Transitioning your Company from B2C to B2B
Recently I’ve been thinking of an idea that could potentially be a B2C or B2B business or maybe even the rare both. It’s likely not one I’m going to pursue but thought the B2C to B2B transition would be an interesting topic to explore.
This article reviews:
Why do companies transition to B2B
What are the types of B2C companies that do this
What are the org considerations
To start, let’s clarify definitions:
B2C: Business to Consumer. Active users want your product but don’t necessarily need it e.g. social media
B2B: Business to Business. Active users (usually) need your product but don’t necessarily want it e.g. compliance software
[Note: While I reference marketplaces below, I haven’t delved into their unique complexities of often building separate products and experiences for B2C & B2Bs simultaneously.]
Why do companies transition from solely serving B2C to target B2B?
Some companies perhaps transition from serving individuals to organisations for altruistic, mission driven reasons. Organisations are just a collection of individuals after all so it allows for greater fulfilment of the mission. Most companies I’d wager transition for revenue. Consumer businesses generate revenue in 5 ways:
Selling ads and/or data for targeted sales to businesses e.g. social media
Subscriptions e.g prosumer SaaS, entertainment services
Transaction fees e.g. marketplaces, financial services
Margins on products/services e.g. eCommerce
Through a series of VC checks that are bridging the “we’re pre-monetisation until we get to scale” phase…
Transitioning to B2B enables companies to unlock a previously untapped market. One which often has less cost adverse buyers. Businesses tend to have higher average order sizes/volume requirements, more consistently (even if they pay less on a per seat/transaction basis) and are more willing to sign up to longer term contracts providing a more reliable source of future revenue compared to consumers.
Types of Consumer Companies that Transition to Business Orientated Products
B2C companies that make the transition broadly fall into 3 categories:
1.Offer Consumer-Product-as-a-Business-Service: These are B2C companies that offer businesses their consumer products as is, or augmented slightly to provide “business features” such as an admin portal. Typically, these products are positioned as perks or replacement services. Consumer apps - perks - are sold through benefit aggregators (e.g. Perkbox), learning platforms (e.g. Learnably) or through direct sales (This approach is what led me to having an employer funded Headspace premium subscription for 2 years). Service based products - replacements - are sold through direct sales or sometimes through organic search, while businesses opt for a familiar, more user friendly platform to replace their existing catering / corporate travel / other business service.
2. Natural Evolution of Product Upstream: For some consumer companies, depending on their target market, it is expected from (near) day 1 that they will eventually move to serving businesses. For example, I don’t think it was a surprise to anyone that challenger banks who initially focussed focused on B2C started offering business accounts. Or that LinkedIn, a social network for professionals, started offering services to sell to/hire those same professionals. Or that GDrive, which was initially a consumer product, incorporated business orientated features into their suite 2 years after launch.
3.Capitalise on Consumerization of Enterprise: There was a time where the tools provided at work were better than those we used at home (think Blackberrys). However, a shift occurred over the last decade where consumer companies now build products with a far superior user experience compared with B2B focussed companies. iPhones replaced Blackberrys. Slack partly replaced email. '“The cloud” more generally replaced a number of painfully archaic on-prem solutions. Employees have come to expect that the tools they use for communicating at work are on par with, or potentially even the same as those they use to communicate in their personal lives (e.g Facebook/Workplace). Customers increasingly expect businesses to reach out to them on a frictionless channel (e.g. Whatsapp).
Org Considerations
Running a B2C business is very different to running a B2B operation. This is felt most acutely in Product and Go-To-Market teams:
Product: Selling to businesses usually requires “enterprise ready” features (e.g. enhanced security capabilities, user activity reports) to be added to the product before it can be sold into larger orgs. While consumer companies enjoy the advantages of being able to take risks and occasionally break the product with minimal repercussions, that is less the case for B2B products. Consistent uptime is an expectation and this may require teams to adopt a culture of more thorough testing before shipping.
GTM: Consumer companies are typically marketing led with a low touch, high volume approach to addressing individual customer needs. B2B companies tend to be sales led (although this is changing), requiring a more hands-on approach to closing, expanding and retaining customers. Companies need to adapt go-to-market motions to serve accounts, not just individuals. This may involve creating a separate section on their website, running account based marketing campaigns rather than relying on targeted ads, spinning up an outbound sales team, developing a deal desk function, and redesigning support workflows. Despite the move towards self-serve, businesses often like speaking to a sales person before making a sizeable monetary decision.
Transitioning from B2C to B2B can be fruitful but it’s definitely not as easy as copy and pasting previously used playbooks. If you have done this in the past I would love to learn more about your experiences! Feel free to share them in the comments or reach out to me directly.