According to a CapChase report, 85% of business applications will be SaaS-based by 2025. This shows just how rapidly the SaaS industry and, more broadly, the B2B sales industry are growing. The global B2B market size is expected to reach 20.9 Trillion USD by 2025, reflecting the tremendous pool of opportunities that lie here.
Selling to other businesses as a business comes with a whole new set of problems and tactics.
Unlike the conventional B2C buyer, business or B2B buyers come with specific and crystal clear needs, and unless you can fully solve their pain points, no amount of marketing genius will help you close the deal.
Now let’s get down to the ins and outs of B2B sales, and cover its meaning, process, challenges, and more.
What is B2B Sales?
B2B sales refers to ‘Business-To-Business’ sales, wherein a business sells its services and products to other businesses. It involves solving another business's pain points and problems and building meaningful relationships with them.
B2B requires a longer, more well-established sales cycle and deeper and more personalized relationships with business stakeholders. Content marketing works really well in this scenario, which includes using educational and thought leadership content, along with downloadables such as templates, ebooks, etc.
Another important characteristic of B2B sales is that the order magnitude is usually large, and the frequency is usually low. For example, a business orders office supplies such as stationery, furniture, etc. once, and in bulk. These bulk purchases are common in the B2B scenario.
B2B SaaS, or software as a service served to another business, is the most popular category of B2B sales, or at least the most talked about. Modern software products are developed to solve business problems, such as expense management, employee engagement, sales compensation, customer relationship management, etc. These products are then made available to businesses on a subscription payment basis in SaaS.
B2B vs B2C Sales
B2B Sales vs B2C Sales (Summarized)
B2C (Business-to-consumer) sales are when a business offers its products or services directly to free-market consumers. In B2C sales, decision-makers are usually individual consumers who want to satisfy their wants and fleeting needs. For example, Samsung selling its latest smartphone to consumers via Amazon is an example of a B2C sale.
From the above example, we can recognize some aspects of B2C sales:
Individual or few decision makers.
Short sales cycle
High order frequency and low order value
Marketing tactics are highly effective
These aspects are essentially what differentiates B2B sales from B2C sales.
Hence, the main differences between B2B and B2C sales are:
Length of Sales Cycle
B2B sales are essentially investments being done by businesses to improve their overall productivity, hence, there is considerable thought put into the decision-making process by multiple stakeholders. This is why B2B sales cycles are longer and more complex, involving multiple touchpoints, demos, sales assets, etc.
In comparison, B2C sales are relatively quick and emotion-driven, involving swift decision-making by individual consumers, resulting in shorter sales cycles.
For example, a business investing in a payroll management system (Hence, B2B) will take time and dedicated effort to make a purchase decision, with many stakeholders such as the C-suite, the employees, the HR Director, etc. On the other hand, a consumer will be much more swift while buying a Netflix subscription (B2C Sales).
Length of Sales Cycle W.R.T Annual Contract Value in B2B SaaS
Decision-Making Process
The decision-making process in B2B sales involves careful need assessment, pricing assessment, demos, negotiations, etc. Multiple stakeholders carry out these steps, resulting in a complex overall decision and a complicated selling process. B2B sales involve large financial and resource investments, hence the case.
B2C sales, on the other hand, are relatively shorter and are much more impulsive. Since they are primarily driven by emotions or fleeting needs. For example, not a lot of thought is required to buy a pack of pens, since the investment is low.
Customer Relationships
B2B sales require the formation of trustworthy relationships between the two transacting businesses. SDRs (Sales Development Representatives) in B2B sales are often tasked with relationship building as the first task, as no conversions can be expected without proper relationships with prospects. Hence, there are multiple touchpoints across resources, meetings, negotiations, etc.
In B2C sales, however, customers usually touch the business only at the retail point of sale and do not interact with the business at all.
Marketing Approach
B2B marketing teams have to appeal to informed and educated consumers to make significant business decisions, hence, the marketing approach is to demonstrate tremendous expertise and experience in the target industry. This involves creating ebooks, guides, templates, and other such materials.
B2C marketing is designed to appeal to emotions and emotional consumers, to encourage them to make quick and impulsive buying decisions.
What is the B2B Sales Process?
B2B Sales Cycle
The B2B sales process starts with creating an ICP (Ideal Customer Profile). This is the kind of customer you (as a business) want to sell to. Then, prospects that fall under the ICP are targeted. These targeting activities are included in lead generation.
Below is a short overview of the B2B sales process:
Prospecting: This is the stage where salespersons hunt for business opportunities or businesses that fall under the ICP. Outbound cold calling, email marketing, etc. are some ways in which this is done. Inbound funnels using content marketing, lead magnets, etc. are also helpful, as the sales team nurtures these leads.
Connecting: This is the stage where salespersons reach out to the decision-makers from a business, and try to create a relationship with them. It is better to not pitch your product at this initial stage.
