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What does B2B and B2C mean and why should I care?

What does B2B and B2C mean and why should I care?

Unless you’re in business for yourself, you probably don’t need to worry about it. But if you are contemplating a business venture, B2B means “business to business” and B2C means “business to consumer”. B2B and B2C are ways of defining your customer.

Small businesses need to know who their customers are, because that will determine how you reach them and how you sell your product or service.

In a B2C relationship, businesses sell directly to the consumer, and that often means selling a little to a lot of people. It means that you will put significant effort into reaching new customers and retaining existing customers through advertising, promotion, marketing communications and customer relationship management. This effort is typically shown as a funnel – at the wider end, you create awareness of your product or service, and the narrow end represents the consumer’s purchase decision.

In a B2B relationship, your customer is another business – maybe you’re providing them with extra production capacity at peak times, or maybe you’re selling products to a wholesaler or to government. Think of a bookkeeping service that takes your folders of receipts and invoices and delivers financial statements, or the company that supplies and services your coffeemaker. Finding those customers, who are fewer and larger, takes a different kind of strategy, relying heavily on tenders and networking.  For the latter, that could mean joining business associations, service clubs, or hiring business development staff. While writing fewer invoices and getting bigger cheques is attractive, courting and keeping larger customers may require discounts, more flexible payment arrangements, and more “care and feeding” of the relationship.

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Community Futures Big Country is your local resource for business development and education. If you have questions about starting, buying, selling, or growing a business, we can help.

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