I had a really interesting conversation with a founder this morning who said that around 70% of their sales were to consumers and that the remaining was to businesses. In the context of a pitch, they asked, how should they tell the story of their B2B sales?
The simple answer is this: You don’t. The truth is that whether you’re a B2B or a B2C startup, the story isn’t about who’s buying your product, but about how you are selling it. Still, getting your classification right is crucial because it fundamentally impacts your operational structure, marketing approach and, most importantly, revenue channels.
Commonly, founders frame their business model solely based on their target customers. Seems straightforward, doesn’t it? B2B if you’re selling to businesses and B2C if you’re dealing with consumers. Unfortunately, it’s not that simple. As alluring as this segmentation sounds, choosing between B2B or B2C should primarily be about how your sales strategies are constructed.
Let’s deconstruct the typical misunderstanding. B2B and B2C, while believed to be stark opposites in many ways, are not purely categories of audiences. Instead, they represent distinct sales and marketing strategies that govern a startup’s approach toward audience engagement, relationship management, and revenue generation.
B2B models inherently demand a more systematic, relationship-driven approach to sales. Deals are negotiated over longer cycles, often requiring multiple touchpoints across various levels within the potential client company. These transactions are usually high value, and hence customer retention, trust-building, and personalized service become key value propositions.
In contrast, B2C sales revolve around individual buying behavior and whims, necessitating potent branding, enticing marketing, and consumer analytics.
Underestimating the importance of organizing your sales strategies around these peculiarities often leads founders to a suboptimal path. It’s not uncommon to find a B2C business frantically up-scaling customer service to B2B standards, or a B2B company spending resources on soon-to-be-discounted, low-value transactions.
Fleshing out your business model requires you to dissect your sales strategy considering the life cycle of your customer relationship, transaction value, volume, branding requirements, scalability opportunities and the resources needed. This approach helps you understand that the dynamics of your sales strategies determine your market category, and not the convenient “who” you are selling to.
Once this mindset is established, startups can better assess and adapt their operational processes, resources and go-to-market strategies. By refocusing where it counts, startups can set realistic expectations, allocate resources wisely, and build comprehensive strategies.
Ultimately, whether your startup is a B2B or B2C shouldn’t merely be about who is buying, but how you are selling. As you weave your pitch, don’t just articulate “who” you service, but more importantly, “how” you intend to create value distinctively.
In a nutshell: If you are running an advertising, direct marketing and influencer playbook, and making a larger number of lower value sales, you’re a B2C company with a B2C sales dynamic. If you also happen to make a number of sales to businesses, great! But that doesn’t mean that you should give those businesses different treatment (unless you make an active choice to deploy resources on that front).
If you’re tooling up a sales force and working on lead generation, sales funnel optimization and relationship-led sales and are making relatively fewer, but higher-value sales, the opposite applies. If part of your business is self-serve, it’s possible that you’ll also pick up a few customers along the way, but you wouldn’t optimize your sales toward them.
When it comes to fundraising, your investors will want to see a single go-to-market strategy, at least in the early days of the company. It’s very rare for an early-stage company to be able to afford to build a full-on B2B and B2C go-to-market strategy at the same time.