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What Is B2B?

What Is B2B?
Credit: CAT SCAPE / Shutterstock

If you often read business publications or frequent professional forums online, you've likely come across the abbreviation "B2B." What is B2B, exactly? It simply means "business to business," which refers to any company focused on selling products or services to other businesses rather than to consumers.

B2B companies are supportive enterprises that offer the things other businesses need to operate and grow. These include businesses like payroll processors or industrial suppliers. This is in contrast to business-to-consumer (B2C) models, which sell directly to individual customers, and consumer-to-business (C2B) models, in which an end user creates products or services for a business. B2B companies have an entirely different target audience: They offer the raw materials, finished parts, services or consultation that other businesses need to operate, grow and profit.

There are B2B companies in every industry, from manufacturing to retail. Wherever business is done, you can be sure a host of B2B suppliers and advisory firms are active. Every B2C company requires certain products, services and professional counsel, so every B2C company generates B2B activity.

One example of a traditional B2B market is in automobile manufacturing. Everyone knows some of the biggest consumer-facing brands, but in every model of car or truck they produce are dozens of other companies' products. These include the tires, hoses, batteries and electronics that are essential for the final consumer product – the vehicle – to operate properly. The manufacturer purchases these products from its various suppliers and incorporates them into the final product. When you buy a car from one company, you're purchasing parts that were created by dozens, if not hundreds, of other businesses from all around the world. Business-to-business sales are a vital part of every industry's supply chain.

Examples of real-world B2B activity are plentiful and more visible than you might guess. For example, the cloud-based document storage company Dropbox serves businesses as well as individuals. General Electric makes plenty of consumer goods, but it also provides parts to other enterprises. Perhaps you've worked at a company where the paychecks were stamped by ADP, a company that provides payroll and financial services for businesses. Xerox is a household name but makes billions providing paper and print services to businesses.

Marketing and branding B2B products or services requires a unique approach. Unlike with B2C companies, the target audience isn't a consumer at all, but another company. That means B2B marketers must speak directly to those in charge of the decision-making process. Driving sales means understanding another company's business processes and developing a business-specific strategy with your sales team to turn potential customers into buyers.

Devising B2B marketing campaigns requires some careful planning, said Brent Walker, vice president and chief marketing officer at healthcare marketing firm C2B Solutions.

"B2B typically relies on its sales function and account management team to establish and strengthen customer-client relationships," Walker said. "Marketing may include advertising in trade journals, having a presence at conventions and trade conferences, digital marketing – an online presence, SEO, email outreach – and other traditional awareness efforts."

While the methods might be similar to those of B2C companies, the messaging and branding is often different. Rather than speaking to a consumer's desire to get something new, fun or convenient, B2B companies face the challenge of convincing company decision-makers that their products or services will yield a return on investment. For some B2B companies, such as digital marketing firms that specialize in content creation and social media management, this can be a tough sell; this type of work doesn't produce immediate results, so making the sale requires educating potential customers. That's where a knowledgeable sales team comes in.

The key to B2B marketing is demonstrating value to a business's bottom line. If your solution streamlines processes, focus on the efficiencies your potential customers could gain. If your services increase traffic to a website or boost conversion rates, highlight the potential for added revenue. In business, it all comes back to profitability: If you can make the case that your products or services will enhance the bottom line, landing the sale becomes much easier.

The rise of B2B e-commerce solutions has redefined the relationship between businesses and suppliers. A product of the digital revolution, these businesses sell products directly to other companies using e-commerce platforms, as well as sharing data and updates about products or services. There are many types of B2B e-commerce companies, but three of the most common are web development, supply and procurement exchanges, and infomediaries.

Every business needs a website, but few business owners have the time or skill set to build an optimized site from scratch. Web development companies (and, more generally, digital marketers) are B2B services that handle the creation and maintenance of company websites, plus other digital advertising services like content creation and search engine optimization. These services are indispensable in the ever-expanding digital environment that dominates the modern business landscape. Though web development companies didn't exist until a few decades ago, they've become essential partners for any business that wants to get off the ground.

Otherwise known as e-procurement sites, these companies serve a range of industries and often focus on a niche market. A company purchasing agent can shop for supplies from vendors, request proposals and even make bids for purchases at specific prices. These B2B websites enable the exchange of product supplies and procurement.

Specialized or vertical industry portals provide a subweb of information for a specific industry or vertical, such as healthcare, construction or education. These sites provide product listings, discussion groups and other features. Vertical portal sites have a broader purpose than procurement sites, though they may also support purchasing.

Brokering sites fulfill companies' supply and procurement needs in another way. These sites act as an intermediary between service providers and a potential business customer. For example, a construction company may need to lease equipment. A broker site can help the construction company find an equipment manufacturer that is willing to lease out the needed equipment. Brokering sites and services include the Neostratus B2B Cloud Brokerage Platform and Axway B2B Integration.

There are also information sites, or infomediaries, which provide specialized information on specific industries for companies and their employees. These specialized search sites are often used as trade and industry standards organization sites.

Though B2B is critical to the success of many industries, when considering your company's potential, do not limit yourself to one model. B2B, B2C and C2B models need not be mutually exclusive: Combining their particular strengths can generate new opportunities for your business.

"A business can package consumer insights and consumer-centric solutions to sell or provide as a value-add to its business customers/clients," Walker said. "In a consumer-driven marketplace, such a service can be extremely valuable to a business."

If you want to get into the B2B market but don't know where to start, visit our list of suggestions for B2B business ideas.

Some source interviews were conducted for a previous version of this article.

Adam C. Uzialko

Adam C. Uzialko, a New Jersey native, graduated from Rutgers University in 2014 with a degree in Political Science and Journalism & Media Studies. In addition to his full-time position at Business News Daily and Business.com, Adam freelances for a variety of outlets. An indispensable ally of the feline race, Adam is owned by four lovely cats.