In contrast to the more traditional business-to-consumer (B2C) model, the consumer-to-business (C2B) model allows businesses to extract value from consumers, and vice versa. Here’s a look at how C2B business models work and why you may want to start a C2B business.
In the C2B model, businesses profit from consumers’ willingness 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, former executive vice president and CMO of C2B Solutions, said C2B’s distinguishing feature is the value customers bring to the company.
“This could involve consumers co-creating ideas, product or service concepts, and solutions with a company through social media,” Walker told Business News Daily. “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.”
C2B business models include reverse auctions, in which customers name their price for a product or service they wish to buy, and 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 their readers. Free products or direct payment may incentivize YouTube reviews. C2B could also include paid advertisement space on the consumer’s website.
Google Ads and AdSense enable this relationship by simplifying how bloggers get paid for ads. Services such as Amazon Associates 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 bidirectional network allows 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, whether that’s a service or a good.
Some examples would be a blogger, as mentioned above, or a photographer offering stock images to businesses. The consumer could also be someone participating in a survey site or referring someone through referral hiring sites such as Upwork.
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 to the pool 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.
The intermediary could be a company looking to fill a job through a referral hiring site, a company seeking to advertise online through Google Ads, or a company that needs individuals to take surveys and provide market research.
Some of the hottest C2B businesses focus on authentic connection and flexibility, including models related to the following areas:
In today’s economy, it’s increasingly important for consumers to trust the brands they interact with. This trust increases with greater exposure from advertising on websites, blogs, YouTube videos and more. That is why influencer marketing and affiliate marketing have gained traction.
Influencers are individuals with a large audience, particularly on social media, but sometimes in traditional media as well. This can be someone who is already famous, such as a professional singer like Ariana Grande or an actor like Dwayne “The Rock” Johnson, or a person who built up a large following (think the Kardashians).
People care about influencers’ opinions and endorsements, so when one of them talks up your product or displays an ad to their millions of followers, sales are bound to result. Companies usually reach out to influencers individually and create a relationship with them. They offer influencers free products or services (so they can give an authentic endorsement) and then take one of these actions:
While influencer marketing is based on an individual’s appeal, affiliate marketing is based on a company’s or website’s marketing knowledge and audience size. The affiliate marketer chooses the brand or product to promote, usually from a list of products on an affiliate marketing marketplace.
Once the affiliate marketer chooses a product, they promote it to their audience however they see fit, usually via website ads or email marketing. When a customer clicks on the unique affiliate link and purchases the product, the affiliate marketer receives a commission.
Here are some of the most popular affiliate advertising and marketing channels:
Businesses are constantly looking for more data to drive the research and development of new offerings and marketing tactics. An effective way to gather that data is to conduct customer surveys. When consumers are incentivized to complete these surveys, businesses get more data.
In addition to surveys, some companies pay consumers to test their websites or software to detect programming, flow or design issues before they are launched to the public.
These are some examples of C2B market research models:
These C2B models match freelancers, contractors or gig workers with businesses that need an independent contractor for a short-term task or deliverable. Consumers get access to job and project listings from companies and can bid on them or post products for sale.
The marketplace receives a commission from providing businesses with an extensive network of individuals who want to work with them. Businesses and independent contractors alike find this service helpful for making new connections and developing new working relationships.
Here are some C2B services that focus on helping freelancers or gig workers network with businesses:
According to Fortunly, nearly half (48%) of millennials use gig marketplaces to find work or work with clients.
In an era when technology has democratized creative content and consumers have more power than ever, it makes sense to gear your company toward using the consumer as a resource. After all, if the customer is always right, collecting their insights, suggestions, recommendations, and content can only benefit your company.
Starting a C2B business offers two huge benefits:
Your business can keep its current business model and add a C2B component. For example, ask customers to upload photos of themselves using your product, then get their permission to use these images in your marketing materials.
Because C2Bs are relatively new, underlying legal issues such as billing and receiving money have yet to be fully sorted. A traditional company pays wages to a limited group of employees, but C2B businesses might have to process credit card payments for thousands of customers.
Fortunately, intermediaries often take care of the financial and legal aspects of C2B transactions. Services like PayPal and Google Pay ease the burden of payment, and Google AdSense pays webmasters by sending them checks in U.S. dollars, incurring shipping fees for Google and currency conversion fees for international users.
Growing your C2B business requires dedication and a few unique skills. In contrast, “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 these marketing tools:
“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 either function as a company’s entire business model or augment an already-successful venture. As with all business models, your company’s success will depend on your 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,” Walker said. “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.”
Jennifer Dublino and Elaine J. Hom contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.