5 challenges in doing a B2C startup
I didn’t realise it at first, but doing B2C startup is in so many areas different then B2B. Of course there are pros and cons for both of them. Over time we developed AIRA we got a very clear picture on what differentiates a B2C startup, what problems you will face and how to tackle them.
1. Customer behaviour
When you do B2B you should solve one of the following problems: A) Save your clients money or B) help them to make more money. Every B2B startups falls somehow in this cluster. It is because companies function in their basic concepts pretty easy. You get some resources, add value and sell it for a higher price.
When you do B2C your customer goals and needs will have so much more variety. You have some weird and hard measure things like entertainment, social behaviour and self-affirmation. Also the buying center of your customers is very hard to understand. In companies you often have devision you can approach. To understand private customers why, when and where they buy your things is much harder.
2. Feedback
To get you product successful and get some kind of product market fit feedback is one of the most important things. During the development process of a B2B product you will often have a pilot client to work with. In B2C it is also great to have a core community to collect feedback. You should definitely keep in mind the honesty curve. If you have a free product people you know will give you the most honest feedback because they care about you and your future. If you have a paid product people you don’t know will give you a very honest opinion on wether your product was worth the money.
Also keep in mind the variety of backgrounds and intentions your users have. You really need to evaluate feedback. I personally had the feeling that some people just like bashing products and writing super bad comments. You will never develop a product which everybody likes so find people you can trust and which are giving you honest and constructive feedback. We also figured interviews are much better for the beginning because people feel more appreciated and will put more effort in the feedback they will give you.
3. MLP over MVP
When you solve the problem of a company (Saving them money or helping them to earn more) your basically good to go. There is no big need for over excitement about your product it helps when it just works. You can figure out the design and user journey on the go. I
personally have the feeling that in B2C your customers are not that patient. When we first launched the beta version of our financial news chatbot AIRA we still had some small bugs in it. So whenever somebody had a break up or something similar our user was gone. It makes sense because on B2C people often spend spare time to use your product but in B2B people are getting paid to use your product. So a break up there is of course bad but they will ask to fix you and continue using it most of the time. So to solve this problem you really need to deliver a Minimum Lovable Product. Focus not only on the function but also on the experience your users have when using your product.
4. Marketing and Communication
In B2B you will have direct sales most of the time. You will most likely have a sales team which is searching the web and cold calling companies. When doing a B2C startup you want word of mouth to happen. This network effect can be really fast and powerful in scaling your business. Challenging is just that it is super hard to approach and to forecast how you reach this.
There is no super strategy or magic formula to insure exponential growth. You will need to test and measure different channels and campaigns until you find something which woks for your audience and product. Growth hacker and online marketers are super important for this kind of work. In my point of view it is crucial to have somebody like that in your team when doing B2C startup.
5. Cash flow
Cash flow prediction and stability is a huge thing for you as a founders and everybody holding shares in your company. It basically determines with which probability you will stay in business. Just look at snapchats stock price and user numbers dropping when ever a celebrity like Riri or Kylie Jenner announces they’re not using snap anymore. Bad reputation can happen to every business but in B2C it can turn south very quickly.
The monetisation method is also very important regarding cash flow. In SaaS and B2B you will often have recurring revenue. Which is worth gold in building and scaling a business. Companies are often fine with these models because it is easy to forecast. Regarding B2C it gets much harder to sell these models. You really need to solve an important problem for your users to get them sign up a subscription. Even after you get the sale you will have just random people churn because of different reasons. Some companies like Spotify or Netflix are doing it super successfully but it will be a hard time to set up these product and services. Personally I have the feeling cash flow is so different then in B2B. In B2C it is hard to setup a consisting stream but easier to scale and B2B kind of vice versa.
Keep in mind that this text shows only challenges and not the upsides of a B2C startup! You can find a lot of successful companies which solved all of the challenges above and running billion dollar companies. There is also a lot of my personal learnings an opinions in it, so i would be happy to discuss the topic in the comments!