Let's start by understanding what
B2B is. B2B describes
commercial transactions between businesses. In a B2B transaction the commodity being sold is typically an input - like a raw product or a machine - to help a business produce another product. B2B transactions can include anything:
- Services (like legal servcies, IT services, marketing services, accounting services, etc.),
- Products (like chemicals, plastics, steel, concrete, wood, rubber, glass, and so on), or
- Information (e.g. customer lists, demographic information, geological studies, weather reports, etc.).
B2B can be contrasted with two other major B2's. The first is the
B2C. Those are transactions that are between a
business and a
consumer - and the transactions that most of us bump into daily: buying your groceries, buying some clothes, buying a new car. This is also where the majority of advertising appears to take place.
The other B2 is
B2G. B2G is a bit like B2B and a bit like B2C. It is
Business to Government. These sales are all about selling items to Governments. Typically this requires participating in complex bidding processes and negotiations. But, the payoff can be very high. The goods and services that are purchased by governments are sometimes "B2B" in nature - for instance a government might buy a telephone system to run a call centre (e.g. an input to other deliverables). Sometimes the government might be buying tourism brochures to mail out to their citizens (e.g. consumers).
Finally, there is also C2C. This is rarely considered but is Consumer to Consumer sales. Good examples of C2C are classified ads (like in a newspaper ... hey, what's a newspaper). The modern and more effective equivalent is Kijiji, Craig's List or eBay.
(I wonder it C2B is when a consumer returns something to a business - effectively selling it back to the busines ... hmmm ... deep thoughts.)
According to
Wikipedia -
The volume of B2B (Business-to-Business) transactions is much higher than the volume of B2C transactions. The primary reason for this is that in a typical supply chain there will be many B2B transactions involving sub components or raw materials, and only one B2C transaction, specifically sale of the finished product to the end customer. For example, an automobile manufacturer makes several B2B transactions such as buying tires, glass for windscreens, and rubber hoses for its vehicles. The final transaction, a finished vehicle sold to the consumer, is a single (B2C) transaction.
B2B and B2G are substantially more complex than your average "2C" marketing and sales transaction. Major differences include:
- Multiple Buyers - A B2B/B2G sale will often involve many people in the buying process - such as the user, the influencer, the decision maker, the evaluator, and a purchaser.
- Sales Team - Due to the complex nature of many B2B sales there is often a sales team in place to handlea variety of specialized tasks that take place through a sales funnel - such as prospecting (marketing), sales lead, technical analyst, sales engineer, and so forth.
- Needs vs. Wants - A B2B transaction is precipitated by a NEED. A Business needs a product, service, or information to achieve a goal. They NEED steel-toed boots for their workers so that they can meet safety standards. On the other hand, a consumer often may just want to have a new pair of shoes. There's a bit of artistic license in that ... consider a business that builds a new building and has an architect design a unique and enormous tower. They don't need that. They WANT that.
- Long cycles - Back in 1988 I became interested in B2B sales when I read an article about a Sales Executive with GE who had worked for 10 years on selling one set of generators to one client. In the end he closed the deal. As I recall that was something to do with the Three Gorges Dam on the Yangtze River. I wonder what that commission was like?
- Significant evaluations - It doesn't always happen, but the chances are that before a decision maker will commit to buy something, the B2B decision maker will demand substantial technical evaluation of the product and will have a "bake-off" among several competitors. It is often a winner takes all contest. Consider how long an airline will take to choose the purchase of a new plane and the due diligence they put into buying a $350 million jet that will carry 800 people more than half-way around the world. Initial cost, operating cost, performance, longevity, comfort, efficiency, and safety (among other things) all get evaluated over many months or years.
Even with all of the scrutiny in a B2B transaction, it would be wrong to think that emotion doesn't enter the equation in a BIG way. In head-to-head comparisons the scoring between products will often be pretty close. The final decision may come down to the sales executive who has the best handshake, or the one that makes the least mistakes. To that end, I worked for a company that was vieing for the IT Services of a very large credit card company. The two companies that were in the final running for the work each took the client out for supper. The company I worked for picked up the bill and paid with a credit card from the client's company. The other contender took the client out on another night and also picked up the bill. Unfortunately (for them), they used their corporate credit card. It wasn't the client's brand. The client saw. Can you guess the emotion? Can you guess who won the business?
(With thanks to
Steve Woods for
his blog that provided me some additional direction and information for my post.)
Next up ... B2B Marketing Strategies.
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