Last updated on February 19th, 2024 at 12:26 pm
Introduction – B2B and B2C companies
The objective of this document is to help you understand the difference between B2B CRM software (business-to-business customer relationship management) vs B2C CRM software (business-to-consumer customer relationship management) and to assist you to decide the right CRM for your business.
However, before we get into the B2B CRM vs B2C CRM discussion, it is important that you understand the difference between the two terms B2B and B2C.
Most companies get classified as any one of the two kinds – B2B companies or B2C companies.
B2B companies
Business-to-business or B2B companies sell their products or services to other organizations or companies; usually referred to as legal entities. In this case, the invoices (or bills) are raised in the name of these entities; and these entities make the payment.
Often people get confused when the products or services billed to organizations are used by employees or end-users. These also come under B2B companies as the companies are making the payments; and not their employees.
Some examples of B2B companies include medical equipment companies selling into hospitals and clinics, IT hardware and software companies catering to business requirements, manufacturing companies providing products to OEMs, etc.
B2C companies
Business-to-consumer or B2C companies sell their products or services to individual customers who are the end-consumers. B2C business is also referred to as retail business.
In the case of B2C companies, the invoices are raised on individual customers. These B2C customers or individuals are the ones who make the payments. In other words, every company that gets paid directly by an end-consumer is a B2C company.
Typical examples of B2C companies are educational institutes, insurance products, retail, restaurants, movie halls, Netflix, consumer goods, D2C brands, etc. B2C customers buy products or services either by visiting a retail store, or from an e-commerce portal, or directly from the company.
Difference between B2B Sales and B2C Sales
Many consider sales as a very generic concept irrespective of whom you are selling to. This is not true.
As sellers, it is important for you to understand the above differences between B2B sales and B2C sales and hence B2B CRM vs B2C CRM.
The decision-making process and the buying journey of B2B companies is very different from that of end-consumers. B2B businesses generally have multiple buyers and alignment between them is extremely important. This complexity is usually not there in B2C sales.
B2B buyers are generally more rational and cautious due to the high risks involved. Whereas, B2C buyers are mostly impulsive and emotional.
This is mainly because the transaction value and risk associated in B2B sales are much higher than that in B2C sales.
Also, in the case of B2B buyers, fulfilment of their needs and requirements usually takes a long time. This is unlike the case of consumers who generally buy for immediate results and gratification.
B2B CRM vs B2C CRM – 15 key parameters to select the right one
Let us now discuss the 15 key parameters to be considered while selecting the right sales CRM before going into camparison of B2B CRM vs B2C CRM.
This understanding will allow you to adopt the right sales process and methodologies for most effective outcomes in your business. This will help you to select the right CRM tools.
| B2B CRM | B2C CRM (or Horizontal CRM) | |
| Client Engagements | Supports strategic long-term client engagements | Supports transactional business |
| Primary Objective | Maximize life-time value (LTV) of the customer | Immediate transactions |
| Stakeholder Management | Supports many decision-makers and influencers; including hierarchies | Not generally applicable |
| Sales Methodology | For high-touch engagements; relationship-driven sales | Usually low-touch engagements; brand-driven sales |
| Sales Cycle | Designed to support long sales cycles and deal stages (months to quarters) | Short sales cycles (minutes to days) |
| Pipeline Management | Very high focus on sales funnel and pipeline health to drive predictability | Minimal focus |
| Average Deal Value | Relevant for high deal values | Relevant for low deal values |
| Buying Process | Supports complex buying process | Not applicable |
| Quotation & Pricing Management | Offers capabilities to manage quotations, bill-of-material, pricing, approvals, proforma invoices etc. | Not applicable |
| Sales Order Management & Workflows | Supports post-sales order management and workflows to track fulfilment progress | Not applicable |
| Account Receivables | Manages long collection cycle to reduce daily sales outstanding (DSO) | Not applicable |
| Integrated Account Management | Integrated account management framework for selling and serving clients on a regular basis | Not integrated; usually in silos |
| Product Knowledge | Equips sales teams with access to high product knowledge for high value sales | Not applicable |
| Customer Success | High focus on measuring and improving customer satisfaction | Lesser focus |
| Post-Sales Operations | Supports post-sales and service operations | Not applicable |
B2B CRM is designed to support strategic long-term client engagements while B2C CRM is a good fit for transactional businesses. Strategic client-engagements require a CRM that supports customer data with 360-degree account management, in-depth opportunity & pipeline management, post-sales service management, customer success, etc. which are the key characteristics of a B2B CRM.
Primary Objective
The main objective of a B2B CRM is to maximize customer lifetime value (LTV). LTV is the total revenue earned from a client during the entire partnership as long as the account remains a client. A specialized B2B CRM goes a long way in meeting this objective, unlike B2C CRM that is generally focused on executing immediate transactions.
Stakeholder Management
Unlike B2C buying process, B2B buying process involves multiple decision-makers and hierarchies. The buying process is very complex and all the decision-makers may have different perspectives to analyse the product/service offered. A CRM with the exhaustive capability to manage multiple stakeholders and decision-makers is crucial for an efficient B2B sales process.
Sales Methodology
Often B2C sales are impulsive, desire-driven, or brand driven. It may take place even without an explicit need. There might be zero to minimal engagement or expectation from the seller to educate or support the product. While in B2B, the purchase happens after a thorough detailed engagement between the buyer and the seller. Unlike B2C CRM, B2B CRM supports high-touch engagements with multiple touchpoints over a long period of time. It offers the ability for the sellers to capture and maintain details about every client interaction.
