Explaining Modern Marketing to My Mom: Part 3
Dear Martha, I understand why people making purchases need to educate themselves and how content helps support their educational needs. But I get lost when you talk about “B2B” marketers. What is “B2B”? Is LookBookHQ a B2B company?
In this post, I’ll do my best to explain in basic terms:
- What does B2B mean?
- How is B2B selling and marketing different from B2C?
- LookBookHQ is a B2B company that sells to other B2B companies…
What is B2B?
Let’s suppose for a moment that you are a strawberry farmer: You can take your produce to the local farmer’s market where you sell small batches of strawberries directly to consumers, or you can partner with a large outlet like Whole Foods that will buy large quantities of strawberries from you to resell in their grocery stores.
Since Whole Foods is a large retailer, they will require you to sell large quantities at a fixed cost. They will want you to make specific deliveries at specific times to multiple locations.
At the farmer’s market, you would be selling your strawberries right to the customer who take them home and make a delicious pie later. This is an example of a B2C (business-to-consumer) selling model.
The Whole Foods example is the B2B (business-to-business) example as you are selling you strawberries to another business.
Simply put, a B2B company is an organization that sells its products or services to other businesses. A B2C company is an organization that sells their products directly to the end consumer. Some companies have a complete B2C selling approach; some sell exclusively B2B and others rely on a combination of the two.
How is B2B different from B2C?
As you can tell from our strawberry farmer example, your approach to selling strawberries to customers at a farmer’s market is going to be very different than selling your berries to multiple Whole Foods locations across the country. Let’s explore some of the ways B2B differs from B2C and how those factors impact a company’s sales and marketing approach.
First, lets look at the people who are making the purchase. When customers buy things, there isn’t an awful lot riding on it. Think of all the different things you purchased this past week, food, stuff for the home, etc.… Chances are you basically just went for it and made the purchases. But the stakes are much higher in businesses where making the wrong purchase can affect profit, effectiveness and the jobs of those around you.
B2B companies have longer sales cycles (it takes longer to make a sale)
In a B2B sale, time must be spent cultivating a relationship with the prospective customer. This relationship building is often tag-teamed by marketing and sales efforts. The sales process is much more formal and usually involves multiple proposals, negotiation and contracts. The purchase is usually a whole lot larger than a basket of strawberries, and that means the price is pretty high. High priced items usually mean longer sales cycles. For example, Whole Foods is not going to choose its strawberry supplier on a whim – they will likely be approached by many other strawberry farmers, you will have to be persistent in order to land the sale and be prepared to negotiate terms and respond to your competitors’ offers.
There are more people involved in the B2B purchase decision
Another contributing factor to longer B2B sales cycles is the number of people that are involved in the purchase decision. It is rare that a B2B sale is limited to selling to one individual. It can often be a struggle to identify who actually has the decision-making power to proceed with a purchase. If one of the many people involved in the purchase decides along the way that you are not a good fit, you may be out of luck!
B2B buyer/seller relationships tend to be long lasting
Depending on the type of product/service being purchased, B2B organizations tend to have long-term business deals with their suppliers. Since it can be very costly for businesses to change suppliers, they generally prefer to have a much longer relationship with the companies they buy from. Organizations are looking for a reliable partner that they can depend on over the long haul. The length of the engagement is also another reason B2B buyers do their homework to make sure they’re making the right choice.
B2B audiences expect organizations to cater to their educational needs
B2B buyers want to make the best possible decision for their company. They want to look like rock starts in their workplace, and they expect you to help them by making it easier to do their research and compare solutions. To become the office hero, they require a large volume of content to self-educate during their buying process. They expect that the companies they are considering buying from will cater to all their educational needs so they can make a well-researched and well-informed purchase decision. This is one of the reasons that content marketing is so popular and important to B2B marketing strategies.
Make sense so far?
Sellers in the B2C and B2B markets may have the same endgame – more sales and revenue – but their goals, methods, strategies and tools can be very different.
To answer your other question, mom, yes, LookBookHQ is a B2B company. We do not sell our products to consumers. You personally would never purchase a LookBookHQ license for your own personal use. Our product is intended for marketers, who use it to more effectively reach B2B buyers with their content. Our end user is typically someone who works within a marketing department at another company.
These marketers use our platform to support their marketing strategy for their products or services. It just happens that most of the marketers that use our platform are selling products or services to other businesses as well.
I can see why you get lost when I talk about B2B. I work for a company that sells a product to other businesses that helps sell their products to other businesses. That is pretty confusing if you’re used to the B2C model. I assure you it only sounds confusing and it really is pretty simple!
Back to our strawberry farmer…
It feels like another example might help clear things up. Let’s say that your strawberry farm wanted to expand. Not only do you want to sell your strawberries to grocery stores but you also want to get into other businesses as well. You figure that you could sell more if you sold your berries directly to the companies that make jam, freeze produce and sell them in bags to grocery stores or use them in the commercial baked goods they produce. You manage to make a sale with the jam company (that also happens to supply Whole Foods with their jam product line).
You are a business (strawberry farmer) who sells your products (strawberries) to other businesses (the jam company) that sell to other businesses (grocery stores).
LookBookHQ is a business that sells its products (marketing software) to other businesses (example: a telecommunication company) that sell their products (example: corporate cell phone plans) to other businesses (example: a construction company).
Is it starting to make more sense, mom? Welcome to the wonderful world of B2B. Stay tuned for more next time!