The most important differences between B2B and B2C Pipelines
While there are plenty of common characteristics between B2B and B2C pipelines, there are some key disparities, that are essential for professionals who work on either to understand. These include differences in payment methods, duration and processes of decision making and the factors that figure into creating value for each type of pipeline.
More negotiations and multiple stakeholders
The B2B pipeline typically involves taking into consideration the opinions of several people from different departments, meaning that you have to bear in mind that there are different types of stakeholders you need to convince. As B2B pipelines rely on several levels of hierarchy to weigh in on a purchase, the consideration process takes a lot longer and there is a lot more negotiating than when you’re selling directly to the end user.
More steps in the funnel and longer payment cycles
Because the negotiation and purchase processes are so long and the value of the goods and services acquired by organisations tend to be of a higher value, the payment cycle and the sales funnel are also more complex and require more individual effort than a sales process where the end users are individuals. Products and services with longer sales cycles typically cost more and lead to more revenue, but this also means that you need to make sure that you’re not spending more of their budget to gain the sale than the sale itself is actually worth.
Because organisations tend to base their purchase decisions on rational and financial factors, and value stability in their vendors, there are also much more likely to establish long standing cooperation and partnerships, which, of course leads to more revenue. While the complex purchase decision making means that the initial sales investment is much larger than with B2C pipelines, the predictability and stability that are hallmarks of the B2B revenue stream make up for it.
Many individual decision makers
While the decision making process is much shorter and simpler when it comes to B2C sales, it also entails that all marketing efforts must appeal to a wider and more diverse group of consumers. Additionally, it is necessary to understand the motivations and needs of of each individual customer, because in the case of B2C pipelines, there aren’t as many stakeholders and the person you reach initially is most likely the decision maker for each purchase.
Emphasis on non-rational, emotional drivers
Unlike companies and organisations who base their purchase decisions on rational factors and predefined budgets, with individual customers there is a tendency to put the emphasis on emotional drivers. As the purchases are likely smaller and the sales cycles are shorter (excluding things like cars, real estate and luxury items), individual consumers are more likely to buy things on a whim, which makes their decisions much more difficult to predict and plan for.
Faster payment and lower ticket price
With B2C sales, payment is often faster and it happens at the time of purchase or usage. Unlike with the B2B model, the sales process that deals with individual customers is more likely to have a bigger volume of total sales with a much lower revenue resulting from the individual sale. In B2C, consumers who buy products from you pay the same price as other consumers. In B2B, however, price may vary by customer, because customers who agree to place large orders or negotiate special terms may pay different prices compared to other customers.