How Businesses Are Winning with B2C Ventures

 

In today's fast-paced market, businesses everywhere are searching for fresh avenues of growth beyond their traditional operations. The consumer landscape, a massive $25 trillion market, is proving to be a fertile ground for expansion. We're seeing a clear trend: established companies, even those primarily serving other businesses (B2B), are successfully launching new business-to-consumer (B2C) ventures. This shift isn't just a fleeting trend; it's a strategic move to stay competitive and unlock significant revenue streams.

The old ways of growing a company aren't always enough anymore. Building new businesses, especially those directly reaching consumers, can open up entirely new income possibilities. In fact, a recent survey of over a thousand CEOs highlighted this point: companies that put about 20% of their growth budget into creating new businesses saw their revenues grow two percentage points more than those who didn't.

So, how are savvy leaders making this leap? It often starts with looking inward. Most companies have untapped resources – think data they've collected or specialized knowledge – that can become the foundation for exciting new consumer offerings. This is especially crucial for B2B companies, who are stepping into a different kind of sales environment and need a thoughtful approach to reach consumers effectively.

Our experience working with hundreds of new businesses points to three key B2C strategies that consistently deliver impressive results, no matter the industry:

1. Advice-as-a-Service: Guiding Consumers Through Complexity

Imagine a company that's already a trusted authority in its field. Why not share that expertise directly with consumers? That's the essence of "advice-as-a-service." These businesses leverage their established credibility to offer insights and guidance on specific topics, from financial planning to medical education or even home repair.

For example, a real estate analytics company like Redfin didn't just stick to its data; it expanded to offer home-buying and mortgage advice to consumers, becoming a comprehensive resource for homebuyers. This model thrives in markets where consumers are overwhelmed by choices and need expert recommendations. Think about services that act as:

Purchase Assistants: Helping you find the best deals online, like PayPal's Honey.

Decision Guides: Providing tools to make informed choices, such as MyFitnessPal for health tracking.

Concierge Services: Simplifying complex tasks like booking travel or dining reservations, much like Resy.

Personal Advisers: Offering ongoing guidance in areas like wellness or investing, exemplified by telehealth services like Hims & Hers.

Life Domain Partners: Providing personalized advice to achieve specific goals, like Policygenius for insurance.

To make advice-as-a-service work, companies should build on their existing strengths, thoughtfully integrate technology while keeping a human touch, and make it incredibly easy for consumers to get started and stay engaged.

2. Embedded Services: Seamlessly Integrating Solutions

"Embedded services" are all about making life easier for the consumer by integrating useful products or services directly into a company's core offering. This could be anything from e-commerce features and payment solutions to healthcare or logistics. The goal is to create a unified experience, eliminating the frustration of hopping between different websites or apps to complete related tasks.

Think of how Stripe, initially a B2B payment company, built a full-service platform for merchants with embedded tools for invoicing and tax preparation. Or how Affirm partners with major retailers to offer "buy now, pay later" options right at the checkout. This approach works particularly well for businesses with an already engaged user base or those in markets with fragmented offerings. We've seen four main types:

Single Feature/Single Journey: Helping users complete one task at a time, like Grubhub for food delivery.

Multiple Features/Single Journey: Guiding users through a longer process, such as Kayak for travel planning.

Single Feature/Multiple Journey: Enabling a single task across many different platforms, like Shopify for e-commerce payments.

Multiple Features/Multiple Journey: The "super-app" model, embedding numerous features for everyday use, with Amazon being a prime example.

The secret to successful embedded services lies in prioritizing a smooth user experience, creating a "win-win" for all participants in the ecosystem, and leveraging the power of network effects and data to make the service even more valuable over time.

3. B2B2C: Connecting Directly with the End Consumer

The "B2B2C" model sees a B2B company working hand-in-hand with its business customers to deliver a product or service directly to consumers. This strategy helps companies bypass traditional intermediaries and connect with end-users, especially when consumers face "decision fatigue" from too many options. Many B2B companies are finding that traditional distribution channels are yielding less, making direct consumer engagement an attractive alternative.

Consider Etsy, which connects independent sellers directly with buyers, or ClassPass, which aggregates fitness studios for a single membership. Another strong example is Warby Parker, an eyewear company that designs and sells glasses directly to consumers, sidestepping traditional optical shops. These B2B2C ventures often fall into one of three categories:

Marketplaces: Connecting sellers and buyers directly, like Etsy.

Aggregators: Combining multiple B2B companies onto one platform for consumers, such as ClassPass.

Vertically Integrated Platforms: Creating new direct-to-consumer experiences, like Warby Parker.

To get B2B2C right, companies should look for unmet consumer needs in their industry, embrace partnerships to scale quickly, and be flexible with their operating models, allowing the new B2C venture to adapt and evolve independently from the "mothership" company.

Is B2C Business Building Right for You?

Top-performing companies understand that building B2C businesses is a powerful engine for revenue. If you're a CEO considering this path, ask yourself these three critical questions:

Can we use our existing strengths and assets to fuel growth in related consumer areas?

Do we have underutilized assets, such as unique data or strong customer relationships, that could be valuable to consumers?

Could these capabilities translate into consumer markets, helping us diversify revenue and build lasting customer loyalty?

If you answered yes to these questions, then diving into B2C business building is likely a smart move. Whether it's offering expert advice, integrating seamless services, or connecting directly with the end consumer, the most successful B2C ventures share a common thread: they solve real-world problems for consumers. In a world full of overwhelming choices and constant noise, any business that simplifies life for consumers has immense potential for long-term success.

Source  McKinsey Digital

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