Quick Takes:
Life seems to be centered around symbiosis.
We all like to think of ourselves as independent, and to a large part we are, but nothing is achievable without the direct input of another. That “input” can be anything from advice to an introduction to physical materials, and that “other” can be a person or an organization, but without the input for others, it’s hard - if not impossible - to be successful.
Business is no different.
We’ve all heard the classifications: you’re either a B2B company or a B2C company…whatever that means. Kidding. For those who don’t know, a B2B company is one that sells its product or service directly to another company, i.e. a “business to business” company. I’m sure you’ve caught on, but a B2C company is one that sells its product or service (seemingly) directly to a consumer, i.e. a “business to consumer” company.
Seemingly? Why would a B2C company only seemingly sell to a consumer. Doesn't a B2C company, by definition, sell directly to the end user?
Well, think about this scenario: you run a toy company that creates toys for kids, predominantly aged 6-12. To you, at least at first glance, you’re a B2C company that creates products directly for the end user: the consumer.
But how do you distribute and sell those toys? Chances are you’ll need to get a major retail account if you plan on being successful. Getting your product placed in the big box stores like Target and Toys ‘R’ Us is how you get your product to sell. So, while your product is built for the end user, you’ll need to create value-adding relationships with the buyers and merchandisers within the Targets and Toys ‘R’ Us’ of the world, in order to get your product to your consumer.
How, then, do go about creating those value-adding relationships that will get your toys in the right stores? Well, you need to add value to the buyers and merchandisers of the big box stores in such a way that it makes economical sense for them to run your product line. Your product, although meant for the end user, needs to add as much value to Target and Toys ‘R’ Us as it does to your consumer for your company to be successful.
Fortunately, if you focus on adding value to your consumer it will also add value to your retailers, since by adding value to your consumer the same consumers will add value to the retailers in the form of purchases. But the value you need to generate to your retailers can’t be forgotten. If it is, you don’t have a business.
So by focusing on making the best product possible, you add value to your retailers by offering them a new product that will outperform their existing products on either price point or volume. In turn, retailers will add value to you though displaying and marketing your product line in their stores.
A symbiotic relationship, no?
It’s only through a mutual value-add between your toy company and the big box retailers that you’re able to add the intended value to your consumer. Without first adding value to the businesses you rely on, however, that consumer value will never be delivered.
Oh, you’re a solo-preneur, you say? You sell your toys directly on your website, and not in retail locations? Sounds like a true B2C, right? Mmmm…no.
Even if you sell your product directly on your personal website (which is as close to a true direct-to-consumer sale as possible), you’re still relying on other companies. You have a toy manufacturer, at the very least. And what about the POS plugin you’re using on your website to take payments? A company made that, and by paying for its use, you’re adding value to that company.
You’re adding value to your toy manufacturer in the form of payment for their services. They’re adding value to you by manufacturing your product at the lowest price possible in the timeliest fashion possible. If you don’t add value to them, there’s no reason for them to manufacture your product, and your business is dead in the water.
The value add, thankfully, is the same. If you focus on adding the ultimate value to your consumer, it will allow you to sell product at scale or charge a higher price for your product, allowing you to then meet the payment terms of the manufacturer and adding value to their business.
A B2C company will always be a B2B company, because it will always have touch points with other companies. If you aren’t adding value to those companies, either in the form of price, volume or story, those touch points will disappear. It’s a little harder to see why a B2B company is really a B2C company, but I’m sure we’ll all see it. I have faith!
Using the same example for the exercise above, now look at things through the eye of the manufacturer. For you, the manufacturer, it’s easy to see why you’d consider yourself a B2B company: you manufacture goods specifically for other businesses needs ( in this case toys), often times through a licensing deal or through direct payment for your services.
But, for you, in order to add value to the business employing your services, you need to take a “client-consumer” business approach. This means that to add value to your client (the toy company), you need to add value to your client’s consumers. A B2C company won’t care about your services unless it allows them to directly add value to its end user.
Your value-add as the manufacturer could be through low cost solutions that will allow your client’s consumers to enjoy their product at a lower price point. It could be through speed of implementation, which will allow your client’s consumers to enjoy their product in a more timely manner. It could even be that you have some proprietary technology that makes you the only manufacturer who can manufacture the value-adding features of your client’s toys, which adds value to the consumer through sheer existence of the product.
Regardless of how you add your value, it’s only valuable to your client if they can pass that value on to their consumer. Therefore, a B2B company should always approach business through the ideology that its client’s consumers are its consumers, and by adding value to those consumers, it's adding value to its client.
We stated previously that even though a B2C company is a B2B company, value is added across the board by focusing on adding value to the end user or consumer. So, if a B2B company focuses on increasing the value to those consumers, it addresses the ultimate concern of its client, which is to deliver the most value possible.
B2B companies should always focus on how its product or service makes the consumers of its clients happy. It should, at least conceptually, think of its value add as a pure B2C play, even if its clients are businesses.
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The theme here, regardless of business classification, is value. Don’t be mistaken, “value" isn’t a buzzword to be thrown around. Value has to be tangible, in that it’s one of three things: price, quality or volume. To add value, a company needs to offer a low priced solution, a higher quality product than its competitors (whether through additional features or through a higher quality production process) or through the ability to drive volume.
How you specifically you drive that value doesn’t really matter in the bigger picture, we’ll save that for the nitty-gritty. What matters is that you’ve identified that you need to add value to every touch point of your business. Business or consumer, it doesn’t matter. Anything and everything you do within your business should add value in some way.
You can take this approach and apply it to anywhere in life. Even if you’re trying to network or socialize, you should always focus on adding value to the other party, and never try to take value. Enjoying the corporate life and trying to get a promotion? Same rules apply. Focus on adding value to every part of the business your job touches (especially your managers), and value will be returned in kind.
By adding value in your personal and professional life, they’ll integrate with each other to build a base upon which you can construct your greatness.
Check out my recent newsletters on the topic