Qualification: This is the stage where the needs of the prospect are assessed, along with their budget, the timing of a potential purchase, etc. If there are any red flags in any of these, the sales team holds back sales efforts until a more appropriate time.
Proposal: The attempt to sell. If proper qualification has been done, a sale can be acquired at this stage. However, the customer can often have objections regarding certain features, or simply like a competitor better.
Proposal/Pricing Discussion: This stage involves presenting your value proposition. This stage involves negotiation regarding pricing, features, plans, and other components of the purchase. Both parties want the best deal possible, right?
Closure: Congratulations! You have closed a deal. This stage involves onboarding, signing contracts, and taking care of all other formalities.
Customer Success: An essential part of B2B sales, especially B2B software sales, is customer success. This involves helping your customers with support, resources, and anything else that they might need to have a successful time with your product and/or services.
For a more detailed view of the B2B sales process and buyer journey, check out Visdum’s guide to the sales cycle. It covers each stage, along with objections that may arise, in detail.
Challenges Involved in B2B Sales
B2B Sales Challenges
The unique nature of business-to-business sales makes it come with a unique set of challenges. Gone are the days when a good product could lead to high sales, as everyone has the resources to create a good product.
What matters then? The answer is your approach- and the subtle differences caused by it.
Here are some of the most common challenges in B2B sales:
Collaboration between sales and marketing: MQLs (Marketing Qualified Leads) are the talk of the town in B2B sales. B2B marketing purposefully targets a smaller group of high-level decision-makers to facilitate sales. The content and message (shared through ebooks, white papers, guides, social media platforms, blogs, newsletters, etc.) is consistent with projecting experience and expertise.
Long sales cycles: Navigating the sales process toward its end is tough in the B2B pipeline. Decision makers are many, competition is high, and the decisions themselves are based on a complex roster of factors. B2B sales cycles range from a few months to even years. There are frequent touchpoints, and leads have to be kept engaged to progress further.
Price sensitivity: B2B buyers are very price sensitive. They want the best ROI for their investment and aren’t hesitant to negotiate for the best deal. The best thing to do is to trust your product or service and have a limit to which you are willing to negotiate.
Lead qualification: There are many frameworks to qualify leads in the B2B market. One such is BANT (Budget, Authority, Need, Timeliness) which assesses whether a prospect has the budget, say in the purchase decision, need for the product, and how long it will take for them to purchase. If there are green flags throughout, the prospect is considered qualified to sell.
High competition: B2B markets are very competitive, and the competition only seems to be rising in the past few years. Differentiating your product and improving upon is a given, along with making sure that it speaks to the needs of the hour. For example, if in your space, AI features are the buzz, then you may miss out on customers if you shy away from them.
B2B Sales: How to Build Your Sales Team
After product or service development, sales is the most important business function in B2B. However, effective B2B sales require a lot of prior setup.
Here are the steps you can take to create a high-performing B2B sales team:
Start with tracking customer journey: The first step is to have a clear picture of your customer journey. It is for this reason that marketing needs to be sorted before starting sales. Create lead magnets, educational content, and sales enablement assets to boost sales effectiveness.
Hire competent SDRs: Hire SDRs that can target incoming interest and convert it into opportunities. Excellent collaboration between sales and marketing will set up a strong inbound pipeline for your business. Hire BDRs for outbound lead generation to assist and secure both fronts.
Create a strong sales culture: Prioritize refining lead qualification and scoring processes, and enhance productivity by leveraging sales technology. Equip account executives with up-to-date demos and software solutions to convert better. This includes tools such as CRM software, outreach software, sales engagement software, etc. Train sales reps to ask the right questions.
Motivate and incentivize your sales team effectively: Set up a culture that rewards frequently and accurately. Introduce non-monetary and team-based rewards to promote strong motivation and collaboration, respectively. Sales compensation software can help greatly in tracking and rewarding performance for sales professionals.
B2B Sales Metrics That Matter
Controlling sales performance is tough in any business. However, in B2B, the complexity is taken a step further. Because of long sales cycles, multiple decision makers, and large contract values, consistent revenue generation can become tough.
Here are a few of the important B2B sales metrics that you should track to keep things in line:
Customer Retention Rate: Customer retention rate refers to the percentage of customers that your business manages to keep over a specific period. It shows how satisfied customers are with your product or service.
MQL To Opportunity Ratio: This metric shows the quality of your lead qualification process. If lots of customers download a website asset and are sent over to sales as MQLs, but a very small percentage of this covert into sales opportunities, then the qualification and marketing processes have an error.
Win Rate: It is a simple metric that shows how many opportunities could actually be closed as won deals. It evaluates the effectiveness of your sales processes and defines sales success.
Average Lead Response Time: This is the average time taken by your sales team to respond to the first contact made by leads (submitting demo forms, emailing, LinkedIn outreach, etc.). Responding within the first minute boosts conversions by a staggering 391%.
