What is Business-to-Business (B2B)?
Business-to-business – “B2B” – refers to commerce between two businesses or companies rather than to commerce between a business and an individual customer. Transactions at the general level are usually business-to-business (B2B) while those at the retail level are most frequently business-to-consumer (B2C).
The dollar value of B2B transactions is significantly more high-priced than B2C activity because businesses are more likely to purchase higher priced goods or services and purchase more of them than customers are.
How Business-to-Business Selling is Different
Selling to a business is different from selling to an individual customer. Key sales and marketing differences for B2B transactions include:
- Selling sometimes requires participating in a bidding process by responding to a purchaser’s request for proposals. On the business-to-consumer side, this relates to asking various auto dealers to provide their best project on a specific model.
- The decision-making process on a purchase can take days, weeks, or months, depending on how the purchasing business works and the size and nature of the order.
- Organizations often make purchasing decisions, so each member needs to be educated and “sold.”
- The dollar value of goods or services sold is much higher than on the consumer or retail level, so the buyer needs to take measures to minimize risk. That sometimes involves demanding a product model or customization.
Business-to-Business Doesn’t Exclude Business-to-Consumer
A company selling to businesses can also market directly to customers. A stone manufacturer selling its grains in bulk to costume jewelry manufacturers might also package them in smaller quantities sold to crafters at craft stores. A phone manufacturer can sell in bulk to companies or one at a time to consumers buying online or at an office supply store. A firm that provides health and wellness consulting to corporations can also advise people one-on-one or in group presentations.
It’s About the Customer, Not the Transaction Size
While B2B transactions often involve high prices and volume, they can also happen on a much smaller range when a small business sells products or services to another small company. The trademark of business-to-business commerce then is the participants – two firms rather than a business and a customer.
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