Working on both B2C and B2B markets presents major challenges and opportunities.
Oscar Torres is the Director of the B2B Management Program at Esade Executive Education
If dedicating yourself to Business to Business (B2B) is difficult in and of itself, doing so in a company focused primarily on the Business to Consumer (B2C) market requires a good dose of heroism. The two mindsets are completely different. Juggling both simultaneously presents several major challenges that companies have to overcome in order to succeed.
B2C companies focus on meeting consumers’ needs –or, at times, creating those needs– by means of a given product or service, at a price and via a dedicated channel and promotion. By contrast, B2B firms must detect problems in their client companies and offer them solutions that represent a clear added value for them.
The two client approaches are also different. In the B2C realm, the business reflects how good the companies’ marketing and go-to-market strategies are. For B2B companies, however, their business reflects their organization, reliability, and ability to minimize risks for the clients actually making the decision to work with them.
But, what happens if a company doesn’t focus specifically on B2C or B2B but both at the same time? For example, what if it sells cars to individual consumers but also provides mobility services to publicly-listed firms that are better valued for being more sustainable? Or, what if the firm provides personal mortgage loans but also credit lines to companies to help them automate industrial processes and compete better?
Five challenges when leading B2B efforts within B2C firms
B2C companies tend to emerge around an idea for a given consumer product and begin selling their products and services to companies later on. If we ask B2B business leaders within successful B2C companies, such as Volkswagen, Ferrero or LG, and other companies on the road to success, most of them highlight five key challenges:
1. Successfully make general management understand that B2B is a different type of business with a different set of rules and rhythm. The solution is emphasizing why B2B is different, specifically addressing that difference and clearly identifying the advantages it provides the business overall. One advantage is that “B2B has different tempos but it is much more predictable,” commented one business director in a firm working in both B2C and B2B markets.
2. Ensure that the company doesn’t implement across-the-board B2C processes but, rather, specific actions adapted to B2B reality. In the B2C market, most company efforts revolve around getting clients to their brick-and-mortar or online stores. In B2B the focus is on getting clients to dedicate quality time to our firms so we can understand their situations and offer them contextual value throughout our long-lasting relationship with them. The difference isn’t just the number of clients (fewer clients in B2B than in B2C) but also the clients’ life-time value for us and the fact that relations with our clients last longer and are more stable than with B2C clients. One executive in a Chinese insurance company with 50 million clients, of which only 2% were B2B clients, recognized that that 2% generated 30% of the company’s revenue and 40% of its EBITDA. “But all our processes are B2C focused, so we probably don’t treat a million companies the way we should; and that can turn out to be very costly,” he lamented. Consequently, we have to implement specific B2B operations, not B2C practices for B2B relationships.
3. Have the appropriate in-house B2B talent. In the B2C world, having sound product knowledge, a certain love of the brand, negotiation skills, and speed are perhaps the most important traits. In B2B, by comparison, we are in the people business: A part of what clients buy are the people with whom they interact. To successfully overcome this challenge, B2B companies need to hire curious professionals that can accumulate knowledge of their clients and add value to the relationship. It’s also important we ensure that our HR departments are well aware of how important they are for the business when sourcing, hiring, onboarding, and developing specific B2B talent.
4. Ensure that the KPIs used to measure the business’ success are appropriate for B2B and not simply imported from the B2C side. The challenge is to demonstrate that the two business’ rhythms are in fact different, because the duration of the relations, the decision-making processes, and the implications of those decisions are also different. Consequently, the metrics we use for our management models cannot be the same. This might make some executives nervous, given that results will take longer to appear on the B2B side. But when they do come about, they are solid and long-lasting.
5. Stop thinking that the product is the focus and don’t center the communications strategy only on promoting that product. In the B2B realm, more than selling a product, what matters is demonstrating our understanding of the clients’ problems and working to generate trust in the solutions which provide contextual value. We also have to instill trust in our companies’ ability to support them and in the people with whom the decision-makers interact. The challenge is making sure that management understands that B2C marketing provides value to the B2B business though it isn’t enough on its own. The company has to generate specific insights for the B2B business to become an asset for the relationship with our clients and show them that we have experience in the future we’re promising them.
If we want to build a better, more predictable, and scalable B2B business, we have to create a dedicated B2B unit that takes key management governance elements into account, promotes a B2B culture, and instills a B2B mindset within the dedicated team. To ensure that the two divergent models successfully coexist within the same company, the key is ensuring that management understands that one is not better or worse than the other. They are simply different, and addressing and working on that difference correctly can add tremendous value to both businesses.
