SaaS: Can B2B Revenue be better than B2C? -
It's not necessary to search for long to locate instances of B2B SaaS businesses that have gained traction using a self-service or product-led motion. Look at Zoom or Slack companies designed specifically to be used by enterprises, which use B2C-like onboarding flows (such as product-led growth, (also known as PLG) to fuel the interest of customers and encourage acceptance.
In fact, it's telling that the public-traded number of PLG-led firms almost quadrupled between the years 2015 and 2020.
Are you thinking about assumptions regarding your B2B market-based approach? assumptions that ignore B2C selling methods which are hindering the growth opportunities you have?
Based on TrustRadius, 87% of buyers in B2B are at least a little element of self-serve in their journey, if not in every part. Specifically, of the nearly 60% of buyers who are young people 29 percent want completely self-service from beginning to end with no representatives required.
I was recently interrogated by my good friend Steve Lurie, who's the Chief Engagement Officer at B2B Rocks. We talked about one of the most important trends playing out within the industry of software and that's the convergence between B2B and B2C.
What exactly does this mean? My hypothesis is that our conventional concepts of "B2B vs B2C" are holding many companies back from unlocking their true potential to grow and eventually this binary classification will cease to exist in the near future.
Here I'll explain precisely what's happening, how this is happening, why it is important, and what you can do to take advantage.
The way B2B and B2C are Converging
1. Product Growth is Increasing in the Opposite Segment
When SaaS companies have attempted to market, they've done it through determining the right product for either of the two primary customers: businesses or consumers. The decision they make determines the product and sales processes for the duration of their business. Moving beyond this go-to-market motion has historically demanded a significant "pivot" which is considered a dirty word in the tech world.
Although this is still the case to find the first product-market or go-to-market fit, more and more we're witnessing examples of companies evolving faster into both market segments.
The companies such as Dropbox, 1Password, and Sketch originally found success with the general public or freelancers. They later expanding into market for mid-markets and enterprises. Why? Essentially, the original value idea was valid in the B2B scenario.
In Sketch, the expansion in the UX design feature has increased the necessity for design teams to work together using the same software and purchase multiple licenses -- instead of buying them individually.
With regard to 1Password, web security and ease of use were more effective when leveraged to the fullest extent in a B2B scenario. It was a once-exclusive B2C firm recently has raised the sum of $620 million to expand its product the most significant funding round for an Canadian business in the history of.
On the flip side, one of the main reasons Zoom was able to grow as quickly as it did was its ability to extend into the realm of consumers. The reason for this was an increase in the need for remote communication due to the pandemic, however, the fact that they had created a mostly self-service similar to B2C for B2B users made the transition to the consumer market much more rapid.
At present, there are less instances of B2B SaaS moving to the consumer market However, I am convinced that it will become more prevalent as software firms are able to think "users first" (e.g., PLG).
2. B2B Buyers Bring B2C Expectations to Work
Covid has poured gas on the booming e-commerce industry. Our expectations and preferences for buying from where and how have completely been rewritten. In our personal lives it's become a habit being able to research products on our own and have questions answered without needing to talk to somebody.
And we're the same people at work.
Meanwhile, a 2021 McKinsey study found that nearly two-thirds of B2B buyers prefer digital or remote self-serve channels over a traditional person-to-person sales.
We want to buy digitally, and we need self-service choices especially for purchases of larger amounts.
How can you make the most of These Changes
1. Make It Easier for the customers to purchase
According to an PYMNTS report and an American Express report, 67% of B2B customers "switched to buying with vendors who offer more 'consumer-friendly' experience."
What is the best way to win? By eliminating as many friction points as is possible, making it difficult for a prospective client to buy your product or an existing customer to increase their MRR using your product.
Example:
- Do you make your quote and invoicing process as flexible and efficient as possible?
- Are you making it easier for potential buyers of B2B to comprehend the various pricing options you offer?
- Do you have an easy method for customers to use self-service plan changes like adding a seat?
- Do you make it simple for your clients to be able to pay you (such as localized currency and payment options)?
Ultimately, the ultimate goal of a "consumer-like" experience can be described as one of control. Zuora discovered that there is an average of four modifications of a subscription plan each year. This includes upgrades, downgradesand additions as well as other add-ons. Changes to your subscription plan must be simple to implement within your subscription product.
Also, self-service options should extend throughout the life cycle of a customer.
Adopting B2C UX expectations and practices will allow B2B SaaS firms to offer a the perfect buying and subscription management experience that enhances the life-time price of the client and the satisfaction of your service.
2. Ask yourself what your target markets are.
What assumptions are you holding about why you're only marketing to a specific market but not to other markets? It's important for companies to ensure they're not relying on incorrect or inaccurate assumptions regarding the reasons they're targeting certain markets and not others.
The new markets could include companies or consumers, industries that are new, or countries that are emerging.
And there are many innovative solutions that make it simpler to iterate on your sales or product as well as expand to new markets.
Are you in a place to take advantage of them?
3. Get Ready to be Iterative
The most successful SaaS businesses over the next 3-5 years will be the ones with the highest degree of repeatability.
The idea of iterativeness is ingrained into the culture of startups. We're aware of the best way to "start slim," but all too frequently, organizations lose this flexibility as they grow.
You need to be able to iterate on the market fit and go-to market strategies in order to capitalize on the latest opportunities like the types of customers and their personasas they are always developing.
Intellectually, we know it is necessary to have this kind of flexibility. In reality, however this becomes more difficult to do, at the very least, on your own.
There are many ways to solve for this. One strategy is to construct on top of a single platform for commerce that ties all the core elements that require iteration together. Here, we accomplish this by connecting prices, payment the management of subscriptions, as well as tax to one platform.
Many find this to simplify iterations and make them much more efficient to carry out. A lot of growing software businesses are slowed by issues which aren't part of their primary capabilities due to being faced with challenges they never saw coming as they go after new markets. There is a chance that you'll spend a whole quarter becoming an expert on sales tax or redesigning your billing process due to the fact that you'd like to incorporate new payment methods.
The most successful companies anticipate these surprises and instrument their business to react quickly and without disrupting their development efforts. This one is always a pain.
One Last Thing B2B vs. B2C is a false Choice
I started this piece with the question: is B2B revenue really better than B2C revenue?
The truth is B2B vs. B2C isn't the best way to think about the issue.
There used to be very stark differences between how we offered B2B as opposed to. B2C software, but these days we're seeing ideal customer experiences converge.
Software of all kinds is purchased by people -it doesn't matter if you're selling B2B software or B2C.