Sales Cycle
B2B sales cycle is more like a marathon whereas B2C is like a 100-meter sprint. B2B CRM is designed to support long and complex sales cycles since typical deal cycles in B2B could range from months to years. A B2C CRM is not designed to take care of these scenarios.
Pipeline Management
B2B sales require very high focus on sales funnel and pipeline health. B2B CRM will help your sales team to accurately manage deal stages and sales pipeline with real time data. This will in turn help you run a very predictable and efficient business. B2C CRM is not designed to address these aspects.
Average Deal Value
The average deal value in B2B sales is much higher than in B2C sales ranging from several thousand to millions of dollars depending on the industry, product or service, and other factors. B2B CRM tools are very relevant to manage these kinds of high-value deals, unlike B2C CRM tools that is best suited to low-ticket transactional deals.
Buying Process
B2B customers follow a very complex and long buying process. They conduct thorough research and analysis before making any buying decision. This analysis spans the technical and commercial aspects of the offering. This is why, in most cases, there are multiple people involved in the decision-making process. A B2B CRM is required to efficiently manage this end-to-end complex process. B2C CRM is not designed to address these kinds of complexities.
Quotation & Pricing Management
B2B sales process often involves selling a list of products or services to the client. This list of offerings, its corresponding prices and quantities are referred to as bill-of-material (BoM). B2B CRM allows your sales reps to easily create and send quotations to clients with the details of the BoM. B2C CRM does not have to cater to this requirement.
Sales Order Management & Workflows
B2B CRM supports post-sales order management and workflows with real time data to streamline and track order fulfilment process. It facilitates collaboration between the frontline sales team and backend sales operations team. That way, everyone in the team is updated on the order status with a single-version-of-truth that could be proactively communicated with the client. B2C CRM tools does not provide these capabilities.
Account Receivables
B2B buyers often negotiate complex purchase terms involving payments in instalments. A B2B CRM is required to manage these long collection cycles. It can help you drive rigor and tight cadence around collections among your team members. When effectively used, a B2B CRM can help you reduce daily sales outstanding (DSO) and improve your working capital. B2C CRM is not built for these scenarios.
Integrated Account Management
Effective B2B engagements require in-depth Account Management. This involves customer intelligence, stakeholder management, account mapping, lead management, pipeline management, post-sales service operations, receivables management, customer success etc. B2B CRM like HappSales is designed to provide this kind of integrated account management framework, which is not provided by a B2C CRM.
Product Knowledge
B2B engagements involve dealing with complex products and services. Sales teams are expected to study and be familiar with all the offerings. B2B CRM provides capabilities to equip your sales reps with product literature, whitepapers, product presentations, etc. This way your reps will be able to educate clients better and they become more effective in their jobs. B2C CRM does not have to provide this capability.
Customer Success
B2B sales depends more on long term customer relationships to get more sales. Building strong relationships can open up many upsell and cross-sell opportunities. It can also measure customer satisfaction and Net Promoter Score (NPS), which measure how likely are the customers to recommend a company’s product. B2B CRM helps in boosting these capabilities many folds. B2C CRM has much lesser scope.
Post-Sales Operations
Retaining customers is the key to run a successful B2B business.
B2B businesses may have a smaller customer base than B2C businesses, but each customer may represent a larger revenue stream. That’s why it becomes very important to provide the best post-sales support and service operations on time consistently. This capability is an integral part of a B2B CRM like HappSales.
Conclusion
CRM software is a necessary software application for all kinds of companies to improve customer management and revenue metrics. It plays a massive role in the way companies execute their strategy around marketing, customer acquisition, sales management, customer retention, repeat purchases, customer loyalty, etc.
The choice between a B2B CRM vs B2C CRM largely depends on your business model, the type of clients you sell to, and your offerings. B2B CRM differs significantly from B2C CRM mainly due to the difference in the characteristics of client engagements.
B2B CRM like HappSales provide an integrated account management framework with a plethora of capabilities like account intelligence, stakeholder management, managing and tracking deal stages, sales pipeline management, post-sales service operations, account receivables management, customer success management, etc. Whereas, a B2C CRM focuses on capabilities around targeted marketing and consumer loyalty.
Here are a few situations when B2B CRM is highly recommended –
- Company is selling to other organizations or businesses
- Company has a team of sales reps or account managers to manage multiple stakeholders in the account
- More than one person is involved from client side during the decision-making process
- Your sales cycle is usually more than few weeks or months
- It is important for company to track deal stages during the sales process and have visibility into team’s sales pipeline
- Management requires detailed reporting around the sales pipeline, weighted pipeline, sales forecasting, deal closure probability, customer activities, etc. for effective sales management
- Company wants to automate lead management and lead qualification process for better sales efficiency and deal conversions
- Company wants to streamline the sales order management process to improve the order fulfilment process
- Company wants to drive collaboration between different departments and teams involved in sales and post-sales operations
- There is a need to better manage sales quotations, invoices, and account receivable (AR)
To summarize, B2B CRM software should be selected when a company does B2B sales selling in to other organizations. Sales cycles in these cases are long and complex involving multiple stakeholders. B2B CRM focuses on building long-term relationships and customer lifetime value. B2C CRM should be selected when a company does B2C sales selling to individual customers retail consumers. It is best suited for high-volume retail transactions, targeted marketing, and consumer loyalty management.
2 thoughts on “B2B CRM vs B2C CRM – Which is Right for Your Business?”
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