Is there any value to be gained through expanding your B2B company to go B2C? The best way to answer that question is to examine the potential for profit that such a venture holds.
The chart above displays where the revenue for a B2B supplies distributor comes from. What’s key to focus on here is the revenue from existing customers (red line) and the revenue from new customers (green line)—the overwhelming majority of this B2B’s revenue clearly comes from existing customers.
Now let’s look at a similar chart for a seasonal B2C ecommerce company.
Here, the new customers (green line) and the existing customers (red line) have switched positions. And when you compare the total revenue for both (blue lines), you can see that the B2B distributor has a more stable revenue flow than the B2C ecommerce company.
So while B2B companies tend to have a more stable total revenue flow, they acquire far fewer new customers than B2C companies.
One weak point of B2C companies, then, is their inability to attract new customers. And one advantage that B2B companies have going into the B2C marketplace is the fact that they been able to create a steady revenue stream from a sizable number of returning customers. The two types of companies are in many ways the solution to each other’s weaknesses.
So, how are those B2C companies targeting new customers?
While this answer may differ by company, one thing is certain: social media is an extremely important customer acquisition tool for B2C companies, and its importance for B2B is not far behind. According to a recent study, 41% of B2B companies and 67% of B2C companies have acquired a customer specifically through Facebook.
While all social networks are important, a few stand out: Facebook, on average, produces 30 times more customers to an ecommerce site than Twitter, and for B2B brands, LinkedIn accounts for 64% of all visits to corporate websites. The numbers speak to the fact that social media has given brands a viable platform to drive traffic to their sites, which brings up another key component of marketing today: ecommerce websites themselves.
B2C companies need a strong ecommerce site to succeed, and in recent years, B2B companies have begun to follow suit. In a global survey of 400 B2B companies, as many as 92% were already online. Due to the increase in activity in the online marketplace, these B2B brands are realizing the importance of search engine marketing and the optimization of their websites, especially for mobile devices.
Why it makes sense to invest in B2C as a B2B
If B2B companies are already investing in a strong web design, SEO, and perhaps even PPC, it makes sense to use those same channels to sell directly to the consumer as well. After all, every B2B customer is also a B2C customer (because businesses are people, too).
By selling directly to consumers and getting their feedback, B2B companies can learn the best strategies for marketing their products and, in turn, selling to large companies via ecommerce marketplaces. Everything from web design to shipping issues can be solved in the B2C space to better optimize the buyer experience in the B2B arena.
Another economic advantage that B2C for a B2B provides is the creation of brand loyalty among consumers through direct interaction. Once a brand has loyal followers, it’s easier to raise prices on the B2C side—something not as easily done on the B2B side. Therefore, there are potentially stronger profits to be made on the B2C side long-term after a strong following amongst consumers has been built.
Expanding to the B2C space is a natural progression for a B2B company that helps them learn the ecommerce space, develop brand loyalty, and create a supplemental revenue flow from a new consumer base.
Kimberlee Raymond is the Social Media Coordinator at Highly Relevant. In addition to all things social media, she enjoys keeping up with the latest tech trends and fashion blogs.