Marketing · Pricing strategy

If you could do both B-B or B-C which would you choose or would you consider doing both?

Ela Emami Founder/CEO of care2manage

July 2nd, 2015

Developing a software that if marketing B-B would allow more robust channels but longer sales cycle or could go B-C which is a shorter sales cycle but possibly higher customer acquisition cost... Would you do one or the other, or both? How would you determine pricing structure and price point if you do both so no one feels cheated?  
(Maybe this is 2 separate questions)

Todd McMurtrey Global Marketing Operations Manager | Digital Marketing at Medtronic

July 2nd, 2015

Interesting question.

My immediate question is: Who is the product better suited for?

A B2B product serves a different need (at least in nuance) than a consumer product. If you are approaching it from the point-of-view of "which is the better market" then I'd suggest ensuring that the product reallyreallyfits the need of that audience.

Reading between the lines, it seems you want to do both. This is fine so long as you hit the unique needs of each. From a pricing standpoint, I'd do something like this (not knowing anything about your product, and probably making several bad assumptions):

  1. Consumer Demo Account: Free
  • 90 day trial. Some features missing
Consumer Account Cost: X Corporate Account Cost: 3X (or some multiple)
  • Comes with multiple logins
  • Comes with extra features (reporting, collaboration, or whatever)
  • Additional logins can be acquired for .75X (or at some discount)
The benefit to this approach is it may (depending on your software and what it does) allow employees to use and experiment with the software on their own before signing up as a business (or to find it on their own before promoting it to their business).

I think Trello.com might be a good model here, as would many others.

Other items to consider:
  • Which are you setup to do? Do you have a sales team? Do you have a digital/traditional marketing team?
  • What's the lifetime value of each audience, both in terms of revenue and upgrades, but also in terms of softer values like referrals, success stories, etc?
  • What's the realistic first-year value of each audience and how much does that matter for cash flow?

Ravi Challu CEO at PARC Technology Research Labs Pvt. Ltd.

July 3rd, 2015

Hi Ela,

We have dealt with a similar problem in our business. And this is a problem most online services/ e-commerce companies deal with. To give you some context we were in the business of aggregating tier 2 (Not national brands) retail chains to provide a precision marketing platform for FMCG brands.

What we did was to answer the following questions...

a. Who is our primary customer? Who are we adding value for? Who will really want to pay for our services.

     Specifically for Caretomanage the focus could be the end patient in which case your business model would 
     be QoS driven, "value to the aged" driven- clearly B2C. 
     Or you could be an aggregator for Health care organizations (a marketplace) enabling patients and care 
     givers to connect through the health care orgs.

     In each case the value proposition, business model and investments are very different. 

b. While our service would have multiple touch points (brands, retail chains, consumer) what does our org DNA     aligned the best with
    Whose problem are you really passionate about solving - the aged, the healthcare org or the neighborhood 
    care giver? An important question to answer I think becuae this will drive internal alignment with your external 
    purpose.

c. Can we have multiple focus?
    As a startup the clear answer was no we could not as it meant increased costs and divided leadership focus.
    If I were you I would pick up a single focus that is best aligned with what the team is passionate about 
    addressing and build the entire company around that passion and focus.

    Hope this helps.

Rob G

July 2nd, 2015

....as Todd points out your product has to solve a problem for the user whether that user is a corporate user or a consumer user.  Your second post indicates that businesses might only benefit tangentially.  If that is the case then i would take a hard look at how you might improve your benefit to B's and if you can't then you've answered your question.  Selling to Bs is hard and time consuming even when you have a clear value proposition.  Without a clear value proposition you shouldn't waste your time trying to 'sell' to B's  and your second question about pricing is then also answered.   There might be reasons for some marketing partnerships with B's, but don't expect revenue from them if you can't clearly articulate a value proposition that will cause them to write POs.  Early on if a channel doesn't generate revenue then unless you are well funded don't bother - revenue is king.  Our product solves a problem for both B's and C's and we designed it that way.  Early on our product was strictly solving a problem for consumers.  We had 3 issues we needed to solve internally or we likely would have bagged the whole idea:  1) ours is a 2-sided market so how do we build 'critical mass' ?,  2) we don't have expertise in consumer marketing so do we really want to sell direct to consumers?  and 3) we don't want to spend time early on trying to raise funding so how do we generate revenue from day 1?  We solved all 3 issues by specifically brainstorming a B2B distribution model. That opened a lot of doors.  We planned to launch with 4 enterprise customers and we have 8 signed up currently... waiting for us to finish development... which by startup standards sounds like a good problem to have.  Selling to B's is not only a longer sales cycle, but they also typically demand a more robust product and support.  This adds to product complexity, time, cost, etc. so there are trade-offs to consider. 

Ken Queen Income For Baby Boomers

July 3rd, 2015

Do both and do not under price your wholesalers. You do not no where your help comes from until you test the waters.

Ravi Challu CEO at PARC Technology Research Labs Pvt. Ltd.

July 7th, 2015

Ela, 

Please feel free to write to me directly should you need a more detailed conversation.

Best of luck with your venture.

Chris Hote Start-up coach, investor

July 7th, 2015

From a long-term perspective, you may want to find your sweet spot at the intersection of what you are good at doing, what you like doing, and what people are ready to pay for what you are doing.

From a short-term (more tactical) perspective, it may take you to go to the C's in order to convince the B's to pay for your services or a slightly modified version of your B2C product. The more C's you get, the eager the B's will be to talk to you.

If you wish to grab the B's in the first place then make sure which ones are actually willing to pay the most for your services, in other words, you wish to make sure for which B's your value prop is the highest. E.g.: which industrial sector suffers the most of absenteeism due to family caregiving? Which organizations would benefit the most of CG stress reduction? You do not need a product for what and rather you need to interview the companies/organizations that you suspect are the most likely to procure your product.

Jerome Pineau Digital Transformation Consultant

July 7th, 2015

Hospitals yes, private practice maybe less - that I don't know for sure. Problem with this as well - so to speak - is the CG has to be fairly competent to use the app. That's often not the case...I'm thinking of older couples for instance. Fascinating market and great "make meaning" product opportunity you have there though. Kudos.

Rob G

July 2nd, 2015

I would go with what i know.  For me that's B2B (enterprise).  For my current project the model is more of a hybrid B2B2C - consumer is the end-user, but we market primarily to medium to large businesses.  We designed our product and many specific features and processes with the intention of selling and marketing via businesses rather than directly to consumers simply because it's what we know best, it's more predictable and reaching consumers directly is expensive. Our  end-user can purchase directly from us and they see the same cost regardless (pretty typical), but businesses see a significant share of revenue if they drive the business. Managing channel conflict is hard - ask companies like Microsoft, but for us the model seems to work - we've not launched yet, but thus far our enterprise customers can find nothing to complain about. 

Ela Emami Founder/CEO of care2manage

July 2nd, 2015

I guess it would be helpful to say that the beneficiary is the consumer. Our utilization of the B-B model would have some benefit for the B but only as it relates to how well we serve their consumers. (if that makes sense). Basically it is a platform for caregivers to organize healthcare info and get connected to geriatric care coordinators local to them. It's a blend of technology and concierge style service. 
Our options are either direct to consumer (expensive) or via HR benefits/Ins companies (long sales cycle). I'm was not intentionally hiding my business, I wanted the thread to apply to a more than just my business. 

Jerome Pineau Digital Transformation Consultant

July 2nd, 2015

Are those caregivers regulated in any way by state or federal?