I am a marketer, and it means I am obsessed with customers. How do I find them, convince them of my offer, and – more importantly – make an offer that will outperform my competitors? It shall always start by answering the following questions: Do we know who we are selling to? Do you?
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Who is your customer?
If you, too, struggle to describe your business model using a definition of B2B, B2C, or B2B2C, then I wrote the article with you in mind. However, I also wrote the article, and even more, thinking of many who have never struggled with it yet. If you were my client or a startup in an acceleration program where I was your mentor, would you know the answer if I asked: Who is your customer (to be)?
We usually set a goal with my mentees and clients at the start of any project. “What would you like me to help you with?” I ask (from this question, you already know I am not an aggressive seller ;P). Most entrepreneurs answer, “Help me find customers and sell to them.” Yes, this is what I do.
My more important question, and often the starting point for our collaboration, is: Who is your customer? I can count on my fingers the people who answered earnestly. If you do not know who your customers are (what your target group is), how will you find them?
Customer definition
Ok, here is where the theory starts. Didn’t I promise it to you? But these things are fundamental to any brand, any business model. You must take it as an elementary book. Learn and stick to it forever.
Being a marketer means that the customer, the concept, and its practical dimension are the centre of your interest. Most of the time, I work by myself and mentor and consult brands that are somehow linked to customers or target groups. Yet, because of a years-long routine I developed, sometimes I struggle to explain a customer’s perspective in layman’s terms.
In the past, I defined “the customer is the one (last in a chain) who pays for your unchanged product or service”. I was sharing it during my workshops, and it served its purpose. I am judging from how people felt it was doing the job. One day, it was successfully challenged (by my client!), so I had to adjust my own definition (and if you effectively challenge this one – I will iterate again.)
Now, I am saying, ” The customer is the one who has the power to choose your offer instead of your competitors’.” Note that this is not the same as merely allowing you to sell or restraining you from selling, which is a role often played by retailers.
There are several types of customers, but I am focusing on two fundamental ones: businesses and consumers. You heard about both, didn’t you?
B2C: business-to-consumer
B2C seems easy, doesn’t it? You run or plan to launch a B2C model if you sell to consumers who are not officially registered buyers. It does not matter if you sell to individuals (e.g. apparel, a running app), families (e.g., holidays, streaming services) or groups of friends (e.g., bachelor parties, expenses sharing app). However, many new brands I encountered understood B2C exclusively as a direct-to-customer model. It is wrong; it is far too narrow.
When I started as a mentor, I was surprised by how many B2C entrepreneurs saw themselves as selling to businesses. Nowadays, I take this for granted, and I am surprised if my peers intuitively get this right. I am talking about intermediaries, distributors, resellers, or channels—all mistakenly taken for your customers if you sell to (through!) them. Technically, one may call them clients or accounts, but they are not your customers.
Over the years, I have used the customer definition to explain the difference between selling “to business” and “through business”. An easy example: if you sell a box of printing paper to a registered business that adds its margin on top of it and resells it further, think of them as your intermediary, not a customer. You only sell it to your distributor (account); the end buyer will be someone else. However, if the same account used your paper to manage their own business (e.g., printing invoices), it was your customer. The same product and the same client, but the intention for purchase (so-called “need”) defines whether you manage a B2C or B2B brand.
Example: B2B and B2C’s intermediary
Let’s stick to a paper box for a moment. Usually, it is a good example. If you were selling the paper to a business (B2B), you would need to learn why they were buying paper and what they intended to do with it. Most likely, each organisation will require only one or two types of paper: a regular one and one for “special occasions”. Both need to meet minimum requirements. The cheaper or more economically efficient the deal is, the better. In the past, no organisation gave a damn about recycled paper, but it is in high demand these days. Nothing has changed in their printing process (except that everyone prints less), but the early CSR policies identified paper as their low-hanging fruit to limit companies’ environmental footprint.
