Whether you are B2C or B2B, you will have to get the approval of four parties before any transaction is made. If any of them don’t like any of the four Ps of marketing (Product, Price, Place, Promotion), they will be able to veto the transaction. A purchasing decision is an exercise in alignment.
As a basic example consider a child that wants an iPhone. They will be the user of the product and their only interest is the product, not the price or anything else. Taking the child shopping might be dad- if he isn’t willing to go out, and then make the purchase, there is no customer regardless of how brilliantly designed for children the iPhone is.
Keeping an eye on the family accounts might be mum, the payer. Even if dad likes the idea of the shopping trip and the product, without her approval there’s no money to spend on the transaction. Finally, behind the kid’s interest in the iPhone were the school friends, celebrities on the adverts, and other influencers that made him or her want it in the first place.
User
The user is interested in the product itself. This is the person who will be interfacing with your user experience (UX) design on a daily basis.
We’ll use a B2C example, Medify (CEP2017), a hugely successful company that provides students taking the medical entrance exams for university with support to get through the exams. Medify’s user is the student, so product design must focus on their needs- not the university or exam board’s preferences.
For a B2B company, there is usually a larger disconnect between the company and the user, as the human user will be an employee of the purchasing counterpart. If you are selling to the NHS, or a GP practice, the user is actually the doctor, nurse, GP or other employee who will personally use the product each day. The simpler the UX, the larger the market of potential users, as larger numbers of non-specialists fall within the purview of the product.
Shopper
For Medify this is the student again. They might be inputting their parents’ card details, or borrowing the money, but regardless of who pays, it is the student who performs the transaction. To that end, marketing has to draw the product to the attention of students, and price points have to be somewhere that students feel they can (and want to) cover themselves, or are comfortable asking their parents for.
For a B2B company, the issue is that expanding the market to larger numbers of potential users means a lot of individual sales have to be made, costing time and money. Instead, the norm is to want to transact with a few counterparts who can perform a single transaction for as many users as possible, for example making one sale to a hospital trust for one thousand items, which the trust then distributes to each to its thousand nurses. Note the extra distance between you and the user journey; the directors and purchasing bodies you talk to at CCGs and Trusts are very different to the users.
The shopping experience focuses on the Place and Promotion. Promotion for Medify means getting the right balance of a cheap and accessible product (weekly subscription, cancel any time), and locking in value from your customers (a one-off purchase of the full product at maximum price). The company went for a monthly subscription model, so that shoppers (here the students) could feel they were testing the product before committing for longer.
Promotion for B2B is about how many units to sell to each shopper, and what to include by default or leave out as extra-cost items; training days, software support, hardware replacement, and so on. At some level, the question becomes whether this a sale or a license of a capability.
Payer
Within the public sector this can be a number of groups each with a veto. A sale to a hospital department might require departmental, hospital, trust, and other approvals before the funding can be released.
For Medify this could be either the student or their parent. In either case, there is usually a certain financial commitment being made if someone is going to go to medical school, and the desire to get in is strong, so there is an inelastic market- raise the price, and people will still buy. This favoured a high pricing model.
As an aside, the mission statement of Medify is to democratise medical education, not extract value from desperate students, and so it priced itself much lower than it could have. But this was not guesswork- the CEO followed the data closely and determined the exact behaviour of his payers. Too cheap and they get suspicious, don’t buy, and you fail your mission, too expensive and you fail your mission implicitly. He drew out the whole demand curve and optimised price for numbers, not profit. Medify has over one third market share at time of writing.
An attractive aspect of selling to private companies over the NHS is that the same corporate headquarters may include both procurement and finance. That means less time spent on meetings and a faster route to revenue. Of course, HQs have separate financial departments internally but from the seller’s perspective there may be less hurdles than there are in a sale to a publicly funded body.
Influencer
For B2C these tend to operate on the customer, whereas in B2B they can have a larger influence on the payers.
Medify spread mostly through word of mouth, giving it very low advertising costs. Students compete for places at medical school and don’t want to be left out of a product that can help you get in. Each user was the influencer of the next user, and so long as each user recommends one or more other people then you will, in theory, have infinite growth.
B2B products, especially devices, have a harder journey. Influencers for a medical product can include regulatory bodies, CE marking, and clinical trials. A negative review from a certain publication could be fatal to uptake. That is not an insurmountable problem, as you can diligently go through all those stages over a number of years, but it means a different time to first revenue.
Identification and Alignment
Based on the user-shopper-buyer-influencer profiles alone, you can guess as to what kind of funding a company will need. Medify, with exponential word-of-mouth advertising and influencers driving other users forward, was self-funded and reached international expansion without ever taking in money.
B2B companies, facing corporate negotiations and regulators who prohibit use of a product until convinced otherwise, often need to raise large funding rounds as soon as prototypes are complete.
Having segmented your customers (see the article on segmentation), you will need to do a user-shopper-payer-influencer breakdown for each one. Your core resources need to align with your customer segments and their internal breakdown, and all of that needs to align with the funding plan.