To become successful in the b2b industry, you must have enough idea about the business models that are often practiced in the marketplace.
There are multiple types of models that are often used by business owners based on the product category and industry type. Some of the common types of business models are –
- B2B Product-based model
- B2B Service-based model
- B2b SaaS(Software as Service)
- B2B Marketplace
- B2B Wholesaling
- B2B E-commerce
In this blog, we will discuss all of these models more elaborately for better understanding. Also, we will talk about the b2b sales funnel, marketing strategy, and more, so that you can choose any of the models according to your targeted market and products.
So, let’s explore the blog and know the whole picture of the b2b world.
What Does B2B Mean?
B2B is Business-to-Business. It is a way of doing business in which other companies are sold directly to other companies rather than to an individual person.
In a business-to-business scenario, the customer is normally a company that requires tools, services, or solutions in order to operate its business, to become more efficient, or serve its customers in a better way.
This contrasts with B2C (Business-to-Consumer), where businesses sell their goods to normal citizens.
An example is the sale of a software platform to another company that is B2B. When a customer buys a shirt, this is B2C even though the clothing brand is selling the shirt.
B2B is a very important thing as it drives the business-to-business of a number of industries.
It supports other businesses and helps them grow and work normally by providing IT and software services, manufacturing, and wholesale.
That is why B2B is important:
- It establishes long-term, strategic alliances.
- The transactions are usually greater in amount and continuous in nature.
- It facilitates business infrastructure in markets.
B2B selling would be the selling of any type of cloud platform, office equipment, or consulting services to help businesses achieve their objectives.
To survive in the professional circles of business interchange, one has to get to grips with this model.
How Does a B2B Business Model Work?
The groundwork of a B2B (business-to-business) business model is that the goods or services being sold are sold to other businesses rather than to consumers.
B2B sales usually have a larger number of transactions and involve more decision-makers as compared to B2C transactions.
This is how the traditional B2B works:
- The business recognizes that it has a requirement: This may be software, materials, equipment, or a service that will support the operations.
- They seek answers: The customers will get information on the various features, pricing, and reliability of the various providers.
- There are several individuals: In many cases, other departments (procurement, finance, operations, and others) may get a say in the decision.
- They want proposals or demos: The B2B sellers offer in-depth information, a free trial, or a product demonstration to demonstrate their worth.
- Contracts and negotiations are made: Pricing, conditions, and service agreements are done and personalized.
- An extended relationship: It is a common situation that a B2B relationship can be a long-running relationship because support, upgrades, and new orders are possible.
Since B2B sales are more revenue-oriented and complex, the sales cycle is also longer than that for B2C. This is not only a matter of fast sales, but also trust and the justification of actual business issues.
The main features of the B2B model are:
- Increasing sales cycle
- Greater amounts of transaction value
- Many decision-makers
- Having a relationship-driven attitude
- Long-term value orientation
The B2B companies prosper by establishing themselves as partners, not sellers. It is all aimed at assisting other businesses to develop. And become more effective in their operations, or be able to deal with their clients in a better way.
So, a B2B model consists of a direct explanation of solutions to a problem and the development of good relationships. Also, value creation in the long run for other businesses.
Common Types of B2B Business Models
There are multiple types of b2b business models available that are structured based on the industry and market purposes.
In this section, we will talk about some of the core business models of b2b, such as product-based model, service-based model, b2b SaaS, b2b marketplace, b2b wholesaling, and b2b e-commerce.
B2B Product-Based Model
A B2B product-based model refers to a type of business that focuses on selling products to other businesses. These products can be manufacturing goods, raw materials, automotive parts, industrial equipment, etc.
The most common types of business that are under this type of business model are supplies and logistics, technologies and hardware, wholesale and distribution, manufacturing and industrial, etc.
Here are some of the core factors of a b2b product-based business model –
- It’s highly focused on the needs of the business. Most of the products are made for commercial use and are specialized & customized based on special business requirements.
- A product-based business comes with a larger number of orders and high-value transactions because most of the orders are confirmed in bulk by the customers.
- Sales cycles are longer in this type of business model. Factors like evaluation of volume, negotiations, and the approval process impact this business model.
- This business model more approaches building a strong relationship between the provider and client. Because the shipping and order process often runs through a regular cycle for a longer period of time.
B2B Service-Based Model
B2B service-based models refer to the type of businesses that are involved with providing specific and specialized services to other businesses.
Some of the common types of b2b services are account and financial services, IT support services, human resources and recruitment services, b2b marketing and advertising services, legal services, etc.
- The target customers of the service-based companies are organizations, institutions, & government agencies, who are specifically looking for customized service for different purposes.
- The core goal of the service-based provider is the productivity, task efficiency, & profitability of the client’s business. Because service-based b2b are involved with the task management sectors of the clients.
- Frequent customization and changes in the structure of the pricing are another core factor of this business model.
- It’s highly determined to build strong relationships with the clients. Because consistent communication with the clients regarding support and solutions creates connections.
B2B SaaS (Software as a Service)
B2B SaaS means a business where the software is sent out online in order to assist other companies in smoothing out the processes, data, or increasing productivity.
Rather than having to buy and install software on the company computers, the users can log onto a web browser and use it.
In many cases, the users may have to pay a monthly subscription or an annual subscription to put it into use. It is one of the most adaptable and cost-efficient models for both its users and providers.
Technology, finance, HR, healthcare, eCommerce, and digital marketing are some of the industries where B2B SaaS is most frequently employed.
Well-known ones are project management-focused tools such as Asana or Trello, CRMs such as Salesforce, accounting software such as QuickBooks, or email marketing tools such as Mailchimp.
This model enables remote working, decreases hardware expenses, and speeds up performance.
- You can access the service using any gadget connected to the internet.
- Regular updates and the release of new features
- Balance as the needs of business increase easily
- The ability to be integrated into other business software
- Onboarding and customer support
B2B Marketplace
A business-to-business marketplace is a business on the internet that allows many sellers and buyers to meet at a single point.
Organizations would use these sites to procure raw materials, sub-components, or services among other vendors.
In comparison to traditional procurement, where the process might be uninteresting and also disjointed, B2B marketplaces make the process of sourcing easier since one can find a variety of choices with clear price tags, vendor descriptions, and real-time availability.
The manufacturing, construction, agricultural, logistical, and wholesale trade industries become dependent on such platforms.
They are normally the purchasers of goods such as industrial equipment, chemicals, electronics, packaging material, or office furniture.
Such may also be niche-exclusive or may cover a wide span of categories. They allow more effective and efficient purchases as well as good management of the vendors.
- The possibility of using the services of numerous vendors under one platform
- Clear product displays at prices
- Shipping and bulk ordering
- Comparison of vendors and customer reviews
- In-built invoicing and transactions software
- A neat contact between seller and buyer
- Saves time and overhead on sourcing
B2B Wholesaling
B2B wholesaling demands the sale of goods in bulk amounts by a wholesaler to a retailer or another company.
The wholesaler buys them more and sells them at a higher price, although at a cheaper price than retailers do.
The model is important in supply chains, which ensure that the businesses in a supply chain get access to products that are ready to sell, without involving the manufacturers.
Such industries as consumer goods, clothing, electronics, food and beverage, beauty, and home goods count heavily on this model. The usual goods are clothing, packaged food, mobile accessories, office materials, and personal care products.
Wholesalers are essential to retailers since they ensure that they stock shelves at all times and at a cheaper price.
- The model is capable of measuring up businesses and offering products at fair prices
- Usually involves the storage and transport of goods
- Good supplier-distributor relations
- Specialized sales persons or web-based ordering portals
- Assists the retailers in boosting profitability
B2B E-Commerce
B2B e-commerce is a business-to-business electronic commerce platform where the sale of products or services is done between one business entity and another using online businesses.
It enables its smooth transactions, which have attributes such as customized prices, bulk orders, and customized bills.
