B2B sales: how does business to business work?

B2B (Business-to-Business) sales is the process of a mutually beneficial partnership between two or more businesses, where one company sells goods or services to another. 

In contrast to the B2C (Business-to-Consumer) model, where a company is focused on selling to the end consumer, B2B sales involve cooperation between businesses. This often involves more complex and long-term contractual relationships.

What does business to business sell?

Businesses that operate on a B2B model are usually this way:

• manufacturers of goods that produce and sell their products to wholesale or retail stores, as well as purchase equipment and raw materials from other companies.

• Suppliers who resell manufacturers' products to the same stores or online retailers at wholesale prices.

• Large corporations and enterprises in various industries, including the service sector, that sell their services to other companies.

B2B companies can also offer their goods or services to ordinary consumers, without intermediaries. For example, manufacturers of well-known brands sell their products both to online stores and to end consumers in their branded stores.

Main features of the B2B market

✅ Long-term agreements. Sales to business customers, unlike to ordinary consumers, can take a long time due to the need to analyze and agree on the terms of the transaction in detail, negotiate, and sign contracts. Companies strive to build long-term, trusting and stable relationships, as the loss of one major customer can have a significant impact on the business.

✅ High average check and transaction volume. B2B businesses generally generate significant profits because the value of transactions is high and they are made with large companies or enterprises. The value of a transaction can vary depending on the parties' agreements and the terms of the partnership. For example, supplying raw materials for production or selling complex software to large corporations can be expensive and time-consuming.

✅ Personalized approaches. B2B sales require a more personalized approach and close cooperation with customers. Products and services in B2B are often personalized to meet specific customer needs. This may include special customization, technical support, and other customized solutions.

✅ Professional relationships. Companies often work with professionals who have a clear understanding of their business needs and are looking for specific solutions. B2B clients usually have expertise in their niche, so they choose their partners more carefully.

✅ Marketing and sales. In B2B, marketing and sales are focused on building reputation, demonstrating expertise and technical superiority. This may include participation in exhibitions, webinars, presentations, and the creation of technical documentation.

The main differences between B2B and B2C sales:

• Target audience: B2B is focused on businesses, B2C on end users.

• Sales cycle: longer in B2B and shorter in B2C.

• Volume and value of transactions: higher in B2B.

• Decision-making process: collective in B2B and individual in B2C.

• Marketing: B2B is more focused on personal relationships and technical aspects, while B2C is more focused on mass advertising and emotional aspects.

Examples of B2B sales

Sale of industrial equipment

A company that manufactures metalworking machines and equipment sells them to manufacturing companies. The transaction involves demonstrating the equipment, negotiating the price and terms of delivery, concluding a contract, and subsequent maintenance.

Supply of raw materials

A chemical company supplies raw materials (e.g., polymers) to plastic manufacturers. The cooperation may include long-term contracts with regular deliveries, as well as technical support on the proper use of raw materials.

Sale of business management software

ERP system developers, such as Torgsoft, sell their software to businesses of various sizes, lines of business, and forms of ownership. The sale of such a product includes an analysis of the client's needs, a presentation of the product in the form of a list of all the advantages and benefits for the client, personalization of the accounting system to the specific features of the business, staff training and further technical support for setting up and working in the program.

Outsourcing of IT services

Companies in the IT sector, for example, can establish contracts for freelance maintenance of the IT infrastructure of a large bank or other company. Remote technicians provide ongoing monitoring and protection of information systems, technical support, software updates, and cybersecurity measures.

Supply of office furniture

For example, a manufacturer or distributor of office furniture enters into an agreement with a large corporation to supply furniture for new offices. In the contract, the company may specify the following mandatory works: design development, custom furniture manufacturing, delivery and installation of furniture, etc.

B2B sales are an important segment of the economy, which has its own peculiarities of concluding transactions and requires specific approaches to marketing and customer relationship management. Understanding these nuances allows companies to operate more efficiently in the market, build long-term partnerships and succeed in a competitive environment.