If, however, your client (intermediary) is buying the paper and intending to sell it further to his customers, the decision criteria, range of products, and the process will differ a lot. Firstly, the buyer will think of his customers’ needs (not their own): what they want and for what they will pay a premium (including packaging, brand, promotions, etc.). Secondly, any corner stationery offers a wide range of whites, colours and thicknesses (weight). Finally, your client (intermediary) would like to pay you only after further selling the goods and would like a return guarantee if your paper doesn’t sell well.
I hope the difference between B2B and B2C with intermediaries is more evident now. If anyone is buying your products or services for their own use, they are your customers. If you sell to a business that will distribute it further unprocessed and unchanged, it is merely your intermediary, your sales channel.
B2C brand, B2B model
One digression: You will like this one because things are more complicated in the real world than the above example of a paper. Marketers like me are dodgers, and they want to play with models to cheat the system, trick competitors, and, last but not least, make their clients challenge the definitions 😛
The vital part of the B2C and B2B definitions is whether your client is reselling your product or service unchanged. For example, if you sell car parts to a manufacturer, who later sells their car via a dealer – technically, your piece is resold, too. But the final buyer wasn’t looking for “your product”. Your product is sold further as part of something greater. This is B2B.
Your business model is B2B when the business independently decides to buy from you, and its clients do not determine it. It is about car parts, computer chips, coffee and the like – a more prominent manufacturer buys from you and sells your goods with their brand. They have all the power to put you out of your business if they find a cheaper replacement.
However, those tricky marketers found a solution to diminish the power of the B2B customers. It is called “ingredient branding”. Imagine Bose car speakers, Intel processors or Fairtrade coffee. Of course, these are brands of specific B2B products, but their marketers decided to leverage their brand power to influence end-consumers directly. So, now, searching for ready products, we are also looking for ingredients used for manufacturing. When buying a Nissan car, HP notebook, or Ben&Jerry’s coffee flavour ice cream, consumers care about which brands their suppliers use in manufacturing.
B2B: business-to-business
A brand selling directly to companies is much easier to define. However, I see organisations instead of merely seeing companies or businesses—this broadens the B2B definition. At the end of the day, B2B as a business model does not differ much when you sell to not-for-profit organisations: NGOs, schools, the public sector, or directly to the government or its institutions, though the latter often stands as a separate B2Gov category.
So, for the record, you run or plan to launch a B2B brand if your customer is a registered organisation buying your goods or services for their own use. But again, not so easy! Suppose your clients are freelancers. If self-employed clients use your goods to run their businesses (e.g., cameras sold to photographers, travel tickets sold to travelling solicitors), you may call it B2B. If the same clients buy something primarily for their non-professional use (e.g. WiFi router for home, travel insurance), I would still call it a B2C, even though they may ask for an invoice and may be eligible for a tax deduction. Again, their motivation (need or so-called use case) matters.
Nevertheless, most entrepreneurs who target organisations describe their models accurately and intuitively. From my experience, consumer brands mistakenly took their intermediaries (channels) for their target customers more often. They would have already changed their opinion at this point in the article. One may say: all is clear; what else to discuss?
H2H: human-to-human
Have you heard about H2H? In layman’s terms, the human-to-human concept neglects organisations as monolith customers, instead seeing them as groups of people working in a specific context. “You do not sell to companies; you sell to people who work for companies,” some say. I agree. However, I also heard a counter opinion that H2H is a concept made up by B2C marketers who want to sell their skills and tools to a B2B world. Let’s see how this works in practice.
When you work for a B2B company and acquire a lead or a customer, you always talk to a person representing a company and never to an artificial concept of that company. These people have phone numbers, emails, LinkedIn profiles, preferences, expectations, and experiences. So what happens when the person moves to a new business? You likely lose contact with the client’s organisation and must establish another. However, you just got a connection to a new client, too. For me, it shows that the H2H concept is fundamentally correct. If you want to read more about it, I recommend Bryan Krammer’s book, which sparked all that debate (link).
