When considering joining a company, it’s important that you understand who their customers are and how they go to market. The better you can understand their business, the better you can form an opinion on their future success and in turn your career growth.
Who companies sell to or what the market for the company's product falls broadly into selling to business or consumers. Businesses or individuals. This will tell you also about how the company goes to market. Within the consumer / business framing there are 4 categories: B2B, B2C, B2B2C and DTC. Let’s dive into what each of these mean.
- B2B: Business to Business is when the target customer is a business. The products and services the company offers are for companies. Examples of B2B business are Salesforce.com, SAP, or Stripe
- B2C: Business to Consumer is when the products and/or services service consumers. The distinction with DTC is that B2C do not often sell “directly” to consumers. Think about how Coca-Cola does not sell directly, they have distributors and resellers of their product.
- B2B2C: Business to Business to Consumer is when a business leverages another business as it’s distribution to the consumer. Examples would include Instacart, UberEats or OpenTable.
- DTC: Direct to Consumer is a more recent trend. This is when the manufacturer sells directly to the consumer with few or no middle layers. Examples of DTC include Casper, Warby Parker & Glossier.
You will also have companies that employ many of these models. As an example, Apple has aspects of its business that are B2C (Selling in a Best Buy), B2B (Corporate Sales) and DTC (Apple Stores). In fact, I’d argue that Apple pioneered the Direct to Consumer model and demonstrated the positive impact it could have on profit margins and customer experience.
When it comes to startup, you want to really understand which model they fall into. The earlier the company, the more you want to look for focus and look for signals that they have one model working well before they expand into other strategies.
For some additional reading here are some great articles to check out:
