Leveraging the B2B2C Business Model

January 7, 2021


Deciding how to structure your go-to-market strategy is never an easy task and your approach will most certainly evolve over time. Most businesses fall into one of two main categories. They are either B2B (Business to Business) or B2C (Business to Consumer).

Many consumer product companies however, also have a B2B advertising revenue model. Facebook is a perfect example of this. Facebook’s consumer product is free to use for users, but they sell user data to other businesses for the purpose of advertising.

ie: “if you’re not the customer, you’re the product”

However, with so many business offerings now moving online,there is a third model that many businesses should consider.

The B2B2C (Business to Business to Consumer) model works when your company sells a product/service to another business, gaining customers and/or data from that business in the process that you get to keep and use.

Why would two businesses come to this sort of arrangement?

There could be a number of reasons, but in most cases, a well-structured set of business deals leads to lots of downstream consumers with no per-customer acquisition cost.

In fact, this is how Google got a large amount of their initial customer base. In the late 1990’s AOL had no interest in entering the ‘search’ industry and Google was still in its infancy. They struck a deal to incorporate Google search into AOL. AOL’s search began being powered by Google’s search engine, giving more and more people exposure to the Google brand and giving them exponential growth over time.

This allowed Google to build huge brand awareness with extremely low user acquisition costs.  

The B2B2C model is interesting for existing B2B & B2C businesses for a number of reasons.


Let’s take eCommerce as an example.


In the B2B2C model, the wholesaler or manufacturer reaches the final consumer by either partnering with the B2B or directly selling to the consumer. With B2B2C ecommerce, these transitions happen online, usually through virtual storefronts, ecommerce websites, and even mobile apps.

From a B2B perspective, with millennials now the biggest online spenders in the US, businesses are having to follow their lead and get as close as possible to these consumers. With customers now being more comfortable than ever with online shopping, they have come to expect a seamless buying experience. A B2B2C relationship benefits a B2B company - wholesaler or manufacturer - by aiding them in reaching a large and loyal customer base, making bulk sales, retaining credibility and lowering customer acquisition costs.

From a B2C perspective, a B2B2C relationship benefits the B2C company - retailer or service provider - by attracting loyal customers to their website and having a wide-range of high-quality products to offer. B2B2C also gives direct to consumer brands and businesses an alternative route-to-market. This is important to note because the consumer market seems to be biased more than any other toward the winner-take-all effect.

It can be a very strategic way to capture early users for startups, just like how Google did with AOL. By going through an existing business and positioning your product or service as a complementary value add for their existing customers, you can create a hybridized solution that benefits all parties involved.


Maximizing Growth Opportunities


At its core, the B2B2C model is about maximizing growth opportunities. If a B2B business wants to switch to a B2C model, they would need to create a consumer facing brand from the ground up. By instead leveraging a B2B2C model, the consumer facing elements are already in place and successful.

In a B2C business, searching for larger segments of consumers who are potential customers is made easier by going the B2B2C route. Seeking out businesses who already have customer segments that overlap with your target market is an extremely efficient way to gain an initial user base.

There are several parts to any B2B2C strategy and it does not look the same for each business. However, there is a simple process that can be followed:

  1. Identify businesses that have naturally occurring blind spots that your product or service can fill for their existing customers.
  2. Establish partnerships with these businesses that produce mutually beneficial outcomes.
  3. Over deliver on value creation once you gain access to your new target customers.
  4. Nurture these new customer relationships to create a Flywheel Effect for your business.  



Conclusion

When done correctly, B2B2C can be one of the most effective ways of acquiring users and growing your customer base. B2B2C channels also have the added benefit of being highly targeted and often yield network effects.

Making the transition to a B2B2C model gives businesses the ability to grow and provide a more personalized experience to their customers. Demand for more personalized shopping experiences is only increasing as millennial internet shoppers become more savvy.



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