If H2H needs to be more complex, there is more of it: a Decision-Making Unit (DMU) within a Decision-Making Process (DMP). The model describes how decisions in organisations are made and explains how, when selling to an organisation, you must target various people in the process. It is a comprehensive concept, and I will devote a separate article to it. Are you overwhelmed with all these models and acronyms yet? Hold on, we are almost there.
B2B2C: business to business-to-consumer
Have you come across “B2B2C”? Its inappropriate use is a common mistake among business model definitions. Most people confuse it with typical B2C selling via intermediaries (as described earlier). It is wrong. To put it simply, the B2B2C model is an e-commerce platform. Unsurprisingly, it has become popular recently with the rise of digital business models.
Running a B2B2C business, you are in an unusual and demanding position of connecting enterprises selling to consumers. You need to target both, bring them together, and create an opportunity to make transactions on which you will earn a commission. We are talking about Amazon, eBay, Skyscanner and the like.
However, there are more platforms than ones selling to consumers. First, there are platforms for businesses selling to businesses. Next, there is a peer-to-peer (P2P) platform for people selling or sharing to people (eBay, Torrent, YouTube, Spotify, etc.). Modern understanding of a business does not clearly distinguish entrepreneurs from hobbyist creators making some extra money from their craftwork. Nor do I see a point in making such a distinction. It is good enough to call them all B2B2C.
We also have these in the analogue world: bazaars, fruit and vegetable markets, food markets, car boot sales, and shopping malls. They all operate similarly, but I only heard of the model with the rise of digital platforms. In the past, they all used to call themselves B2B because other businesses leased space from them.
Selling to all
Finally, we are here: when I meet them for the first time, most of my clients and mentees avoid (!?) focusing on their chosen group but rather… sell to all. And I often hear (wrong) examples of successful brands doing so.
“Selling to all” is like selling to no one. Entrepreneurs who argue that they want to include everyone in their target group, in fact, do not target anyone. “Everyone is welcome” is far from finding customers proactively. Having a business does not yet imply doing marketing. If you proactively aim for more than someone merely passing by your store (off- or online), you must take things into your own hands.
I have encountered brands that operate both B2C and B2B, sometimes B2B2C. Moreover, I know brands with multiple target segments instead of one (I will discuss segmentation in another article). In all cases, they have more than one business model, more than one sales funnel, more than one sales pipeline, many products or services, and so on.
To sell to all, you need to target all segments individually. To target both B2C and B2B customers, you ought to develop at least two business models. Adding a concept of segmentation to the straightforward definition I discussed in the article will make the whole world of selling even more complex. At the same time, segmenting and specifying your target group makes selling to them inversely easy. This is a type of content I am sharing at uouee.com, and it will help you focus and sell more efficiently.
What’s next?
Thanks for reading until now. I hope the post gave you an overview of the differences and a clear definition if you were the B2C “selling to” instead of “selling through” business. I would love to read your feedback below, especially if you know what to add/explain in more depth or have questions.
I dedicated uouee.com to turning marketing theory into practical know-how. If you would like to explore more customer-obsessed content, here are a few ideas I plan to publish and more to come:
- Customers do not decide purely within B2B or B2C but instead follow a complex or spontaneous buying process. Therefore, different arguments are valid at each step of the process. Additionally, it increases the complexity of a customer acquisition funnel (e.g., buying chocolate is spontaneous, and choosing solar panels on a rooftop is complex).
- Segmenting your market is the most strategic marketing job. Actors in your market have different motivations, cultures (B2B) or lifestyles (B2C), and values, and they behave differently. Picking the right segment and later positioning your brand to this segment is critical to your business success.
- From the above, you already imagine a sales channel concept – let’s explore it further and find out what (if any) difference there is between communication and distribution channels.
- Since we already understand there may be various businesses before and between the customer and us, I will explain the supply and value chain concept. My former marketing tutor once told me that the idea of a value chain is the favourite of all marketing models by… accountants. I also had a chance to observe how much sponsors and investors like it.
