Strategic Pathways for Building B2C Businesses

In an evolving marketplace, medical device manufacturers and various companies are redefining their roles by stepping into the realm of business-to-consumer (B2C) services. As traditional corporate playbooks are becoming less effective in achieving significant growth, many firms are pivoting to capture a share of the vast $25 trillion B2C market. Research from McKinsey indicates that companies investing 20% of their growth capital in new business ventures experience a notable increase in revenue growth.

The Case for B2C Business Building

The urgency for established companies to develop B2C strategies is underscored by a McKinsey Global Survey of over 1,100 CEOs. It revealed that a significant number have identified underutilized assets within their firms that could support new consumer offerings. More than 80% of businesses possess at least one such asset that can be harnessed for innovative B2C strategies, especially pertinent for business-to-business (B2B) companies transitioning into consumer markets.

Key Business Models in B2C Development

Research has identified three promising categories for CEOs considering B2C ventures. These are:

• Advice-as-a-Service: Leveraging established credibility to offer expert insights and guidance.
• Embedded Services: Integrating consumer-focused services directly into existing platforms.
• B2B2C Models: Collaborating with B2B customers to connect with end consumers effectively.

1. Advice-as-a-Service

Businesses in the advice-as-a-service category help consumers traverse decision overload by offering expert recommendations. For instance, Redfin evolved from a real estate analytics provider to delivering comprehensive home-buying insights, ultimately transforming into a full-service broker.

Popular Business Models in Advice-as-a-Service

• Purchase Assistants: Help users at the purchasing moment, generating revenue through commission fees (e.g., PayPal’s Honey).
• Decision Guides: Support individual purchases through subscription models (e.g., MyFitnessPal tracking nutrition).
• Concierge Services: Streamline complex tasks such as travel bookings, monetizing through commissions (e.g., Resy).
• Personal Advisers: Offer ongoing advice in areas like health or finance, typically charging subscriptions (e.g., Hims & Hers).
• Life Domain Partners: Provide specialized advice to assist goal achievement, earning via commissions (e.g., Policygenius).

Effective Strategies for Adoption

CEOs looking to delve into this domain can follow these strategies:

1. Build from existing strengths before branching out, using established assets as the foundation.
2. Embrace technology while ensuring human interaction comes into play where it enhances customer connectivity.
3. Facilitate easy onboarding and keep users engaged with progressive features across platforms.

2. Embedded Services

Embedded services enhance user experiences by integrating additional functionalities, such as payments or logistics, into existing platforms. Companies like Affirm partner with retailers to simplify consumer transactions, resolving pain points around multiple site navigation.

Types of Embedded Services

• Single Feature Platforms: Focused on completing a specific task for users (e.g., Grubhub for food delivery).
• Multiple Features Platforms: Support users through various phases over time (e.g., Kayak for travel planning).
• Single Feature Across Multiple Destinations: Assist customers in achieving various transactions (e.g., Shopify for online purchases).
• Super-Apps: Combine numerous functionalities into one platform (e.g., Amazon for shopping, streaming, and groceries).

Strategies for Driving Engagement

To foster consumer loyalty through embedded services, consider:

1. Creating intuitive user experiences that integrate seamlessly within the host environment.
2. Establishing mutually beneficial ecosystem dynamics for both host platforms and embedded services.
3. Utilizing network effects to amplify the platform’s value as more users engage.

3. B2B2C Models

This approach fosters collaboration between B2B companies and their clients to deliver consumer-focused products and services. Platforms like Etsy connect independent sellers directly to consumers, enhancing access and options for buyers.

Main Archetypes in B2B2C

• Marketplaces: Connect consumers directly with merchants (e.g., Etsy).
• Aggregators: Coalesce multiple B2B services on one platform (e.g., ClassPass).
• Vertically Integrated Platforms: Offer unique user experiences via direct sales (e.g., Warby Parker).

Key Strategies for Success

When implementing a B2B2C model, companies should:

1. Identify underserved market needs to tailor offerings.
2. Leverage partnerships to expedite growth trajectories.
3. Adapt operational models to ensure agility in evolving landscapes.

Conclusion

In summary, businesses that effectively harness B2C strategies stand to gain substantial revenue growth. By assessing their existing assets, companies can innovate and connect better with consumer needs, creating lasting customer relationships. Successful B2C endeavors address genuine consumer challenges, thereby positioning themselves for enduring financial success in a competitive marketplace.

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