B2B e-commerce is faster in buying processes and automated as compared with traditional ways of sales through phone calls, face-to-face meetings, or through manual orders. Industrial equipment, IT and software, office supplies, safety gear, and healthcare are some of the most common industries to use this model.
Businesses use the B2B e-commerce platforms to make purchases such as hardware tools, software licenses, uniforms, or any medical instrument.
Also, the business-specific features of such websites may be things such as reorders, account management, and connecting with ERP systems.
- It enhances purchasing effectiveness, lowers manual errors, and allows the operation to be done 24/7
- Business-specific access to online stores
- Large-scale order feature and repeated ordering
- The built-in shipping, inventory, and CRM systems
- Improves visibility and tracking of orders
- It increases customer satisfaction due to convenience
How B2B Sales Work
In B2B sales, one business buys goods or services from another and is usually considered a business-oriented purchase.
In contrast to B2C (Business-to-Consumer), B2B sales are usually characterised by a greater number of stakeholders involved in decision-making, a longer decision process, and more complex negotiations.
These sales would normally be aimed at long-term partnerships and not at flash-in-the-pan sales.
Some of the major industries that depend on B2B sales are manufacturing, software, healthcare, finance, logistics, and consulting.
Typical examples of B2B products and services are licenses to software, machines, bulk raw materials, business consulting, and IT solutions.
To get a better idea of how B2B sales work, you should begin with the sales funnel and sales channels that businesses utilize to seal the deal.
The Sales Funnel of B2B
A B2B sales funnel describes the phases that a business buyer has to pass through, again learning about a solution, through becoming a paying customer. Both steps demand communication and strategies, which are specific.
1. Lead Generation
B2b Lead generation process means the act of getting possible business customers who could be interested in what you are selling or offering.
- Target business segments identification
- Content marketing, paid advertisement, SEO, LinkedIn, and webinars
- Obtaining contact details with the above by lead forms
2. Qualification
When the businesses have collected leads, they need to filter them to make sure that they meet the ideal customer profile. This is because it prevents time wastage on using unqualified leads.
- Economic measurement, Business size, Budget, and needs
- Employing BANT (Budget, Authority, Need, Timeline) or the like
- Focusing on the leads with the most potential so as to follow them up
3. Proposal and Negotiation
When a lead is qualified, the seller offers a customized solution, which often comes as a proposal. Negotiations take place in order to inscribe finer details like the price, terms, or deliverables.
- Providing product demonstrations or advising
- Business needs-based proposal customization
- Negotiating rates, volume discounts, or the term of the contract length
4. Closing and Onboarding
Once the deal is agreed, the parties close the deal. In B2B, onboarding is vital to make sure that the buyer is familiar with a product or service and that s/he maximizes his or her value.
- Signing contracts and making the payment terms final
- Equipping training, documentation, or setup support
B2B Sales Channels
The choice of sales channels that are used by B2B companies in reaching their customers depends on the complexity of the company, the complexity of the product or service, and the complexity of the target market/audience.
1. Direct Sales Departments
They are inside sales representatives who contact the prospects and process the entire sales funnel.
Direct sales on an industry level are common in the consultancy, software, and machinery industries. Goods marketed in this manner can be enterprise software, big equipment, or individual business services.
- Individual communication and building relationships
- Comprehensive product knowledge
- Suitable for sophisticated, big-ticket products
2. Channel Partners
Channel partners are external businesses that sell your product or service on your behalf. They can be consultants, resellers, or distributors.
It is an IT, telecom, and manufacturing model. A good example is the way a hardware company operates. It might use resellers to be able to cover more markets in its expansion.
- Training and support of the partner are required.
- Rev share, or commission-based
3. Online Platforms
The online mediums are websites of the company, business-to-business online services, and online markets. Customers can investigate, compare, and buy on the internet.
Office materials (office supplies), electronics, and packaging materials industries are examples of industries that are making good use of the channel. The products that they will offer are the printers, bulk stationery, and packaging boxes.
