Business Model B2b B2c – There are many similarities for product managers who either work for a consumer-oriented product (B2C product management) or for specific business user products (B2B product management) —
We all want to create a product that users love, but of course it has to make money.
Business Model B2b B2c
B2C products typically generate revenue from many customers (i.e. thousands or millions) with small transactions (i.e. subscriptions, purchases, ad impressions, etc.)
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B2B products typically generate revenue from a handful of companies (i.e. tens or hundreds) with larger annual contracts (i.e. 5-7 figure contracts). For example, the first B2B product I worked on had 2 companies that accounted for 80% of our revenue and enabled us to be cash flow positive.
B2B products may have 1-5 customers that drive the majority of their revenue; these customers therefore carry a lot of influence over product development priorities (especially when a product is first launched).
The sales funnel is quite different with different points of emphasis that influence who you will work more closely with.
B2C products perform well with a high volume of impressions (led by marketing) on the product, while user experience and usability will keep users and convert to paid conversations (led by product and design). Customer Success Managers will engage with your many customers to ensure they are happy for retention. You will perform more experiments which means you will either analyze the data yourself or you will work with data scientists or business analysts.
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B2B product sales cycle is more complex and can be longer to develop larger meaningful contracts ($XXXk contracts will have many hoops to jump through). For example, I have worked with B2B products with 30 day sales cycles (very short) and others with 6-12 months. Talking to the right people at a company to nurture a successful contract is essential (led by Sales), while created business value and functionality will help convert prospective users to customers (led by Product and Design).
You will work with similar stakeholders in either B2C or B2B products, but generally B2C product managers will work more closely with customer success and analytics, while B2B product managers will work more closely with sales and design.
For example, as a B2B PM, I usually become part of our sales cycle to help our sales team answer tough questions and hear directly from prospective users about their needs. When I was B2C PM, I regularly met with Customer Success to learn about common user problems or questions.
B2B requires more stakeholder management and caution. Losing 1 customer can be huge (whereas losing a customer in B2C is not that big of a deal), requiring more team alignment (especially with sales) to be achieved. B2C has more leeway and can therefore experiment more.
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Great product managers deeply understand their user needs to quickly figure out who they’re building for and why. Determining who will use your app is essential to effective marketing and sales.
B2C users are typically everyday people who are focused on their experience. You tend to break these users down by demographics (eg location, age, gender, income, hobbies, interests, etc.).
B2B users are often more targeted to a certain person or industry focused on increasing revenue, saving time or reducing costs. They tend to be more sophisticated about their problems, which means you need to understand your user more. You learn significantly more from a B2B customer call than a B2C customer call. You tend to break these users down by demographics and firmography (eg, job title, department, company size, industry, etc.).
B2C needs tend to be discovered more quantitatively. The larger number of users can be leveraged using analytics and surveys to isolate which personas are most common (or have the most favorable metrics). To confirm user needs/wishes, experiments (A/B testing) can be performed with statistically significant results. Identifying needs leans more towards behavioral psychology.
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B2B needs tend to be discovered more qualitatively. Each user is more influential and more knowledgeable about their nuanced needs, so you can learn a lot more through user interviews. It is especially important to build relationships at different levels of a company (c-suite to junior) as your product may have multiple users and/or customers (more details below). These users are usually looking for you to remove a blockage or make a workflow more seamless to help their business.
For B2B products, the person who buys the product is usually not the one who uses it. This means you may be able to adjust your marketing and sales to the customer (i.e. Boss) to convert a sale, but retain your product’s functionality to the user (i.e. employee). Solving customer problems and user problems simultaneously, although very difficult to do, is how you build great product for enterprise.
Excellent product managers ensure that their roadmap is properly prioritized and syndicated with the entire team. The roadmap is critical to ensure that everyone has the same vision and goals; however, I think there are subtle differences with B2B and B2C products.
B2C roadmaps tend to be more flexible (due to the more experimental nature of feature releases) and less visible. Because
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B2B roadmaps are absolutely essential because they distill your company’s strategy. People use the roadmap to determine whether they will stay or become a customer. Prioritization is often more stringent in weighing influential customers against your end vision (more of a balancing act). More factors go into the roadmap prioritization such as the sales funnel, existing large customer accounts, market activity, technical feasibility, etc.
Because the B2B product roadmap is more visible and used more frequently with stakeholders, there are greater expectations about the prioritization rationale. The sales team will also have more influence on roadmap prioritization. For example, I worked at B2B startups where I would often discuss our roadmap in sales calls to either (a) an influential existing customer to help convince them to upgrade or retain, or (b) with a prospective customer to help convince them to use us.
B2C feature releases can be launched more adhoc and usually have an A/B testing plan. With an A/B test, a product manager will introduce a new feature to a smaller group of users and measure predetermined metrics to determine a new feature’s success — if the A/B test is successful, the product manager deploys the feature to more users or if there are mixed results, the product manager can experiment with other changes.
B2B feature releases are often bundled together and launched at the same time to avoid disrupting a customer’s workflow. Since B2B users often use the product for something related to their work, B2B products should avoid disrupting a user’s work, as this will create a high level of frustration along with potentially large revenue or cost impact. Releases may require documentation or a method to get feedback that accompanies a release.
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Functionality and ease of use are important to everyone. B2B users will tolerate a clunky UX if the product solves a chapter of functionality (more about what your product can do and less about how to do it) — these users will always push to expand capabilities. B2C products don’t have the same pressure to keep adding new features — it’s more important to do a few things really well and easily to appeal to a broad, diverse audience. B2C products typically launch features less frequently based on strategic goals instead of specific customer requests.
The responsibilities of B2B and B2C product managers are still very similar and require many of the same skills and tools; however, their goals and day-to-day execution may differ significantly. A product manager can even work at a company with both B2B and B2C products (i.e. I worked at a labor management startup with this scenario)
Both B2B and B2C products have their advantages and pitfalls, such as B2B product managers can get frustrated because decisions are made with less data, while B2C product managers can get frustrated with a wide variety of users and a lack of clarity.
For your own career, you may find that you are more excited about B2C products or B2B products, but luckily there are enough similarities that you can alternate between different product types throughout your career. Selling to business is completely different than selling to any consumer. Marketing involves a broad spectrum of activities, the ultimate goal of which is sales. B2B and B2C are the two business marketing models where sales are the end result, but that does not make the two business models the same. Understanding the nuances of each is fundamental to effectively marketing your products or services in the B2B or B2C worlds.
On B2b2c Business Models
Most of the time, B2B marketing focuses on logical process-driven purchasing decisions, while B2C focuses on emotion-driven purchasing decisions.
The B2B and B2C business models sound similar, but they are worlds apart when you inspect them closely.
Here are eight (8) Key Factors to consider when building a channel (B2C vs B2B) sales strategy, and choosing the right systems/processes:
Consumers buy products or services for personal use. Business buyers buy products or services for use in their companies. In B2B purchases, the purchasing process is more complex. Decision-making groups include members from technical, business, financial and operational departments, depending on the type of purchase.
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The person selecting a product may not have the authorization to purchase
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