What Makes B2C and B2B Startups So Different?

Imagine you’re thinking of buying a tablet. What will make you decide whether to buy? What will make you decide which product to go with? Who do you have to consult with? How will you evaluate whether this is a good or a bad purchase? How long will you take to evaluate the options?

Now put yourself in the shoes of someone about to authorize the purchase of $2M of enterprise software. Ask yourself the same questions. Are the answers similar? If you ask the same questions, why are the answers so different?

There are three critical areas of differences between B2C and B2B customer development:

Being unaware of these differences is a big reason why many B2B startups never seem to find their fit in the enterprise (or even with small businesses).

Return on Investment in B2C and B2B Startups

There are three main reasons why businesses buy technology. To…

  • …Increase revenue;
  • …Decrease costs;
  • …Increase customer satisfaction.

A B2B transaction is, by definition, an investment; an investment in future profitability, cost reduction, timesaving, productivity, sales or customer satisfaction.

Unlike consumers, businesses never buy technology simply to look good, for fun or for the user experience. Expectations of ROI are always built into the purchase of new technology.

The new accounting software has to be fast and reliable, the new marketing automation solution has to have an impact on bottom line and the new support platform has to help serve customers better.

Consumers love novelty; businesses just call it risk.Ben Yoskovitz and Alistair Croll, Lean Analytics authors

ROI estimation is an essential part of making any kind of sale in B2B. ROI is the native tongue of decision makers and one of the main ways in which products are compared and evaluated.

Client Relationships in B2C and B2B Startups

B2B markets are generally much smaller than B2Cs. Burning leads in B2C may not be a big deal if the market has millions of potential customers, but, with substantially smaller markets in B2B, burning leads quickly become a big deal.

To succeed in B2B, entrepreneurs need to build deep relationships with a relatively small number of companies. Relationship-building skills are critical to landing long-term agreements and growing existing relationships. This is one of the reasons why B2B companies are often service-focused and operate with a different business model.

Trust and stability are essential factors. To sign long-term maintenance, consulting or upgrade deals, clients must be convinced that your company will be around for the next two to five years. It’s one of their first considerations.

Your company can’t change product overnight. Transition must be planned for fear of alienating prospects. You’ll most likely validate your product with the same customers you will do business later on. You can’t just disappear if a product doesn’t work out.

The relationship leading to and from a sale is much more critical in B2B. Starting off as a consulting firm is a strategy every B2B entrepreneur should consider.

Decision-Making Process in B2C and B2B Startups

For large purchases, customers in B2C sometimes consult family, friends and their social network, but it rarely gets more complicated than that.

For a big-ticket B2B purchase, requiring the approval of four to six stakeholders tends to be the norm and the end user may not even participate in the decision.

Validation in B2B often requires winning over a group of buyers. New Strategic Selling authors Robert Miller and Stephen Heiman talk about three types of buyers — Economic, Technical and End User in B2B.

These three types of buyers often have completely different — sometimes conflicting — motivations and worldviews. It’s vital to develop positioning and support collaterals that appeal to different stakeholders in the target organization, from the CEO to the budget operator.

Although there are other differences between B2C and B2B startups – funding, services, money, etc – the above are the three main differences B2B entrepreneurs need to be aware of.

More on What Makes B2C and B2B Startups Different

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