How Does Product Management Work in B2B vs B2C? Find All Your Answers Here!
On the face of it, B2B & B2C companies’ structures and processes appear completely divergent. When thinking about B2B, one visualizes large sales teams (in suits), dedicated account managers, customer visits by senior management, etc. In B2C, we consider using flowery marketing language in the content, heavy spending on branding, mass marketing, scale issues, etc. Looking a little closer, we will quickly realize that the parameters used to define B2B product characteristics are found in some B2C products and vice versa. Here is a quick guide on b2b vs. b2c product management. For example, the same product, in some cases, gets sold to both individuals and businesses (Example: Gmail/G Suite, Amazon, Makemytrip, etc.);
Superhuman looks like both a B2C and a B2B product when we look at it from different lenses; PayTM merchant services have 30 million customers, which is not the typical small scale that we expect of a B2B product.
The lines between B2B & B2C are blurred, and so are product management practices.
What are the Parameters?
So, instead of trying to compare & contrast B2B and B2C products directly, we will discuss the underlying parameters that determine a relevant product management practice. At the extreme ends of the spectrum, these parameters denote pure B2B & pure B2C plays. And most products (either B2B or B2C) lie somewhere in the middle using some combination of these parameters.
This is important for a young product manager in many ways – mainly to dictate career choices in a given industry. But also to know the nuances between these verticals to build products that cater to a specific niche and adapt well to B2B & B2C dynamics.
Number of stakeholders
B2C products tend to have just one stakeholder. In B2B, the number of stakeholders is generally more than one on the customer side (e.g., users, finance, HR, compliance, admin, senior management, etc.). However, there are exceptions in B2C, like Eedtech, travel, etc., where multiple family members or friends tend to be stakeholders.
Similarly, on the B2B side, small tools (e.g., PDF converter) with a low price have just one stakeholder – an employee using a discretionary purchase budget to buy tools.
How Does This Impact Product Management?
When there are more stakeholders, each stakeholder’s product value differs. For example, a user of a data platform, or a product analyst, for example, cares about smoother workflow + simpler queries where. In contrast, the CTO of the same company is looking for product scalability. The CFO cares a lot about the ROI of the investment.
Unsurprisingly, there are more analytics, dashboard, and reporting requirements in B2B than in B2C purely to cater to the needs of stakeholders who are not actual users.
PMs working in multiple stakeholder contexts must build for different stakeholders considering their relative importance in decision-making and balancing their needs.
Also Read: Mastering Core Product Management Skills: Communication & Storytelling
Size of User Base & Ticket Size
Both user base and ticket size (revenue per user or transaction) work in tandem to define product management practices.
Let us take two extremes of user base & ticket sizes. Palantir has less than 200 customers worldwide with ~8 million USD average revenue per customer. Facebook has ~3 billion active users and average revenue of ~35 USD per active customer. PMs in these two extremes would face different challenges.
When the user base is low and/or ticket size is large (e.g., Palantir), the voice of customers (and prospects) is very powerful, and the customers are generally crystal clear on what they want. Product management tends to be more of a business analysis (detail out & build what the customer wants or co-build with them). The failure rates of features are low as long as you and the customers are on the same page. Custom feature requests are quite common. Whenever customization requirements are shared, the PM needs to understand them, look for patterns, platform or provide a workaround or deflect (if necessary) them.
Business Example
These products also tend to become service-oriented and must react to every customer request.
When the user base is large (e.g., Facebook), no decision taken by the PM is based on a single or even a small group of customers. The PM looks for wider patterns that apply to all or an important customer segment and then decides which features are worth investing in. Product discovery, therefore, becomes a challenge. As a result, the failure rates are very high in B2C products/features. Scalability is another important factor (can this work for millions/billions of users?), and a PM should be well-versed in balancing radical ideas and scalability challenges.
When the ticket size is small, or the product is free, monetization becomes an important skill for the PMs.
Is there a product with a large user base and ticket size? Such a market invites heavy competition, and the industry gets disrupted. Players move to an advertising-based revenue model (e.g., android is free!), or the industry fragments (e.g., international travel business) take the flavor of service orientation.
User Onboarding
Products with a large user base tend to have super simplified onboarding with the least clicks and information input required from the users. Compliance requirements are an exception, though.
Products with low ticket sizes (irrespective of user base) focus more on automation, self-serve capabilities, documentation, and demos. They also could offer special services for users willing to pay more.
When ticket size is large, onboarding tends to have complexities like lead scoring, operations/sales product integration, etc in addition to the above-mentioned automation.
The expertise that PMs need to develop these different kinds of onboarding experiences is different. A lot of experimentation is needed on both sides to determine an optimal onboarding experience.
Customer Decision-Making in B2B vs B2C Product Management
B2B product purchase decisions tend to be more utility-based. i.e., large importance is given to the ROI that the product can generate. It also depends a lot on the big purchasers and their requirements.
In B2C products, though utility-based decision-making is quite common, many customer segments also emphasize experience. At one end of the spectrum, products like Instagram, Farmville (or most gaming products) are fully experience based with the least amount of utility built into them.
As a result, B2C products tend to be sleek and very good at UI/UX, whereas B2B products continue to suck on experience as long as ROI targets are met by the product (e.g., Workday, Oracle, Salesforce). You’d see many multi-billion traditional B2B businesses continue to have old-school designs for the same reason.
The PM skills thereby shape accordingly.
The other implication is that customer research in pure B2B play is straightforward. It is about focusing, understanding pain points, and providing relevant solutions. In B2C, it gets trickier since users do not reveal or articulate their underlying motivations and needs.
Sample Underlying Motivations
- “I’m buying this product to signal my status”
- “This would boost my ego”
- “I feel more confident in front of others when I use this product”
Product Managers need to develop the skill to uncover unstated needs. Of course, B2B PMs also need to consider motivational factors, albeit these are relatively straightforward.
Examples
- “Will implementing this product make me look good in front of senior management?”
- “Will this initiative get me promoted?”
- “What if I get fired if this project fails?”
Distribution & GTM in B2B vs B2C Product Management
While both B2B and B2C have overlapping channels, in the extreme case, distribution is sales and partnerships oriented in B2B and marketing oriented in B2C.
This has significant implications for the Go to Market (GTM) strategy. In a marketing-oriented distribution model, GTM planning is mostly independent of product development and even ok as an afterthought (though not advisable). However, in the partnerships model, the product needs o be designed to support or integrated with other products to cater to the channel. For example, reporting & analytics products like amplitude need to support middleware (segment), and different platforms (e.g. snowflake, spark, etc.) to have a decent GTM plan.
In B2C, however, the channel aspect is limited to OS support (e.g., Windows, Mac, Linux) or the app store hosted by the software. These decisions are fewer and less frequent compared to B2B.
Also Read: Guide to Product Management vs Product Marketing
B2B vs B2C Product Management Takeaways
While planning to transition from a B2B to a B2C product or vice versa, one needs to be aware of the following areas and develop/unlearn the related skills:
- Decision makers and their stated/unstated needs/motives
- Customer research & product discovery
- The relative importance of customer outcomes (ROI) vs. experience
- Scalability considerations
- Importance of automation
- GTM differences
The article above explains these core areas in detail. As a Product Manager, you can make rational calls when choosing a career in B2B vs. B2C companies. If you are looking for professional product management courses, explore Emeritus’ offerings today.
