Friday, January 8, 2016

B2B2C Is Dead. Long Live B2C2B!

Many startup and mature software companies are looking for Business-to-Business-to-Consumer (B2B2C) models as a new business opportunity to sell to other businesses. The idea is to start with a B2B approach, and then offer the services to the customers or employees of those enterprises.

In fact, consumer packaged goods manufacturers (CPGs) are a key target group. Why? CPGs want to build relationships with their end consumers, a relationship that has been typically owned by intermediaries such as retailers and restaurants.

I have seen numerous startup initiatives with CPGs and in other industries fail: A warranty app that wanted to connect end users to manufacturers. A bar app that wanted to connect patrons to beverage producers. Healthcare apps that wanted to connect patients for specific diseases with doctors and hospitals. An app for non-profit organizations that wanted to provide donors with a complete experience.

However, these businesses - the ‘B’ in the middle of B2B2C - typically lack the understanding of their end customers behaviors. They also know that they don’t know their end customers, and that is why they are interested others providing B2B2C apps. So if the first B - the startup providing a service - and the second B - the business customer - are both lacking in understanding the end customer C, nothing good will happen.


Ultimately this is the classic case of differentiating between users and buyers. A product needs to delivers value to end users, and only when it is desirable, it will also become viable with buyers. Building a successful product therefore requires an intimate understanding of the end customer, and is no different than any other B2C model, whether the target is a consumer, or an employee in a company. LinkedIn, Glassdoor, Box and many other SaaS startups are successful examples: Often, the product is free for the end user. Above and beyond the individual usage, the value to the business customer lies in the interaction and the analytics. The products are often seeded with user generated content using a ‘give to get’ model where for people to see information they have to post own data. As Tom Besse of Glassdoor said ‘you need to focus on something or someone so people will start talking about you’.

So there are no shortcuts to building products for businesses and their end customers and employees, but there are dead alleys. 

Stop calling it B2B2C - if a five letter acronym is required, B2C2B is the only path that will lead to a successful outcome.

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