- 24/7 access and convenience
- Automatized deals and following of orders
- Great to do on repeat, lower-complexity purchases
B2B Marketing Strategies
Business-to-Business marketing involves getting access to businesses rather than consumers.
In opposition to B2C, which aims at triggering emotion, B2B marketing is based on logic and appeals to people of business who seek investment money and returns, efficiency, and profitability in the long run.
They need to apply keen but focused business-to-business techniques that directly address the needs of other businesses in order to succeed in this field of business.
Content Marketing B2B
Nurturing is heavily dependent on content marketing for better b2b lead generation service. The B2B buyers love good research, therefore, informative and helpful content is a must.
SaaS, finance, IT, and logistics industries utilize content as an element of expertise. Some of the popular types of content are blog posts, whitepapers, webinars, ebooks, and case studies.
The reason behind its success is:
- Ensures a relationship with prospective customers
- Assists in SEO and site rank
- Assists in part to cultivate the leads during long sales cycles
- Comes up with QSIT thought leadership
Account-Based Marketing (ABM)
Account-Based Marketing is a prospective strategy in which the marketing and sales divisions collaborate to target business accounts with a high revenue potential.
Rather than a fisherman with a large net, ABM aims at narrowing a campaign by targeting only one prospect.
This approach is common in such business fields as software, enterprise services, and B2B consulting, where deals are large and decision-making is multi-stakeholder.
Why It Works:
- Targets potential customers with high potential
- Improve congruency between selling and marketing.
- Increases the value and percentage of wins
- Saves marketing wastage
B2B SEO Lead Generation
SEO (Search Engine Optimization) is useful in enabling B2B companies to attract organic traffic via search engines.
Unlike profitable advertisements, SEO qualifies to generate long-lasting value due to the fruits it bears as far as bringing in relevant business leads is concerned via optimized content and landing pages.
Examples of industries that can utilize SEO in capturing leads that have intent to and are searching in their respective industries online include manufacturing, Saas, and professional services.
Why It Works:
- Drives sustainable, long-lasting traffic
- Reaches seriously interested decision-makers
- Cuts the cost of acquiring the leads
- Improve brand awareness
What is the difference between B2B and B2C?
The greatest distinction between B2B and B2C lies in the target group and the mechanism of selling.
B2B is aimed at business companies, and B2C is aimed at individuals.
Customers want efficiency, B2B ROI, and business problem-solving. The nature of sales is more reflective and complicated, and involves many decision-making individuals.
B2C buyers, on the other hand, are motivated by emotion, personal need, and desire in making purchase decisions.
Key Differences:
- B2B is slow and logical B2B
- B2C is pressurizing and emotional
- B2B is a problem of a multiplicity of stakeholders
- B2C is targeted at individual likes and dislikes
These are some of the common B2B businesses:
- Salesforce – A CRM platform used by businesses in the management of sales and customers.
- Slack – a collaboration tool that helps communicate on work and team projects.
- Shopify Plus – A network that serves the interests of widespread businesses.
- HubSpot – This is a growth platform for inbound marketing and sales software.
- Zoominfo – Analytical-based prospecting and sales intelligence B2B platform.
Advantages of B2B Business Models
B2B enterprises have some benefits in comparison to B2C:
- Increased average order value – average order value in the case of B2B is generally large orders or bulk buying.
- Long-term relationships with the clients – the B2B transactions are based on retention and continuous partnership.
- Consistent revenue- the subscription or long-term contract-based revenue earner types decrease the variance of revenue realization.
- Niche expertise – B2B firms are also likely to dominate a highly specific sector with a few rivals.
These are the advantages of the B2B model that make it a good option for companies oriented on development, sustainability, and revenue adaptivity.
Final Words
We have come to the end of our discussion about the b2b business model. We hope that you got a complete idea about the types of b2b business and how the b2b models work, focusing on the market and customer type.
Our core discussion parts were commonly used models such as product-based, service-based, wholesale, e-commerce, and more. Also, we have told you the sales funnels of b2b business and marketing strategies. So, before choosing the b2b model, you must understand who your target customer is and which market you are targeting right now.
