Key differences between B2B and B2C product management

Product management is a multi-dimensional role that can look very different across organizations (start-up, mid-mature orgs, MNCs), product maturity (Early stage, PMF, Growth stage) and product type (B2B, B2C, B2B2C, D2C). Our focus for this series is B2B vs B2C product management. Irrespective of its varying nature, Product Management can be broken down into 4 foundational stages:

1. Discovery phase – Before a single line of code is written, a PM should be able to identify these 4 risks for the product: Value risk (will customers buy it?), usability risk (can users figure out how to use it?), feasibility risk (can techies build it given time, skill, money constraints), viability risk (will it work for other aspects of business; is it in-line with company mission, vision?) (Source: https://www.svpg.com/four-big-risks/)
   During this stage the PM has to communicate these risks with stakeholders for go-ahead
   
2. Design and Planning – This phase is the journey from problem space to solution space. PM has to work with designers, tech architects to progress from wireframes to high fidelity clickable prototypes. Customers can go through clickable prototypes and provide valuable feedback before development.
   This stage provides a great understanding of usability and viability risks.
   
3. Development – This is the core phase of execution. PM has to work with engineers, QA, Scrum master, and others to get the job done. While PM is not responsible for actual delivery, their primary job is to keep all stakeholders in sync for next stage of product launch.
   PM has to tame these difficult beasts during development phase: scope creep, misalignment among stakeholders, and internal/external dependency
   
4. Launch and Iteration – This phase is the manifestation of all previous three phases. Solid launch plan will ensure high user reach and adoption among the target audience. After launch, PM will know whether the product is valuable and usable for the users. Many a time MVP version will not make the cut as a strong product among users. PM has to learn from product usage metrics and iterate on MVP.

These 4 stages are sequential in nature. There are important differences between B2B and B2C product management practices in each of these 4 stages.

During this course of series we will focus on B2B SaaS (Software-as-a-Service) product management; on-prem and perpetual licensed products are not within the purview of these articles.

First, how would we define B2B and B2C products? Then we will dive into B2B vs B2C product management.

By definition B2C products are sold to individual customers. Mostly, the user and customer are same for B2C products. For example, Amazon, Airbnb, Verizon, Paypal. There are some aberrations though. For example, baby products are used by babies but are bought by parents. We use them

In contrast, B2B products are used by employees of firms and are bought by finance department or department head who barely uses the product. For example, Google Workspace, Microsoft 365, Salesforce, Adobe. The user and customer of a B2B product are different. Broadly, users can be segregated into 4 persona: user, buyer, influencer, admin.
End User – who uses the product on a daily/weekly/monthly basis
Buyer/Decision maker – person who approved the budget; typically a C-suite executive
Influencer – who has prior experience working with same/similar product and has a say in buying of product; this persona isn’t typically a user of product but has good influence in buying process
Admin – who sets up and manages roles, permissions, etc. for product

Here are the top 5 areas where difference between B2B vs B2C product management exists:

1. Type and number of customers –
   B2C – large in number, no individual influential customer but power users dictate a lot of features in backlog. Ticket sizes are smaller and customer churn is higher
   B2B – relatively low in number, large account customers can call the shots for feature release. High value transactions are common, can go into million dollar per account. Annual, multi year contracts are common and customer churn is very low
   
   
2. Product release cycle –
   B2C – product releases are more frequent (typically once in a fortnight/month) and updates are quickly adopted by customers. This helps product managers quickly understand if the new feature release is moving towards the intended goal. B2C product metrics start moving within a week of release.
   However, release cycle depends on maturity of product. If product is at an early stage, there are not many early customers and release cycles are faster. If product is mature, there would probably be millions of users and product managers have to very careful to not make existing customers angry
   
   B2B – customers don’t want product changes very often. Huge number of customizations made by customers make it difficult for shorter release cycles. Customers need to go through training materials, help files, release docs and understand the impact of product changes in their customizations. New release adoption cycle is much longer for B2B products.
   B2B product metrics take time to show results.
   
3. UI UX demands –
   B2C – UIUX is very critical for B2C users. Users are vocal and critical about slightest of the misaligned UIUX. Change in position or color of a button can make or break a successful product release. Google ran A/B tests to decide which shade of blue is the suitable color of a specific button. B2C PM has to do enough A/B testing to ensure the product usability standards are exceeding user expectations. Because the number of users are high, A/B testing results can come with high confidence.
   
   B2B – B2B customers have high tolerance for UIUX glitches as long as the functionality is working and they are able to get the work done. Because the number of users are not as high in numbers, it’s tricky for PM to show A/B test results with high confidence level.
   
   
4. Product Roadmap
   B2C – PM has to manage only internal roadmap. Users don’t bother about what features are going to get released next sprint or next month. If they raise an issue or feature request and they get it, it’d make them happy. But rarely they get out of their daily life and look for upcoming features in B2C products
   
   B2B – PM has to manage two distinct roadmaps: internal and external. While internal roadmap can be more detailed with numbers to back-up, external roadmaps are succinct and crystal clear on what’s coming with release dates cast in stone.
   
5. Tech Debt
   Compatibility, Security, Reliability, Usability, Efficiency, Maintainability, Portability are main areas where engineers and PM cut corners to release a product fast
   
   B2C – Tech debt is more manageable
   
   B2B – customers are always looking for customization options to suit their business needs. B2B tech debts much more difficult to manage compared to that of B2C 
   
   

Switching Cost
B2C – Due to low entry and exit barriers, switching cost is very low. It doesn’t cost a cab driver anything to switch between Uber and Lyft. User might face initial difficulty after switching to a new product because the previous one had lots of data for personalized user experience.
For marketplace products, switching cost is high if there is a critical mass. WhatsApp user would find it difficult to switch to other B2C messaging platform ‘because they have all their contacts in WhatsApp

B2B – Very high switching cost. Data migration, user training, partner ecosystem are major factors for considering a switch between B2B products. The longer a product is used the higher is the switching cost.

In the next blogs we will deep dive into each of the 4 phases and uncover how those 6 areas, and other product management areas as well, make life different for B2C vs B2B product managers.