Pipeline Creation By Month: This tracks the total value of new opportunities created each month. It helps identify seasonal trends and the effectiveness of your lead-generation efforts. For example, you might see that Q4 consistently generates 40% more pipeline than Q2, allowing you to adjust your strategies accordingly.
Sales Cycle Length: This measures the average time it takes to close a deal, from first contact to closing. Calculate it by averaging the number of days between opportunity creation and close dates across all won deals. For instance, if your average cycle is 90 days, you can use this to set realistic expectations and identify deals that might need extra attention if they're taking longer than usual.
The Future of B2B Sales is Led By Data and AI
B2B sales are heading toward a technology-centric hyperconnected environment. Gartner predicts that 80% of all B2B sales will go through digital channels first. This represents a huge shift towards remote sales and remote sales employees. Read more about his from McKinsey here.
Furthermore, automation and AI will not remain optional. As sales move toward data-driven decisions and digital channels, AI tools such as chatbots for outreach, predictive analytics for lead scoring, etc. will become necessary to survive the competition.
According to Harvard Business Review’s study, the number of channels B2B buyers use has doubled between 2016 and 2021 - and continues to grow. This marks a push towards omnichannel selling- over email, call, web, and more. Sales teams will have to adapt and integrate data from multiple sources to manage sales across multiple channels, another feat where AI shines.
Social selling- or building relationships with potential customers- is also key. SDRs will have to become more visible, more educated, and better communicators to grow brand awareness. B2B buyers can be anywhere- so creating your social presence will be key.
All in all, B2B is heading towards a more brand-oriented and data-driven approach. AI has only just begun impacting businesses, and It will be great to see where it goes from here.
Wrapping Up
Sales in the B2B space have evolved with many different tactics, strategies, and approaches. While marketing efforts may work to differentiate products in the B2C space, B2B continues to have tough competition that can only be survived through providing genuine value.
However, the biggest pro about working with an informed and educated set of prospects is that they know their own pain points well. If B2B businesses can solve these problems effectively, they don’t have to opt for tactics such as discounts or promotions to sell their solution.
With the new wave of AI-powered sales tools, the landscape is changing even further, as the capabilities of these products are unmatched compared to what businesses are working with now. This means more competition and more new strategies that will surely come up.
FAQs
What does B2B sales mean?
B2B sales refer to the direct sales of products or services made by a business to another business. The buying business is the consumer, which uses the product or service to aid its own functions.
What is an example of B2B sales?
An example of B2B sales is HubSpot, a marketing and CRM platform businesses worldwide use to track their customer journeys. It is a B2B SaaS product that helps businesses streamline their sales process.
Are B2B sales hard?
B2B sales require more input and more convincing to convert sales. This is because order values are generally higher in comparison to B2C, and the sales are need-based and not desire-based. B2B sales require trustworthy solutions and problem-solving.
How do B2B sales work?
B2B sales involve prospecting for leads, usually business decision-makers, that fall under the ICP (Ideal Customer Profile) for your business. Then, contact has to be established, needs assessment and negotiation is done, and finally, the deal is converted.
What is an example of B2B sales?
A business investing in HR software to manage its workforce is an example of B2B sales. This example reflects how B2B sales are mostly aimed at solving crucial problems for businesses, which in this case, is to manage employee data efficiently.
How to crack a B2B sales interview?
An analytical and problem-solving mindset is required for B2B sales. The sales process requires needs assessment, qualification, and other significant steps that require evaluating a prospective business on many levels. B2B sales interviews focus on checking for this quality.
Why is B2B better?
While what is “better” depends on perspective, B2B Sales usually deals with more sophisticated buyers who are more difficult to sell to. However, the transaction value is usually much larger in B2B sales.
How to excel in B2B sales?
B2B buyers have their own purchase criteria already determined, plus, they are educated about their needs and the problem they need to solve. That is why educational content and case studies work really well in B2B sales.
Which skills are important for B2B sales roles?
B2B salespersons need to be excellent communicators and need to have excellent knowledge of the product. Often, the founders are the perfect salespeople in the initial stages, since they are most adept with the product.
What is the B2B sales funnel?
A B2B sales funnel refers to the stages, starting from awareness, that a B2B buyer goes through before converting to a customer. It requires creating awareness, generating interest, winning at evaluation, and finally, encouraging action to purchase.
How does a B2B sales funnel work?
B2B businesses generate interest by creating case studies, creative interactive demos, giving educational blogs/resources in newsletters, etc. Social media presence is also built to serve as a thought leader in the industry.
What does a B2B sales representative do?
A B2B sales representative focuses on generating leads, nurturing MQLs (marketing qualified leads), and creating and maintaining relationships with prospects.
How much commission do B2B sales make?
Salespersons in this industry make on average, 2 to 6 % of the sale value as commissions. However, with extra incentives and SPIFFs (Special PurposeI Incentive Funds), their commissions can reach as high as 12%.
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