B2B vs B2C Product Management: How do I decide?
Even though the underlying principles of product management are similar for all products and businesses, it is critical to understand the differences between the various types of management. In this blog post, I compare Product Management(PM) roles in Business-to-Business (B2B) and Business to Customer(B2C) products. In this discussion, I exclude different classifications of product management based on the nature of the role, such as Data Product Manager, Technical Product Manager, and Growth Product Manager. Most of this article is tailored to software-based or technology companies.
As a broad generalization, a B2B company sells a product or service to another business, whereas a B2C business sells it to a customer like me. Some companies, such as Google offer both B2B and B2C products. However, a product manager is unlikely to work on both products. Based on certain attributes, I analyze the similarities and the differences. I'll conclude with some advice on how to find the best fit for you.
Usability: B2B products are more functional in nature and solve very specific problems for businesses. B2C products, on the other hand, are more user-friendly and enjoyable. I see the lines blurring over time, and a few B2B products, such as Slack, are very well-designed. Many B2B products have remained "complex" due to multiple use cases and an informed customer base. For most B2B products, the users are trained to use the product and thus are aware of the various use cases of the product. B2B products have an implementation lifecycle that spans from weeks to months whereas B2C products are ready to use with a few keystrokes/clicks.
Distribution: In B2B products, the person using a product is often different from the customer (one who approves the purchase ). This leads to interesting incentives where the product is sometimes optimized for purchase rather than usage. In the case of B2C products, the user consciously decides to purchase/install the product. To expand their customer base and upsell, B2B products rely heavily on sales and customer success. PMs also frequently meet with these teams to review customer feedback and challenges. Furthermore, these teams are critical in gathering customer feedback and prioritizing the company's roadmap. Advertising, referrals, as well as other marketing tools, are the primary means of distribution for B2C products.
Monetization: B2C products are often provided for free to the customer or at an extremely low cost. The company monetizes through advertising or other auxiliary services. B2B products, on the other hand, have fixed long-term contracts with a high dollar value that can be usage-based or tiered pricing per seat (per every user). B2C companies require a lot of users in order to be successful, but also need to calculate their Customer Acquisition Cost (CAC) and Long Term Value(LTV) well. B2B products generally have large enterprise customers with contracts (exceptions are SMB focussed products) which keeps them going for a long time. B2B products typically have large enterprise customers with contracts (exceptions include SMB-focused products), which keeps them in business for a long time. Net Retention Rate, ACV (Annual Contract Value), and Churn are important metrics for B2B companies to consider for effective monetization.
Roadmap and Release Frequency: In addition to the company's goals, a B2B company’s product roadmap is strongly influenced by its clients (particularly larger ones). The roadmap is frequently made public for customers to plan ahead. The roadmap for B2C companies depends on a number of factors, including competitors, general macro trends, and evolving customer tastes. Due to the differences in customer profiles and the nature of the product, B2C companies tend to release more frequently than B2B companies.
Data: As an extension of what was previously stated, B2C companies make more data-driven decisions. Experimenting with users also aids B2C in gaining non-obvious insights into product usage. This isn't to say that B2B does not experiment. Because B2B products are critical to their customers and occasionally disrupt their business workflows, the scope of experimentation is limited. To be successful in both types of roles, PMs have to be data-driven and analytical.
User Base: A B2C product typically has orders of magnitude more users than a B2B product. PMs in B2B roles frequently meet with customers and learn about their problems. In B2B, where the product is tailored to an Ideal Customer Profile (ICP), customer segmentation is relatively easier.
What should I do if I can't decide between the two?
Like everything in life, it depends. These are a few things to think about.
Do you enjoy talking to customers, giving demos, and presenting at conferences? - B2B
Do you like data analysis, A/B experiments, and fast-paced culture? - B2C
Do you have extensive knowledge of a specific industry? - B2B
Do you have a technical background or experience with technical products? - Likely B2B
Having said all this, you should consider what you like and where you want to progress in your career. All rules are made to be broken, have fun!