Businesses operate by finding customers for their commodities. As you join the entrepreneurial world, your primary goal is to secure a strong customer base. You invest in marketing and promotion to realize this goal. This activity is not a loner idea. Every business you know follows the same principle. Whether selling to consumers or businesses, your goal is to get customers for your products and services.
However, things are changing. With technological development, customers are beginning to transact with businesses. C2B is becoming a popular business model. What does this model involve?
This article will help you understand everything about the C2B business model. This includes its definition, how it works as well as its pros and cons. Therefore, let’s continue reading this article to get to know more about this model.
What is C2B Business Model?
As mentioned, the C2B business model is a shift from the past. C2B is a short form of consumer-to-business. The model is a reverse of the business-to-consumer (B2C) approach. Here, the consumers or end-users develop products that businesses consume. The consumers deliver value and information that organizations use in the development of their products and services.
C2B business model provides a win-win situation for both the business and consumers. Businesses benefit from valuable information from the consumer while the consumers enjoy free products, lower prices, or the chance to set the price they will pay for a given product. In this essence, the C2B concept enables a business to acquire value from consumers that they can utilize this model to gain a competitive advantage in their niche.
How Does C2B Business Model Work?
In this model, consumers develop services that businesses need in developing their products. The companies pay a fee or price to acquire this information. Consumers can be individuals or businesses that other businesses need to deliver their services. For instance, a photographer offering photos for a given company’s photo stock.
A person taking a paid survey by a given business is another good example of how this relationship works. The company needs the consumers’ views and opinions about the products and services. They pay the customers to offer their views on how they can improve these products.
Also, some companies allow consumers to come up with a name and ingredients to incorporate in new products. Restaurants can request customers to add a new recipe to their current list. Businesses benefit from new information while the consumers get the freedom to determine how much they will pay for the new products. Hence, this model provides value for both consumers and businesses.
C2B Business Model Examples
C2B business model is among the recent concepts in the e-commerce world. Despite this being the case, many businesses are adopting it. Many online marketplaces operate through this model where buyers and sellers meet and transact. Amazon affiliate is a good example C2B model in use.
Here, the blog owners write reviews about various products and get a commission when people purchase products through their Amazon links. Also, Google AdWords follow the same concept. The company pays a fee to website owners to display ads on their sites. Also, refer and earn companies apply this concept in generating revenue. All these platforms help businesses to get valuable information about their products and services in exchange for a fee.
Pros and Cons of C2B Business Model
No doubt, the C2B business model is transforming how businesses operate. The model is offering value to customers and businesses on equal measures. However, before considering it as your operational approach, you need to know the benefits and challenges to expect. You can find the pros and cons of this model below:
Pros
Opportunity to develop customer-centric products
Unlike the traditional B2C concept, C2B allows customers to take part in product development. Your business use ideas from customers to create products and services. You create products that align with your target needs and interests.
Developing customer-centric products will always offer you a competitive advantage in your niche. So, you’ll always have products that align with the market needs guaranteeing your consistent sales.
Enhanced customer reach
As a customer, the views of other people influence your purchase decisions. You are likely to take action when you read a review from other customers than from the information you hear from a brand. This aspect is what the C2B model thrives on.
By paying customers for reviews and ratings, you can easily enhance your customer reach. Some of the people reviewing your products are former customers. When they share their feelings and experiences, they influence other customers which enhances your sales level.
New selling approach
No doubt, you do not like listening to salespeople. In most cases, you avoid a sales representative and likely to ignore sales emails and messages. However, you will read blogs and posts that feature a conversational tone. The C2B model capitalizes on this aspect. It is changing how people approach sales.
The model is allowing customers to share advice and interesting aspects about a brand that influence their peers’ purchase decisions. Hence, it is introducing a new selling approach that follows an interactive notion than the normal sales language.
Easy branding
Brand awareness is one of the hardest tasks every entrepreneur has to perform. You must invest in popularizing your business to create trust and loyalty among the customers. This task calls for robust marketing and promotional campaigns. However, the C2B model saves you from this experience.
The model empowers customers to talk about their favorite brands and products. This way, it creates a pool of people talking about your brand which boosts its awareness and recognition in the market.
Cons
It is a new model
Unlike B2B and B2C, C2B is a new model in the business world. It came into existence when the internet surfaced. For this reason, businesses cannot use it as a stand-alone model. You need to use it in conjunction with other models to succeed in your venture.
Chances of negative reviews
With customers sharing information about your business, you need to ensure that your customers are happy. A negative experience from customers can have hurtful impacts on your brand. So, you need to be careful about how you handle negative reviews from customers.
Conclusion
In a word, the C2B business model is transforming how business owners run their ventures. The model is allowing your customers to contribute to your product development. This way, you are likely to gain from extensive ideas that will drive innovativeness and offer a competitive advantage. However, you must be conscious while handling customer disappointments as they may have a hurtful impact on your business.
