Crucial differences between B2B & B2C product management
By: Adam Brownell
Tags: Enterprise Software, Product Management, B2B, Product, Sales

#1 Business Model

I’m a business man I’ve got business, man. Photo by Scott Graham on Unsplash

A major distinction between B2C and B2B products is the business model.

In B2C… revenue is generated from thousands of customers making millions of small transactions.

Whether it be subscription, purchases, or micro-transactions, this is how the business makes money. Even a business with whales — where a small cohort of customers generates a majority of the product’s revenue — still needs to rely on creating a great experience for everyone (more on this in a moment)

In B2B… revenue is generated from a small handful of large enterprise contracts.

These can be 6+ figure annual contracts. My first B2B company was cashflow positive after 5 huge contracts. Having significantly fewer customers completely changes the dynamics for Product.

The biggest distinction here is The Sales Funnel.

The Sales Funnel. Credit to MailMunch

In B2C, most companies will use marketing to generate as many impressions + initial conversions as possible, and it is up to Product & Design to funnel these new users down to paid conversions and keep them around. B2C Products can get thousands of hits a day, keeping the funnel fully stocked (and ideally growing) at all times.

In B2B, large meaningful contracts take a long time to develop. People may impulsively buy a $20 T-Shirt online from a B2C store; no company is impulsively signing a $250K annual contract for BI software. The typical enterprise sales cycle is 6–12 months (and from my experience 6–8months is insanely fast). This means it is up to Sales to nurture these contracts and bring them to the finish line. Product plays a fundamental role in this process by providing (at a minimum):

A Sales Deck with screenshots

An internal-only sales enablement deck with more technical slides and pricing

One pager and blog posts/whitepapers (if available)

General advice and support for Salespeople on technical inner workings of product

1–3 year (tentative) Product Roadmap so they can evangelize a long-term relationship with customer

As a B2B PM, I was actually part of our sales cycle and took enterprise sales calls. This not only helped support our Sales Team in answering challenging questions, but also gave me unbelievable insight into the needs of our customers.

Ridealongs to Enterprise sales calls somewhat mimics B2C enthnographic interviews, but from my experience Enterprise sales calls provide significantly more signal & insight into product needs than B2C calls; most likely because enterprise lacks the quantitative data a B2C sales funnel can create.

#2 Customer Problems

Things are never easy for customers. Photo by Sebastian Herrmann on Unsplash

At its core, Product Management is about solving Customer Problems. Good PMs can quickly figure out who they are building for and why.

But for B2B, this become a little more complicated because Enterprise Users are typically not Enterprise Customers

To define those terms, think of…

Users are the people who are actually using your product on a daily basis

are the people who are actually using your product on a daily basis Customers are the people who have deep pain points and will pay for your product

For B2C products, like a mobile app, your users are also your customers, since the people playing the same on their phone (users) also bought the app themselves (customers).

But B2B products, like BI software, would have employees who use it everyday (users) and their boss who paid for it (customer). Their boss many never touch the software, they just need to product to help their team achieve their goals.

It is absolutely crucial that you understand the differences between User and Customer problems, how they interact, and ultimately how to prioritize them.

A powerful rule of to use, from Gaines & Reeves book, is:

Treat Customer Problems as the “currency” that allows you to build alignment around a specific product vision

This is essentially to say that solving users problems alone will not get generate any revenue, and you will be dead in the water. While obvious when reading this article, it is an exceedingly easy trap for companies to fall into.

I believe this is because of a few reasons:

It is much easier for PMs to collect user interviews than customer interviews, as there are usually more users than customers overall, and customers tend to be extremely busy and hard to get a hold of. Also users are happy to complain to you, since they don’t need to make a strategic/monetary decision about it.

So if you aren’t careful, you may use the overwhelming passion and number of user interviews to justify building more user-supported features over solving the foundational Customer Problem that will ultimately keep your lights on.

Solving customer problems and user problems concurrently, while very difficult to do, is how you build great product for enterprise.

Can you solve User Problems first and then address Customer Problems later? Potentially. If you focus on conquering the total user base through UX, design, and heavy marketing, then maybe your users can pressure customers to buy your product to get with the times… but this requires evangelical users and large upfront costs.

Can you ignore User Problems since they won’y pay you? Sure, but tread carefully. Solving customer problems and ignoring user problems will result in a terrible user experience, but can still win contracts since the customer is the check-writer… just don’t expect to stick around long if another company actually listens/supports users. Ideally you want to get a few design sprints in to satiate users. As Gaines & Reeves state,

User Experience & Design own the user, Product Management owns the customer

So how do you know you have a strong Customer Problem? Here are few helpful exercises to go through:

Customer vs. User

Can the persona experiencing the pain point write a check themselves to buy your product? If yes, they are a customer. If not, talk to their boss. You’ll also notice that there are many personas of users (analysts, marketers, engineers) that your product addresses, but almost exclusively only 1 persona of customer (marketing manager, CMO, etc.)

Customer Problem Statement

Complete the following sentence:

“As a customer of [product], our company cannot grow as fast as we would like to because we can’t [problem].”

Customer Problem Statements are a staple of both B2c and B2B Product Management. Photo by airfocus on Unsplash

I find that the phrase “grow as fast we would like” is only really applicable to enterprise customers, since most users will be more focused on hitting tactical KPIs. This isn’t to say enterprise customers don’t care about tactical KPIs as well — they certainly manage their teams tactical KPIs — it is that the growth of the company often hinges on these higher-level strategic problems managers/leaders/check-writters

Product Iteration

Is the customer willing to accept a bootstrapped and simple (subpar) version of product to address their problem? This is a flavor of the classic Product mantra to “ship product you are embarrassed about,” but for B2B; we are essentially asking if you can successfully deliver a MVP to your enterprise customer.

This is a bigger deal in B2B, because unlike B2C with it mass of potential customers that can be A/B tested on, there are only a handful of enterprise customers and they do not want to receive a sub-optimal experience.

If you can deliver them a low-fidelity solution and receive glowing reviews, you know you have found an enterprise pain acute enough to build a company around. Maybe the early adopters will even help you on future iterations.

Conclusion

In the end, the nuances of B2B vs B2C are trumped by the fundamental skills of the Product Manager. If you are an exquisite interviewer, have strong feature prioritization skills, and deep industry and product knowledge, then the differences between the two markets will all but disappear.

But it is still crucial to adapt your tried-and-true B2C framework to B2B, so as not to miss the points mentioned above.

Hope this was informative, and let me know if you would like to write another article similar to this one!