What Exactly Are the Differences Between B2B and B2C in SaaS?
July 31, 2022
SaaS, software as a service, is a cloud computing model that provides customers access to software products over the internet, thanks to the work of third-party vendors.
Knowing this definition, you might be thinking about who these customers are.
And if you are not, you should because today's article is all about these customers. Or all about what the change in a software company's audience brings.
Without dwelling on it, let me tell you who these customers may be:
Being directed at one of them labels your SaaS business as either B2C or B2B—so let's dig in deeper to see what these abbreviations are for and focus on the differences to understand them even better.
Is SaaS a B2B or B2C?
Well, SaaS is both of them—a SaaS company can be a B2B company or a B2C company.
This entirely depends on the crowd you are trying to pursue.
If your SaaS company targets end-users, then it is a B2C business.
However, if the aim is selling products and services to other companies, it is a B2B business.
B2B stands for "business-to-business," while B2C is the shortened form of "business-to-consumer."
So, a SaaS company can be either of them; sometimes, a combination of both is even possible.
What is B2B?
B2B (business-to-business) is a company whose target customers are other companies. In SaaS' case, it is a company that sells software products or services to an enterprise company.
B2B companies aim to assist businesses in operating more efficiently with B2B products that are involved in the solving process of the issues that arise within the customer journey. For instance, a platform that focuses on customer relationship management (CRM) like HubSpot is a good example of an all-in-one SaaS company that executes B2B product marketing.
Needless to say, there is a wide variety of areas that B2B business applications cover, such as sales, marketing, operations, customer service, etc., by improving the customer journey to grow the business.
Some popular B2B companies and their area of expertise are as follows:
Slack is a real-time messaging software application that aims to connect colleagues to track task management, productivity, etc.
Hubspot is an inbound marketing and sales platform that aids companies in attracting visitors and converting leads by providing tools to evolve the customer experience.
Salesforce is a customer relationship management software that gives insight regarding the interaction with the customers in each relevant department, such as the sales team.
What is B2C?
B2C (business-to-consumer) is a company whose target market is made up of end-users. For SaaS, it is a company that sells software products or services to consumers over the internet without any middle person.
B2C products offer solutions to the challenges that B2C customers face regularly. As B2C's target market is individual consumers who could derive value from the product or service proposed, B2C marketing is done according to their needs, demands, and goals to pursue them to buy it for personal use.
For example, Duolingo is a SaaS B2C product whose prospective customers are individuals who seek to learn a new language online through a mobile app.
There are many other categories that B2C products take part in to make the customers achieve personal goals and satisfy their needs, such as task management, special day tracking, and storage of files.
Some popular B2C companies and their main purposes are as follows:
Netflix is a SaaS company that sells software to watch licensed videos over the internet and follows a subscription-based business model by offering various subscription plans to its customers.
Spotify is a SaaS subscription service that provides online and offline music and podcasts without any ads for its customers to stream.
Duolingo is a SaaS product that works as an interactive language learning management tool.
Differences Between B2B SaaS and B2C SaaS?
B2B SaaS and B2C SaaS might share some elements in terms of providing service, having the same business models, and engaging in the same metrics, such as churn rate, conversion rate, and customer retention rate.
Even so, they are home to many differences due to the diverse nature of the two businesses, especially when it comes to departments.
Here are the five departments where the differences between B2B and B2C SaaS businesses are as bright as daylight:
When developing an application, the audience you are targeting affects some crucial elements throughout the process. That is why whether your product or service is aimed at B2C or B2B customers matters a lot.
Most of the time, the goal of the application is affected significantly because B2C companies tend to produce applications that are used for personal interests, such as entertainment, social presence, and modern conveniences.
B2B, on the other hand, seeks to solve a specific business problem or manage a particular operational need that is crucial for the continuation of the business procedures for a smaller audience since it is marketed toward a niche crowd—unlike the customer base of B2C as it caters to a larger audience made up of people that want to take a breather or relax.
The importance that the developers put on user experience tends to vary concerning the type of business as well, which originates from the fact that B2C customers are pickier when it comes to finding an application they will regularly use. For example, they care more about the elements they come across frequently, such as the user interface.
However, this is not the case for B2B customers as they have limited options to choose from—which has started to change as business owners started to invest in the areas that interest the startups, medium enterprises, and large scale businesses.
B2B and B2C marketing teams have one thing in common: the outcome they wish to achieve, which is increasing revenue.
However, their marketing focus differs since B2B marketers employ a marketing strategy that entirely centers upon lead generation and customer engagement, while B2C marketers use their funds to optimize brand building.
The product marketing strategy of B2B is related to maintaining such a marketing agenda that operates the interactions with potential customers to enhance the customer acquisition process.
For B2C, it becomes a way of unifying data to boost brand engagement as B2C customers are likely to decide based on emotions during the buying process.
In addition, the language they use through the marketing channels counter. For instance, social media marketing is usually popular for both parties, yet the industry terminology is always present in the detailed and serious approach of B2B product marketing.
B2C marketing does not dig that deeper as it involves the daily language with short and simple sentences to make it relatable to its audience, which is due to the effect emotional factor has during the consumers' buying process.
The most significant difference in sales between B2B and B2C is the sales cycle duration.
In B2B, the sales process is longer due to its complexity. When a company is interested in a product or service, they sign up for a free trial. After seeing the value, the relevant person has to get approvals from their group leader, senior management, and investment department since this is not a decision they can make alone.
But that is not the only reason why the buyer journey of B2B is longer than B2C. It is known that B2C customers are apt to purchase products or services on impulse. Unlike the B2B sales process, which is more logic-driven, the B2C sales process might involve more emotions that derive from desires.
To simply put, the road to purchase starts with wanting something for B2C customers, not needing it. That is why impulse purchases are a thing in the B2C world, while it is not common to see such a thing in B2B as their customers are likely to justify what they buy by having logical reasons that are discussed with the relevant departments.
4- Customer Service
What customer wants is what customer gets. This is no different in either B2B or B2C. However, there are still some major distinctions, especially in customer support.
First of all, the complicatedness of the issues changes according to the audience. Generally, the issues that arise within the B2B sector are more complex and require more time to be fixed. Considering that B2B customers make significant purchases, it is no surprise that the customer support team must promptly manage the situation by providing adequate support to build a long-lasting relationship that would exceed the customer's expectations in the long haul.
In the B2C sector, this process takes a more independent and self-service-oriented approach since the issues tend to be simple. For this reason, a tool makes more sense to employ instead of having a crowded customer support team. For example, using FAQs and blog articles to make your audience find solutions in a short amount of time is more necessary than getting them on a phone call or video chat to address a minor question or issue.
5- Customer Success
When it comes to customer success, the main difference lies within the size of the customer base. Particularly due to the habit of emotional purchases, B2C has a remarkably higher number of customers than B2B.
In contrast to that, the recurring revenues of the B2C businesses are much lower than B2B businesses due to their costly nature, which means that it is not possible to assign a customer success manager to a certain group of customers in B2C for more personalized service.
In addition, the duration of the customer journey is affected by the fact that B2C businesses are supposed to offer a more automatized process. For example, customer onboarding and product adoption should be fast and simple, and automatized due to the large number of customers they acquire.
In B2B, the process is more time-consuming and long, which causes the customer journey to slow down. However, this is a win-win for B2B companies as they rely on an emotional connection with their customers to make them stick by maintaining a close yet professional relationship—which is not the case for B2C businesses since they do not need to nurture the relationship with the customers.
This article focuses on the meanings of B2B and B2C and the differences between them to provide you with background information regarding the types of SaaS businesses.