B2B

B2B stands for “business to business” and describes a commercial relationship between two companies. B2B is also referred to as the organisational market, since it is a model in which one company or supplier sells products, services or other resources to another company — unlike the consumer market, so-called B2C, where those items are offered to end consumers.

The B2B market has a number of defining characteristics:

what is exchanged is usually a smaller number of high-volume orders;
more care and time has to go into processes such as negotiation, contract signing, and the purchasing, distribution and control processes;
relationships, trust and a good reputation are key aspects of the B2B market;
prices on the B2B market are set individually, based on the outcome of negotiation and the relationship between the trading partners.

Advantages

B2B contracts often run into thousands or millions of euros, which means a single acquired client carries enormous value for the company.
Once a company finds a reliable supplier, the cooperation lasts for years.
Thanks to contracts and retainer fees, cash flow is easier to plan.
Companies do not have to administer thousands of small orders; they concentrate on quality service for a smaller number of key partners.

Disadvantages

Months or even years can pass between first contact and signing the contract.
Marketing has to convince several stakeholders with different priorities (the finance person cares about price, the technician about functionality).
Obtaining contact details for the decision-maker in a large company is more expensive than obtaining an ordinary consumer's email address.
In times of crisis, spending on services and external suppliers is often the first thing companies cut.

Practical example

B2B relationships — commercial relationships between companies — underpin how many industries and economic systems work. In practice there are plenty of examples illustrating the various forms these interactions take. A steel producer, for instance, supplies raw material to a carmaker that uses it to build vehicles. A software company sells a CRM solution to sales teams, helping them manage customer relationships and increase sales efficiency. A marketing agency runs online campaigns for an e-shop in order to reach its target group and increase the client's revenue. Likewise an IT company provides cloud services to large firms, taking care of their digital infrastructure and data storage.