There are several different models of B2B business. There are Product-based B2B businesses, Buyer-centric B2B businesses, and Buyer-biased B2B businesses. Ultimately, you need to decide which business model best suits your business. To get started, follow these 3 steps: (1) Choose a business model that is aligned with your business goals and customer base.
Product-based B2B business
A product-based B2B business offers a product or service to other businesses. This business model typically requires a higher initial investment and overhead costs, but can provide significant revenue potential. For example, a product-based B2B business might provide marketing consultancy services to a company that sells computer equipment.
A product-based B2B business can be either online or offline. Online businesses usually have a lower overhead. The downside is that some software is expensive. In addition, a brick-and-mortar store may have higher overhead. For a B2B business, service-based businesses generally have lower overhead.
Another advantage of a product-based B2B business is complete pricing flexibility. As long as you know what your customers need and can communicate these costs clearly, you can compete on price. If you need to raise prices, you can simply communicate that you are raising your prices. In the short-term, this type of business model offers the potential for rapid growth.
For example, Alibaba started out as a small online marketplace connecting Chinese exporters. Since then, Alibaba has become one of the most popular B2B ecommerce businesses in the world. Another well-known B2B conglomerate is General Electric. This company sells a wide range of products and services to companies across different industries. Some members of the company are even Nobel laureates, such as Irving Langmuir and Ivar Giaever.
Buyer-centric B2B business
In business-to-business, one strategy is to be buyer-centric. This means you sell goods or services directly to businesses. This business model is best for companies with a low initial cost, and requires little ongoing support. However, it does have its disadvantages. For example, in some industries, a buyer-centric business model will not be profitable over the long run. Some examples include Home Depot, OfficeMax, and Craigslist.
B2B buyers are increasingly empowered to make purchases online, and 74% of them research and complete their work-related purchases online. As a result, they expect a B2C-like experience from suppliers. To meet this demand, B2B eBusiness professionals must emulate the best practices of online shopping experiences, and incorporate the best of consumer-centric business practices. These principles include price transparency and immediacy. B2B buyers also demand personalization and convenience. Moreover, the process should be automated.
Buyer expectations have changed significantly in the past few years. Today, two-thirds of a B2B buyer’s journey is completed through digital channels, including websites, blogs, and social media. The proliferation of choices and distrust for advertising are driving this change. By focusing on buyer experience, B2B businesses can improve their sales and profitability.
Buyer-biased B2B business
Buyer-bias in B2B transactions is a phenomenon resulting from irrational thinking and decision-making. While irrationality may not seem a big deal to consumers, it can impact purchasing decisions. In other words, buyers make irrational decisions based on what they perceive as value or quality. For example, in a restaurant, a buyer may pay more for Pembrokeshire potatoes than they would for an average potato.
The problem arises when decision-makers are confronted with a plethora of options. As a result, many B2B buyers face a decision paralysis. However, buyers must be able to compare options. Since there is usually more than one good option in any given industry, it’s essential to show why your business’ offerings are superior to your competitors’.
B2B sellers must engage with buyers at an early stage. They can do this through ABM strategies and by offering useful content in exchange for contact information. According to Forrester research, those who help shape the buyer’s vision are likely to win 75% of subsequent purchases. But a buyer’s need for a product is often not definite, and waiting until the buyer has defined his or her needs could result in missed opportunities.
In B2B sales, emotion plays an important role. While people are generally able to explain their actions, they often can’t understand the reasons behind their actions. Moreover, emotions are often unconscious. A buyer’s decision may be based on emotion alone, and a brand’s ability to create positive sentiment could help distinguish them from competitors.