Know Thy Customer

Understanding the difference between Consumer, Business, and Enterprise Customers

Customers are the people who pay for your product or service. They’re often confused or overlap with users, but the exchange of money is what sets them apart. This distinction is important because of incentives. Paying customers behave differently and have specific expectations.

Paying customers expect higher levels of support. As they are choosing your product for a reason, they also expect a certain level of consistency. Over time, software customers expect product improvements too.

Customer Types

The usual breakdown is B2B (business to business) and B2C (business to consumer). The way they buy it, use it, and think about it however, will vary greatly by their mindset. Within B2B, there is a common distinction between SMB (small to medium businesses) and Enterprise products.

Consumer facing apps are often less expensive but business who sell to consumers benefit from much larger markets. These products require a level of polish and interactivity that can be lacking among B2B systems.

Enterprise apps fetch a premium in the market. They have longer sales cycles but usually have a stronger lock-in with customers. Do to the scale of the customer, enterprise products require increased security and more complex technical considerations. It’s not uncommon for large organizations to force data-storage to be onsite.

Who is your target customer?

• Consumer
• Business
• Enterprise

Consumer

Consumer products are usually less expensive or free. The low price point or advertising-based revenue model usually require large numbers.

Solutions that tend to interest consumers provide a level of entertainment, communication, or solve an issue experienced in ones personal life. Financial tools, coupon/deal sites, and social platforms are among the most common consumer products.

Facebook, Twitter, Instagram, Pinterest, and other forms of social media are great examples of consumer products. Other non-social media examples include Venmo, Waze, and Spotify.

Business

B2B products improve effectiveness or facilitate key business functions. Some can be collaborative in nature, but they most popular items solve a deep organizational pain. It’s common to see tools around reporting, back-office management, or sales.

Slack, MailChimp, Basecamp, and Zoom are B2B solutions that solve problems like email marketing, project management, and conference calls.

Tools like Evernote and Dropbox have a consumer bent, but use that exposure to drive customers to their business offerings.

Enterprise

Tech solutions that sell to enterprise companies are considered ‘up market’. The idea of moving ‘up market’ comes form the pursuit of more affluent or less financially sensitive buyers.

These products usually require customization or more hand holding. Because of a more sophisticated buyer, it takes more time and skill to sell.

The needs for compliance, integrations, and regulation can make this approach much more expensive. Rather than user-directed on-boarding, enterprise deals usually involve complex contracts and more hand holding along the way. The complexity can require increased cashflow and highly knowledgeable teams.