What are B2B Sales?
Plainly put, B2B sales refers to business-to-business sales. Businesses that sell to other businesses perform B2B sales. Think about a furniture manufacturer that sells to hotels or a company like Asana that sells licenses to their project management software. Forbes pronounced 2023 to be the year of “business enablement for B2B sales,” which is a fancy way of saying B2B sales are going to be more important than ever. Let’s take a deeper look into B2B sales and their growing significance.
There are four B2B markets and purchaser types
Businesses that conduct B2B sales will interact with a purchaser that can be described in one of four ways.
Resellers do what their name implies; resell goods they did not manufacture. Typically, resellers will buy in bulk for a discounted rate and then resell the products for profit. Grocery giant Whole Foods orders goods from a large variety of companies, many of whom rely on wholesale orders from resellers.
Producers purchase raw materials and services needed to create a product. The home design manufacturer West Elm buys wood, fabric, and other goods necessary to build their furniture. They get these materials from suppliers who specialize in raw materials.
Government buyers are fairly self-explanatory. Some of the largest sales are conducted between a company and a government organization. Businesses that specialize in aircraft technology may have the US Air Force to thank for a majority of their sales. Additionally, drug manufacturer Pfizer sold their Covid-19 vaccine and Paxlovid treatment drug to the US government and saw profits skyrocket.
Institutional buyers are typically nonprofit organizations or other groups that need products or services. Colleges like Harvard order university-specific clothing, decor, and other promotional materials. Some of the products may be sold for profit, while other products are to be given away. Nonprofits like Habitat for Humanity need a lot of raw materials to build homes – the main function of their organization. For nonprofit institutions like Habitat for Humanity, keeping the cost low is paramount.
B2B sales fall under one of three categories
Wholesale orders and large-quantity purchases are considered distribution sales. Companies without their own brick-and-mortar stores will sell to retailers who intend to resell the product. Large retailers like Target will buy a variety of products from hundreds of brands. So while Target sells Yeti products, they had no part in making them.
Companies that do not have a physical product perform service sales or software-as-a-service sales (SaaS). Content management software, WordPress, is a widely-used example of SaaS. A company can buy the right to use WordPress to create and maintain a website, but they do not own a physical product, nor do they have proprietary ownership of any WordPress feature or function.
Businesses that do supply physical resources do so through supply sales. For example, companies in need of office supplies like paper, paper clips, staples, and more can purchase all of those products in bulk through a supplier like Office Depot. Individual consumers can buy the same products in smaller quantities through Office Depot’s website or their brick-and-mortar stores.
Real-World Examples of B2B Sales
If the concept of B2B is new to you, take a deep breath. Examples of B2B sales are all around you. Imagine you want a new MacBook. You could go to a large-scale retailer like Best Buy who purchase the MacBooks directly from Apple. Or, you could buy from Apple directly. Regardless of the option you choose, B2B sales had to happen in order for you to get the laptop. Best Buy had to purchase the laptops from Apple, and Apple had to purchase the materials needed to manufacture the product. Here are some more examples of B2B sales.
Software-as-a-Service: Adobe Creative Cloud
Adobe is a juggernaut in the SaaS space. In 2022, the software company saw a revenue of $17.61 billion, and much of it can be attributed to its Creative Cloud product. Adobe Creative Cloud is a collection of media creation software that requires a license to use. Adobe sells individual licenses and business-specific licenses at different price points. Companies with the business package are able to share the software with employees without the need for multiple individual licenses.
Supply Sales: Restaurantsupply.com
Restaurants order in bulk to cut down on supply costs and to stay ahead of demand. So, they work with wholesale retailers like Restaurantsupply.com for cost-saving inventory options. Restaurant Supply carries all manner of restaurant supplies, from disposable drinkware to industrial potato slicers. While a consumer may make a purchase, a majority of the site’s business comes from restaurants.
Distribution Sales: Martin’s Family Fruit Farm
Farms typically sell in bulk to grocery stores or food manufacturers. They may sell directly to consumers at farmer’s markets or through a website, but traditionally, their products are purchased by resellers. Martin’s Family Fruit Farm, an apple farm, sells its apples and apple products wholesale. Purchasers then resell the products individually for a profit.
What is the Difference Between B2B and B2C?
If B2B is business-focused, B2C is all about the consumer. B2B sales can differ wildly from direct-to-consumer sales. Here are some key differences between B2B and B2C.
