B2B is an abbreviation for “business to business.” It is a business model in which the companies involved produce goods and services for other companies and organizations. Software as a service (SaaS), marketing agencies, and companies that produce and sell various materials are examples of B2B companies.
No matter how big or little your company is, you’ll need to buy items or services from B2B companies at some point. We’ll look at the B2B business model and how B2B companies can increase their earnings and market share.
What is Business-to-Business (B2B)?
Business to Business (B2B) is a type of commerce in which firms trade and transact with other businesses rather than with end customers. Some companies use the traded offering to improve their product or to resell it for profit.
This is in contrast to firms that sell to customers. Consider the following scenario as an example:
A company creates automotive parts, such as brake pads, and sells them to another company that constructs the full vehicle. This business is stated to use the B2B model. It is a business that provides a service to another business.
How Does Business-To-Business Work?
A B2B business offers items, services, or software to another business that can use them as raw materials. One example of business-to-business is retailers selling to wholesalers. A company that manufactures and sells car parts is likewise involved in business-to-business sales.
What Is Business-To-Business Marketing?
B2B marketing encompasses all techniques designed to raise customer brand awareness of a product or business. An example of B2B marketing is a marketing agency promoting a product via numerous advertising channels and social media.
What Is Business-To-Business Communication?
B2B communication entails the exchange of information between two entities involved in a transaction or business. It could be operational communication between two persons inside the same firm or communication between a buyer and seller business. It can also be a more informal or personal kind of communication aimed to keep two companies in touch. Communication is possible in both the virtual and physical worlds.
A Business to Business (B2B) model of operation is any business model that provides value for other businesses to consume (B2B model). Furthermore, the B2B business model differs from the B2C business model in that it focuses on producing value for businesses rather than end consumers.
B2B Vs B2C
B2C, or B2C, is a business model in which the company serves the customer and, unlike B2B, does not service other companies.
This gets us to – The fundamental sorts of business to business models.
Types of B2B Companies
Given that it accounts for the majority of global economic activity, one would expect B2B to come in a variety of flavors.
#1. Product-Based B2B Company
These are the companies that sell tangible goods that can be felt and held. As an example, consider a steel company. A steel stockist is a business-to-business supplier. They will have a large stock of various types of steel, alloys, forms, sizes, and so on. They can be called by a business and asked for exactly what they want, and it will be supplied. As an example, consider a furniture supplier who sells office furniture.
#2. Service-Based B2B Companies
B2B companies that provide services are similar to those that provide products. Accounting firms are an example of business-to-business services. Accounting costs tens of millions of dollars per year for a large organization and is a service supplied to a B2B company. There are also a variety of other business-to-business services available, such as telemarketing, advertising, consulting, litigation, graphic design, and so on. These services may be delivered both online and offline.
#3. B2B Software Companies
Then there are the more modern software companies. It can include companies that sell software that is specifically designed to meet a specific task or demand. Invoicing software, CRMs, accounting software, databases, and other similar applications are examples. Hosting, security, maintenance, and customer support are all aspects of software-based B2B organizations.
B2B includes all of the diverse things that are sold, such as goods, services, software, and digital products, as well as the various ways they might be sold, such as physically, online, and so on. Business-to-business sales are distinguished by the fact that one organization purchases from another.
Business-to-Business E-commerce
So, business-to-business e-commerce is the exchange of goods and services via internet channels. B2B e-commerce, and e-commerce in general, are becoming increasingly popular as technology advances. B2B e-commerce is exemplified by Amazon, the online marketplace for commercial items, and Upwork, the job search portal for freelancers.
This gets us to – The benefits and drawbacks of the B2B model.
Benefits of The Business To Business Model
#1. A Steady and Predictable Market
Businesses that cater to other businesses abound in the B2B sector. This means that sales and purchases are made on rational rather than emotional grounds. This increases predictability.
Furthermore, whereas a buyer in B2C may or may not be a return client, sales and contracts in B2B tend to continue longer – at least a year or more with guaranteed prices and terms established between the two sides.
#2. Increased Customer Loyalty
Because most B2B negotiations and contracts endure for years, it leads to the establishment of a much better evolution of supply chain management. It encourages collaboration in distribution channels, which contributes to high levels of client loyalty.
Because B2B transactions are both expensive and time-consuming, delivering consistent and reliable service can help build loyalty. B2B loyalty is a given as long as you remain trustworthy and consistent.
#3. A Trillion-Dollar Business
The B2B e-commerce sector was one of the fastest-growing industries in 2018, surpassing the trillion-dollar threshold in March 2019. In sum, this accounts for only 13% of total B2B sales. This is a tremendous motivation to enter into the B2B market, as this growth is projected to continue for the foreseeable future. The market is ready for emerging enterprises to capitalize on expanding sales and demand for B2B solutions and goods.
B2B Model Drawbacks
#1. Reduced Consumer Base
Because the B2B market mostly works with corporations rather than individuals, there are fewer prospective buyers and sellers at any given time. Selling niche or specialist items and services, as opposed to serving the consumer market, further limits your serviceable and potential clientele.
#2. Marketing Difficulties
Marketing to other businesses is more difficult than selling to regular customers. While B2C companies use social media and content marketing to attract clients, B2B companies must plan carefully before implementing any marketing strategies. Companies are more critical of the brand image and status of the other businesses with which they engage. This means that B2B companies must invest in skilled employees in order to build polished and well-defined marketing programs.
With the benefits and drawbacks of B2B enterprises out of the way, let’s look at examples of B2B companies to have a better understanding.
Examples of B2B Companies
As previously said, the majority of companies, whether B2C, C2B, C2C, or even B2B, rely on at least one other company or business to function. This means that there are a lot of B2B companies out there that serve other businesses.
