In contrast with the more traditional business-to-consumer model, the C2B (consumer-to-business) model allows businesses to extract value from consumers – and vice versa. In the C2B model, businesses profit from the willingness of consumers to name their own price or contribute data or marketing to the company, while consumers profit from flexibility, direct payment, or free or reduced-price products and services.
Brent Walker, vice president and CMO at C2B Solutions, says the distinguishing feature of C2B is that customers bring value to the company. "This could involve consumers co-creating ideas, product/service concepts and solutions with a company through social media. C2B can also mean that a business brings consumer insights and consumer-centric solutions to another business as its primary service or value-added offering," Walker told Business News Daily.
C2B business models include reverse auctions, in which customers name the price for a product or service they wish to buy. Another form of C2B occurs when a consumer provides a business with a fee-based opportunity to market the business's products on the consumer's blog. For example, food companies may ask food bloggers to include a new product in a recipe, and review it for readers of their blogs. YouTube reviews may be incentivized by free products or direct payment. This could also include paid advertisement space on the consumer website. Google Adwords/Adsense has enabled this kind of relationship by simplifying the process in which bloggers can be paid for ads. Services such as Amazon Affiliates allow website owners to earn money by linking to a product for sale on Amazon.
The C2B model has flourished in the Internet age because of ready access to consumers who are "plugged in" to brands. Where the business relationship was once strictly one-directional, with companies pushing services and goods to consumers, the new bi-directional network has allowed consumers to become their own businesses. Decreases in the cost of technologies such as video cameras, high-quality printers and Web development services give consumers access to tools for promotion and communication that were once limited to large companies. As a result, both consumers and businesses can benefit from the C2B model.
For the C2B relationship to be fulfilled, the participants must be clearly defined. The consumer could be any individual who has something to offer a business, either a service or a good. Examples could be a blogger, as mentioned before, or a photographer offering stock images to businesses. The consumer could also be someone answering a poll through a survey site, or offering job-hiring services by referring someone through referral hiring sites such as elance.com.
The business in this model could be any company planning to buy goods or services from individuals either directly or through an intermediary. An intermediary would connect the business that needs a service or a good to the mass of individuals, acting as a portal both for buyers and sellers. The intermediary promotes goods and services through distribution channels, and gives individuals promotional, logistic and technical expertise. For example, the intermediary could be a company looking to fill a job through a referral hiring site, a company seeking to advertise online through Google Adwords, or a company that needs individuals to take surveys and provide market research.
Because C2Bs are relatively new, underlying legal issues such as how to bill and receive money have yet to be fully sorted out. A traditional firm would pay wages to a limited group of employees, but C2B businesses could potentially have to process thousands of customer payments. Fortunately, intermediaries often take care of the financial and legal aspects of C2B transactions. Services like PayPal and Google Wallet ease the burden of payment, and Google Adsense pays webmasters by sending them checks in dollars, incurring shipping fees for Google and currency conversion fees for international users.
Growing your C2B business requires dedication and a few special skills. "B2B typically relies on its sales function and account management team to establish and strengthen customer/client relationships," Walker said.
According to Walker, companies interested in extending their models to reach a C2B audience should consider the following marketing tools:
- Market research (quantitative surveys, qualitative interviews, segmentation).
- Consumer feedback channels, such as rating and reviews, customer service lines, avenues for suggestions/comments.
- Social media, such as online consumer user communities, Facebook pages, Twitter followings, etc.
"Marketing may include advertising in trade journals, having a presence at conventions and trade conferences, digital marketing (online presence, SEO, email outreach) and other traditional awareness efforts," Walker said.
C2B is a new and growing segment of the business market that can function as a company's entire business model, or that can augment an already successful venture. As in all models, your company's success will depend on your thorough understanding of the marketplace and your willingness to pursue new technologies that make reaching your customers easier than ever.
"Pursuing a C2B approach is a strategic choice and requires a commitment to involving the consumer in business decisions. This takes extra effort, resources and discipline to avoid being internally focused, but it is critical for a business to succeed in a consumer-driven marketplace," Walker said.
Elaine J. Hom also contributed to this article.