B2B companies endure longer sales cycles
Due to the scale of most B2B sales, the process takes longer than B2C sales. The acquisition and finalization of sales can last businesses seven months or longer. However, repeat customers require less time to place future orders as they trust in the product and know the experience they will receive.
Multiple stakeholders are involved in business purchases
Consumers usually make purchasing decisions themselves. Some may consult household members, but there is never a board that approves individual purchases. Businesses do have committees, boards, and departments for purchasing decisions. So one member may see the value in a product while other members could think the product is overpriced. There are more people to convince in B2B sales.
Business buyers are motivated by facts and easily swayed by discounts
Direct-to-consumer sales rely on marketing that resonates with a target audience. Successful consumer marketing uses emotion to drive a connection between product and person. In the world of B2B marketing, function reigns supreme. B2B purchasers ask, “what can this product or service do for our business?” A photography studio is less concerned with how light will make them feel and more focused on the wattage of a particular light bulb.
Businesses buy in bulk and on a routine basis
Businesses that need raw materials to make their product or resellers who rely on other businesses for inventory all appreciate discounts. Discounts for repeated bulk or wholesale orders entice businesses on the purchasing end. The selling business in turn, benefits from consistent, large-scale sales.
What is an Effective B2B Sales Process?
In B2B sales, there are usually multiple stakeholders that must be included in the sales process. The process is rarely as simple as, “they see it, they want it.” A B2B sales process is heavily influenced by the service or product being sold. However, there are steps all businesses can take to ensure an effective B2B sales process. Here are some actions that contribute to an effective sales process.
1. Conduct in-depth market research
Businesses should know their niche inside and out. Research should be conducted on competitors, consumers, and current marketing trends. Surveys, web traffic, data reports, and search engine usage all provide valuable market information.
2. Understand a potential purchaser’s needs
A business that makes a large purchase is doing so out of necessity. As we previously discussed, businesses make purchases for a plethora of reasons. Understanding why a business needs a particular product makes it easier to sell. B2B sales should focus on eliminating pain points and making current processes run smoother.
3. Approach qualified leads
Businesses that understand a potential buyer’s needs will have an easier time determining whether the lead is worth pursuing. Sellers can gather information like budget, the intended use of the product, and stakeholders involved in purchasing decisions. All of this information can be addressed in the sales process.
4. Meet with potential buyers to foster trust
Whether it’s a follow-up to a sales pitch or a first-time introduction to a product, meeting with a potential buyer eliminates confusion and facilitates connection. Representatives from the businesses can meet and discuss anything from concerns to needs assessment. Purchasing businesses will appreciate an attentive relationship with a supplier.
Strategies for Successful B2B Sales
Just as the B2B sales process varies upon industry, so do the strategies for success. In 2023, there are some strategies that seem to be more effective than others. The following tips can yield results.
Engage B2B buyers with creative content
Creative content is not just a strategy for direct-to-consumer marketing. Purchasers rely on content like blog articles and testimonial videos to inform them of new and innovative products. Publishing content intended for B2B audiences will engage potential buyers and present the business as a reliable source of information.
Introduce and encourage faster sales with social selling
Social media marketing has become an increasingly effective way to advertise and drive sales. Social selling is a quick way to make connections with a potential buyer using social media. Popular networking site LinkedIn is a popular spot for connecting with key decision-makers. Social selling reinvents the cold call and allows for more direct lines of communication.
Create a unified approach by aligning sales and marketing departments
Marketing and sales departments should be intertwined. Marketers should lead the charge in creating effective campaigns that can be understood and utilized by the sales team. The sales team in return, should share data, feedback, and other relevant information that can be used by the marketing team to create or modify campaigns.
To Summarize
Business-to-Business or B2B sales are conducted by companies that sell directly to other businesses. Examples include manufacturers who sell wholesale products to brick-and-mortar stores like Target, raw material providers who deal in components like fabric and wood, and goods suppliers who sell equipment and other finished operational products. Understanding the needs of a potential buyer, social selling, and market research all contribute to success in B2B sales.
Though B2B sales differ from direct-to-consumer sales, they can be tackled by creating a smart, buyer-focused sales process. Marketing and sales teams can benefit from proactively learning more about the best strategies and practices for selling directly to businesses. B2B sales are expected to take prominence in 2023, providing game-changing opportunities to those who can seal the deal.