Back to basics! What is B2B sales? What is business-to-business? What does all that actually mean? What should you think when developing your B2B sales? Read this and learn!
Source: Forrester Research US Online Retail Forecast, 2011-2016
What is B2B sales?
B2B sales is short for business-to-business sales. It refers to an activity where a business is selling its products or services (=creating value) to another business. It is distinct from B2C or business-to-consumer sales, which mean sales to individuals rather than businesses.
The key features in B2B sales are the following:
- Larger average transactions than in B2C. Business-to-business transactions are often thousands of dollars and can reach millions or even billions. A shop that sells shoes, for example, buys the shoes from a wholesaler 1000 pieces a time but sell them one by one (or rather two by one). That’s why B2B sales are usually bigger than B2C sales.
- Professional decision-making. The average shoe-shopper buys maybe two pair of shoes a year and has a billion other things to do as well in their life. They are happy to find a fitting shoe and go on with their lives (well, some women might disagree on their level of professionalism when it comes to buying shoes but you get the point). But when a B2B sales person goes to meet a shoe shop owner to sell them some shoes, they are expected to face a lot more knowledgeable team of people who’ll ask tough questions on the materials, supply chains and corporate responsibility. B2B buyers are experts so a B2B sales person have to be an expert, too. In B2B sales you have to find the right arguments to convince your counterpart.
- More stakeholders. Especially in the case of bigger deals a business-to-business sales person has to convince not only one but many different stakeholders. Often these stakeholders even have contradicting priorities. Someone working in marketing wants the shoes to be from a well-known brand and someone in the purchasing wants to make sure they are as cheap as possible. In B2B sales you are most often dealing with more than one buyer from the same account. Charming one person is not enough to close your deal!
- Longer time-to-purchase. On average business-to-business sales take longer to close. When you are buying new shoes, you just go in the nearest shop and buy them. On the other hand, when the shoe shop bought their last batch of shoes, selecting which shoes, which colors and how many they would buy involved decisions from CEO, marketing manager, store manager and a consultant and litres of coffee and dozens of Powerpoint presentations and Excel sheets. Don’t expect to get big deals from your new B2B customers. Building trust takes time and you’ll probably be handling smaller things until your new customer trusts you.
- Less prospects and customers. B2B customers usually have a lot higher LTV (life-time-value) than B2C customers. The pool where a B2B business can draw new customers is also smaller. When an underserved shoe-shopper gets tired of waiting and leaves angrily, another comes in (at least up to a point). However, there are a lot less shoe shops than there are potential shoe shoppers. This means that B2B customers must be taken good care of. You don’t want to burn bridges with any of your prospects and especially you don’t want to lose your current customers. Getting more is usually a lot more cumbersome and expensive than in B2C sales.
Some would also say that B2B buyers are more price-sensitive. I’d rather argue that they are more value-sensitive. B2B buyers don’t necessarily look for the cheapest alternative but they surely look for the best one to fit their needs.
What is the best alternative depends on a lot of factors of course and that’s exactly why a B2B buyer has the team of professional decision-makers that the B2B sales person has to convince (see earlier)
B2B, B2G and B2C sales
Sales can of course be categorized in various different levels. An often used categorization is made based the target of the sales activity. Categorizing sales per sales target gives us three different kinds of sales activities:
- B2B sales; business-to-business sales is sales made for other businesses.
- B2C sales; business-to-customers sales is sales made for consumers.
- B2G sales; business-to-government sales is obviously sales for governments or public sector in general
Digging deeper we can find C2C or consumer-to-consumer sales, such as eBay and even C2B sales, such as [Fiverr](https://fiverr.com. Some may argue that G2G sales is still a big thing, too. However, in this post, we’ll simplify things and say there are two kinds of sales; B2B sales and B2C sales.
Overall business-to-business is the bigger of the two. Still, while walking the streets of any city you’ll mostly see stores clearly made for consumers. Why is that?
While B2C is often more visible, those shops have rented their premises, marketed their services, planned and bought stuff from wholesales businesses before any of those shops can be opened (profitably, at least). Also, a lot of those businesses have bought a lot of the similar services before they could serve the shops.
In many legislations, B2B marketing (or sales) is not as heavily controlled as B2C marketing. For example it could be that it’s not allowed to send marketing mail to a consumer customer without an opt-in but it would be for a business customer. Be aware of the current laws regarding marketing activities!
B2B business can be thought to be the backbone of the economy. Before anything can be sold to consumers, a lot of B2B sales has happened. Wholesellers, transportation companies, raw material companies and a lot more just to create the shoe and then a lot of business services, accounting, marketing, HR and consulting to sell them profitably.
This is exactly why we at Leadfeeder just love B2B sales.
Ps. ICYMI: our tool Leadfeeder shows you which B2B companies visit your website. It’s a valuable source of information for any business-to-business sales person. Read more and sign up for your free trial here.