4 core differences between building B2B vs B2C products

The more the merrier or the less the merrier? The major dilemma for each venture in the discovery phase is the choice between what type of customer to target and, ultimately, what product questions would arise from that choice. From go-to-market strategies to business expansion to marketing costs, let’s have a look at main consideration points when formulating the solution for your client base.

Industry Knowledge needed for a successful launch

B2B product leads need to understand the language of their product and industry, the related sales cycles, and common considerations when rolling out the product to the customers. This “know-how” is essential for the product to have a smooth sail from the start. Having the expertise in the industry allows teams to better form the go-to-market strategy and pitch for the funding with the right VC (and for the right amount). Product leads in B2B focused startups are expected to be the face of the product, lead innovation and leapfrog the competition by proactively discovering the needs of their customers. This usually involves being a thought leader not just within your organization but within an industry overall. For B2C products, data is the true king and one can go forward enough with analytics and usability data and by understanding the moves of the masses at large (considering our sample size is sufficient). 

# of Users to the Breakeven

For a B2C company to make money we need to play at volume, whereas in B2B the list of customers can be quite small, and the number of users quite low in comparison to B2C software. From that, we arrive at differences in investments in customer support, free trials, and the operational team costs overall. In B2B, product managers know and have direct access to users of the software leading to a better discovery process and feedback loop and better scoping of purchasing power. In B2C the ideal user is harder to pin down from thousands of users and one can easily get lost in too many voices.

Sales Cycles 

Sales cycles in B2B products are significantly longer, yet the ticket size is rather larger too. Usually, you have a clear overview of the competitors on the market and can pinpoint the missing features with good precision in your conversations with clients, winning from the competition. In B2B sales team can exert a considerable influence in the product roadmap, naturally collaborating with the product team, serving as a voice of the customer at every point in time.

Release cadence & support 

B2B software often comes with training, supporting documentation, and existing client migration, that being said it has a longer development cycle for each major update. B2C moves way faster and adjusts based on the volume of customers who demand particular features, forming a development continuum, often expected by users. 

To summarise:

ProsCons
B2B products
  • Lower costs overall

  • High barrier of entry

  • Lower marketing expenses

  • Higher sales margin

  • Fewer concentrated clients, making marketing research easier
  • Longer sales cycles

  • The pricing structure is difficult to determine

  • Danger of ‘custom making” each product version
  • B2C products
  • Relatively low cost of acquisition

  • Flexibility and speed of response

  • Relatively short sales cycle

  • Infrastructure for the setup and testing
  • High overhead and service costs

  • Data reliant business

  • Low barrier of entry

  • Volume-based business: longer time to profit

  • High marketing costs
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