These are five instances of B2B companies:
#1. WeWork
WeWork is a real estate and software startup that helps businesses and entrepreneurs find workspace.
The company is an excellent example of a B2B firm because it is essentially a corporation that sublets office space to other businesses.
#2. Slack
Slack, which stands for ‘Searchable Log of All Conversation and Knowledge,’ is an online platform that functions as a chat room with additional features, making it easier to share content and messages from the same platform.
This is a business that offers a communication platform as a service to other enterprises.
#3. LinkedIn
LinkedIn is half social media and part business-to-business platform. The use of social media is well-established. Yet, LinkedIn also serves as a hub for most firms to stay up to date on business happenings.
LinkedIn assists other firms in informing them about market concerns and in digitally getting to know people in their sectors.
#4. IBM
International Business Machines (IBM) is a multinational software and technology corporation that offers other companies hardware, software, and cloud-based services.
Though it has dabbled in the consumer market, the company’s major operations have always been in delivering services to other companies, making it one of the largest and oldest B2B companies on our list.
How Can B2B Companies Increase Their Market Share?
Operating a B2B business is difficult, but there are strategies to increase income and market share.
#1. Participate in supply and procurement exchanges.
A business purchases the goods and materials it requires to operate profitably through the processes of supply and procurement.
Many firms struggle with cost-effective sourcing. Several departments and locations within larger corporations may have separate budgets and agreements with numerous suppliers. As a result, one department may pay $3 for a lightbulb while another pays $30.
Larger corporations and public sector organizations can use online supply and procurement portals to get pre-approved, pre-priced lists of goods and services. If you sign up for one of these e-procurement sites, your company will be accessible to buyers and specifiers at some of the top companies in the world.
#2. Employ keyword-specific marketing.
B2B companies place a premium on high-quality websites and high-ranking search engine results. Choose targeted keywords that your competition may be overlooking to maximize your website’s ranking potential.
According to the SEO marketing website Ahrefs, for example, if you’re a broker competing for the keyword “business loan,” your site would require 202 backlinks from third-party sites to rank on the first page of search results.
There are over 640 related “business loan” keywords that may be useful to you, such as “small business loan,” “business loan calculator,” and “beginning business loan.” To generate traffic to your site and develop your site’s standing with Google over time, try using successful terms with less competition.
#3. Experiment with direct marketing tactics.
Consider developing or purchasing email lists of decision-makers in the types of companies you target to assist your sales team in generating leads.
CRM software can streamline email marketing campaigns and follow-up. Maintain monthly contact with decision-makers to familiarize them with your organization and how it has aided other clients. You’ll build familiarity and trust over time, and these campaigns will begin to deliver strong, closeable inbound leads.
#4. Make use of lead generation websites.
Lead-generation websites, while not ideal for every sort of B2B organization, offer extensive buyers’ guides on a wide range of business goods and services.
Visitors can acquire two or more bids from vendors on these websites, who then sell these leads to properly certified B2B companies. When a sales representative contacts these prospects, they are already aware of the client’s budget, needs, and timetable.
Lead-generation sites provide two types of leads: exclusive leads that only you receive and shared leads that you and other companies can pitch.
Where Do B2B Companies Fit in the Supply Chain?
If you want to know where B2B companies fit into the supply chain, you must first grasp the three economic sectors: primary, secondary, and tertiary.
#1. The Primary Market:
The primary market is only B2B. Farmers and oil and gas companies are examples of primary-sector companies that harvest or produce basic resources.
#2. Secondary market:
The secondary market is virtually entirely business-to-business. Companies in the secondary market produce goods. Companies add value to the raw materials they purchase on the open market by transforming them into something different. Consider producers who convert oil into polymers or jewelers who cut and polish diamonds. Automobile manufacturers and construction firms are examples of secondary-market assembly companies. The B2C model is occasionally used by secondary-market companies, such as farmers who sell their wares at a market booth.
#3. Tertiary market:
The tertiary market is a hybrid of business-to-business and business-to-consumer models. Some companies in the tertiary market provide the items or services that businesses or consumers require. Plumbers, internet retailers, floor installers, supermarkets, commercial loan brokers, home renovation professionals, teachers, and the hotel industry are among those involved.
What are Some Examples of B2B Tertiary Markets?
There are certain tertiary companies that simply deal with business-to-business. They provide the items and services that other customer-facing tertiary companies require in order to perform their tasks. Here are a couple of such examples:
- Plumbing supply companies sell the tools that plumbers require.
- Retailers buy POS systems from point-of-sale (POS) suppliers.
- Lenders are needed by commercial finance brokers to fund small business loans, equipment leasing packages, and asset-based loans.
- Companies can survive and grow thanks to management and business consultants.
- Credit card processors are required by retailers to handle client payments.
- Companies require advertising agencies to assist them in increasing sales.
- To manage payroll and streamline taxes, businesses use payroll providers and financial services companies.
- Lead-generating services are required by businesses in order to generate money.
- Organizations require insurance carriers to protect their employees, customers, and themselves.
Conclusion
The B2B model is a straightforward business model. It solves problems or provides services to other businesses while also running its own.
All of the B2B companies listed above are tackling pain problems that other businesses are experiencing and have developed a B2B business solution to help solve those pain points. And all it takes to start one is to identify market shortages at any moment and assist in providing a remedy.
Related Articles
- WHAT IS B2B MARKETING: Meaning, Examples, Types, and Strategies
- Business-to-Business (B2B): How Does It work?
- What is B2B Sales? 15 Best Strategies for B2B Sales Lead
- B2C MARKETING: Meaning, Example, and Strategies to Use
- E-Commerce Explained: Types, Examples, And Advantages
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