The business model is an integral part of any business to process well, it is the base that builds the company to create the leaders towards success. We have often been listening to the terms like B2B and B2C business models, which are easily understood from its abbreviations that these e-commerce models connect business to business and business to customers, but what is this mixed term B2B2C business model rolling in the market strategies is all about? Is it some kind of combination of the models?
Let’s find out!
What is B2B2C Business Model – Definition and Overview
As Google says, B2B2C is a business model designed a little differently for business owners like e-commerce, online marketers or any business owners who want to reach more customers, but via other businesses.
Yes, the last “but” in the sentence makes all the difference!
Let me explain to you more precisely, Business to Business to Consumer business models work on the combined concept of (B2B and B2C) where the service providing business connects with another business to get more customer reach.
Here the service providers do not directly connect with the customer but pay the intermediary company to generate leads by selling its products through its network and thus growing its business through the increased sales.
Giving the definition a simpler touch let’s consider the service providing company to be (A), and the intermediary company to be (B) and the customer at the end to be (C)
(A)=>pays(B)=>leads(C) = Profit + improved brand value of (A)
The above workflow thus acts as the solution to one of the most prominent start-up business problems and that is, building the right audience.
A Practical Look Into This Model:
A real-life implemented examples can help you get a light to the above scenario. So where does this business model working in the real scenarios?
Taking car manufacturers as (A) who deals with the different dealers in the market that are (B) who in return will sell the cars to the Drivers or customers that are (C), thus implementing hierarchical pattern;
(A) Car manufacturers > (B) Car dealers > (C) Drivers
Similarly, there is one other such example that is;
(A) Food manufacturers > (B) Grocery stores > (C) Shopper
So now when you are clear about how the B2B2C model functions, it’s time to know about the rules that build this relationship.
What Are The Building Rules of Business to Business to Consumer Relationships?
So before jumping into the process of sharing information, there are some basic terms that both the parties mutually agree upon.
Here we are talking about (A) the service providers who want to access the consumer market and (B) who has access to the consumer data to sell the service.
Following are the legal terms that both parties agree,
Products original identity and integrity will be maintained:
Here the service provider party (A) assures that (B) can not sell this service with any other identity than the brand itself, as it’s not providing any white label solution to them.
Party (A) can access the consumer’s data:
The service providers are paying enough to get the leads from (B), but once the deal is closed, the party (A) can get all access to that consumer to give him a personalized service.
Build brand identity
While providing the service to (C), the intermediary party (B) has to make sure that it could promote the selling brand well enough to mark an impression in the market. This can help (A) to increase the visibility of its products among its real customers.
After, agreeing on all the above points, (A) hands over its product to be sold by (B) to its prospect customers (C).
Now the point is does this model work well for all the business?
Let’s look at the other part of the story..!
How Can The B2B2C Model Prove To Be Wrong?
The B2B2C model, when talked in theory, seems very simple but it’s hard to get it implemented right. There are many factors that might act as a reason behind the failure of this model. Below listed are some of them;
Week marketing strategy
The most important factor that can make or break your business plans is the strategy that you adopt to gain more business leads. But what if your intermediary party (B) has adopted a wrong marketing strategy? Maybe, your business is at risk!
Poor management of generated leads
What if the generated leads are not answered back on time? Your customers might not wait for you to call them back and would prefer the other service providers that could listen to their request actively.
The intermediaries desire to enter the same industry
Your business can only get deserved success if the intermediary party is not interested in getting involved in your business profit or do not have any plans to expand their business in your niche. Otherwise, it’s like having competitors in your own house.
Marketing cost increases the revenue amount
The biggest reason behind the failure of this model can be the investment amount getting higher than the profit amount, this can only lead a company to loss.
The above list is just a highlight, there are many more reasons that make a good going brand a failure with this model, but does this mean it’s not a good concept?
NO! What if I tell you that the most talked about brand “Google” itself followed it. Read along to know the story…
Yes, Google the tech giant today was once an infant company who took help from AOL the tech giant of their time to reach to its users. Google was completely a customer product, what it needed was the right audience to use its service.
Thus to get to the position that Google reaches today, it has to pass through the distribution channels like AOL to build its customer span.
Indeed, Google has some smart workers from its very start! But the question is how can these Business to Business to Consumer model help grow your business?
How Can You Make It Work For Your Business?
B2B2C is simply a constructive model. It can help both (A) and (B) to generate great revenues if implemented accurately. Irrespective of the niche where the model is implemented, it can assure at least a 57% success ratio from the market.
So, if you are planning to implement the B2B2C business model into your business, here are some things every business owner should keep in mind before adopting this model.
Does your intermediary party have enough knowledge about your niche?
You are giving your business services in someone’s hand, make sure they know how your services work and who can be your potential customers.
To make your business successful through the Business to Business to Consumer model, this is the first thing you should research about. If you think your service selling partner (B) doesn’t have enough knowledge about your niche, just back-out, as this would be better than giving it into the wrong hands.
Make sure your network effects are working in your favor
Once you are done with selecting your (B) party, start focusing on the marketing strategies they follow to get effective leads and the number of output you are getting from their efforts.
Here if you find the revenue generated from those leads is less than the amount you are paying to (B), it’s time you should rethink your decision and revise your policies.
Keep An Eagle Eye On The Sales Funnel
To run your business successfully, the next important thing is conversion. The intermediary party (B) might generate hundreds and thousands of lead for you but in the end, the service that you provide to those leads is what will make the difference.
So if you think you are ready to take care of all the above points, then my friend, you are ready to dive in the ocean of success.
For the one who is in the Fintech, Healthcare or SaaS start-up businesses you have some great opportunities heading your way to look for as the B2B2C business model is said to work well for this industry.
But if you think that you have a doubt or are confused about investing behind the model it’s better to take advice from the experts in your niche. Concerning the business consultancy services might help you get a better idea about making your business decisions.
You can also prepare a list of dos and don’t by researching about the success and failure of your industry giants before making your decision.
Didn’t You Have A Question, Why Can’t Companies Approach Directly To The Customers?
Who doesn’t want to directly connect with their customers? Everyone does right! But adopting the B2C culture has some risk involved, the people in the real-world have a stereotype of following and believing the one who is on the top.
Here as the new business owners, your brand and the products might have chances of getting less preference, unless it is recommended by someone who has established business or has already won the trust of people. In such scenarios, adopting the Business to Business to Consumer business model can prove to be fruitful.
So that’s all folks! The Business to Business to Consumer business model is a very broad niche to talk about, with this blog we have given you the basic understanding about this model, from its working to its execution along with the tips to keep in mind to avoid any worst-case scenario that could occur with the bad implementation of this model.
Hope this information can help you make at least a good start for your business plans.