the buyers' emotional perspective about the purchase. Consumers make buying decisions based on status, security, comfort and quality. Business buyers make buying decisions based on increasing profitability, reducing costs and enhancing productivity.

Number of individuals involved in the buying process – For the most part the buyer is different. It's pretty much standard practice to have multiple people involved in the B2B buying process on the buyer's side and the seller's side depending on what is being sold. In B2C marketing, the decision maker tends to be the buyer and it's rare that more than one individual is involved in the buying process. Of course, there are exceptions, for example the purchase of big ticket items such a home or car. These purchases may be influenced by family members or friends.

One of the characteristics of a B2B product is that in many cases it is bought by a committee of buyers. It is important to understand what a brand means to these buyers. (Note: Temporal) Buyers are usually well-versed with costing levels and specifications. Also, due to constant monitoring of the market, these buyers would have excellent knowledge of the products too. In many cases the purchases are specification driven. As a result of this, it is vital that brands are clearly defined and target the appropriate segment.

Length of sales cycle - The B2B sales cycle tends to be longer. The evaluation and selling processes are longer and more complex than consumer purchases. Although digital is altering and in some cases shortening the B2B sales cycle, the sales cycle for consumer purchases can be minutes.

The B2B sales cycle really hasn't been shortened. What has changed is the physical engagement cycle, the time that the buyer is actually physically engaged with the sales team of the seller. Because of the easy access to information, the buyer make actually delay engagement until they are closer to pulling the trigger. They wouldn't be engaging with the sales force for basic information gathering. So the evaluation and the selling process, in total time may be the same, but the actual time engaged physically in the selling process might be less. But, the buyer still needs to get to know the personnel in the company, so how much shorter is the selling cycle?  It's not been documented and it is going to vary by product and industry.

B2B purchases are usually expensive and require a long time for research and decision making involving multiple people at the purchasing company. The type of expenditure can affect the purchasing cycle length – operating expense vs. capital expenditure.

High cost of selling process – The B2B selling process involves high costs. Not only is it required to meet the buyer numerous times, but the buyer may ask for prototypes, samples and mock ups. Such detailed assessment serves the purpose of eliminating the risk of buying the wrong product or service.

Cost of a sale – B2B sales are "higher ticket" purchases usually costing from just a few thousand dollars to tens of millions of dollars. B2C sales can range in cost from less than a dollar to a few thousand dollars for most typical items purchased. Exception might be homes, cars and luxury goods.

High perceived risks – In terms of perceived risks, a B2B product is commonly viewed to possess higher perceived risks compared to B2C products due to the value of each transaction: e.g. buying machinery can cost $2Million compared to a tube of toothpaste which would cost just $2. However in reality, risks levels in terms of duty-of-care, can be fairly similar depending on the nature of the product. A faulty machine similar to a contaminated tube of toothpaste can bring grave harm to its respective users. However, because of the quantum of purchase, buyers of B2B products tend to place more focus on the evaluation and selection process.

Lifetime customer value –  The lifetime value of a B2B customer is much higher due to the higher cost of sales and the likelihood of repeat or add-on sales to the same customer. The lifetime value of a B2C customer is lower than B2B because of the lower cost of an individual sale and repeat sales are generally fewer. The payoff for B2B sales prospects is a high lifetime customer value.

Partnership / long term relationship – Nearly every deal in the B2B world is more than just a sale – it's a partnership. You're providing a product or service that will help the company you're selling to be more productive. And when the price points are in the six, seven and eight figure range, it had better do the job. Losing a single client over a fracture in the customer or client relationship can be devastating, leading to restructuring and even layoffs. That's why in B2B it's not only important to acquire new customers, it's sometimes even more important to keep those that you have. Companies seek long term relationships as any experiment with a different companies and their product(s) will have an impact on the entire business. Loyalty to company and product is therefore much higher than in consumer goods markets.