Parsing through: B2B, B2C, B2B2C…

Note: I’ve had this post in drafts for 8+ months and thought to just get it out today!

Scope: Software businesses.

1/ Some businesses successfully pull off both B2B and B2C sales.

2/ But it’s not easy — it’s different muscles across the company in product, engineering, sales, partnerships.

3/ Asking — so can companies do both?

“Software license” when searching on on Unsplash. Photo by Iyus sugiharto

1/ Some businesses successfully pull off B2B and B2C sales

Successful examples of those who “do both” exist, like:

Microsoft/Zoom/Chatgpt

• B2B — sell licenses to businesses for their employees.
• B2C — sell licenses directly to consumers for Microsoft Office personal use.

Microsoft is probably the greatest case study of successfully launching new B2B products (Azure), and also having a great B2C business with Office licenses.

Paypal

• B2B — what merchants use to accept card payments + Paypal wallet
• B2C — Paypal wallet. Global consumer brand for consumers to spend and move money.

We see the successful examples, but also contrast them with challenges like Goldman’s entry into consumer banking, Citi’s exit from consumer banking (in some countries). Succeeding in corporate/investment banking (more “B2B” like) is no guarantee that this success translates to consumer banking (more “B2C”) like.

The next question then is why?

2/ Different muscles are required across the company

Generally, B2B vs B2C demands different muscles from all teams — product to engineering to partnerships to sales to marketing to support. It is almost two separate companies doing two different motions.

For regulated businesses like financial services, B2C might require different licenses, and more licenses, as regulators are especially careful with consumer protections (for good reason).

For B2B, scaling is an operations machine. For example, being able to understand:

• Inbound: What is the funnel from the time a lead lands on your landing page to the time they use your product/talk to a sales person?
• Outbound: How many targets do you have to outreach to sign X deals? What’s the overall conversion funnel by step, and how do you optimise at each stage?
• Post sale: What does onboarding look like to get to activation? What is the support offered after to manage existing customers, upsell, and reduce churn?

Product, marketing, partnerships and sales have to evaluate what works best for businesses, specifically business buyers, of all sizes (or depending on the target) throughout the funnel.

In B2C, while there are similar considerations, but with a focus on a larger group of people — consumers!

• Product led growth (also in B2B, but will focus more on the B2C element): Ensuring the product is intuitive, seamless, and helpful to the target consumer segment.
• Marketing (product and brand): Marketing working closely with product to ensure consumers are aware of the brand (top of funnel) and moving through the funnel to becoming users / paid users of the product.
• Partnerships: Partner with a select group of partners to distribute the product — could be telcos , similar target segments.

The above is a simplification of the intensive work behind the various B2B and B2C models.

3/ So can companies do both?

An example of companies doing both at once could be when they target companies targeting developers are a segment that act both as a business (building businesses for themselves and for others) and consumer (developer tools). I believe thats why developers are such a priority segment for so many companies.

That being said, I think there’s always a leaning e.g., some companies lean more towards B2B, others to B2C, and even if doing both, they might keep the teams fairly separate and somewhat siloed to ensure they can focus on their core areas.

[1] Side note: B2B can be industry agnostic, but sometimes is built specifically for an industry, hence creating the “B2B2C” category.

• Industry agnostic: Generally cloud services, or support management software (Zendesk, Salesforce), accounting services (Xero, Quickbooks, Zoho).
• Industry specific: “Vertical Saas”. I’ve written a deep dive here previously. Think about software that is built for a gym to run on. While it the purchaser of the software is a business (the gym), the end user of is both the gym and also the gym-goer who is scheduling appointments, paying bills.