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Why Product-Marketers Ignore the Goldmine of B2B Segments: Lessons From the Taxi Industryby@maxs
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41,241 reads

Why Product-Marketers Ignore the Goldmine of B2B Segments: Lessons From the Taxi Industry

by Maksim SadontsevMarch 15th, 2024
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Compare Product needs and peers in the B2C segments of SMB and Enterprise vs the B2C customers
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Imagine you're in the taxi business, cruising through the competitive landscape where companies have to make a big choice – whether to focus on regular folks (B2C) or on businesses (B2B). It's a tough call because most of the industry, like 60 to 70%, goes after regular customers. You might be wondering why more companies aren't jumping into the business customer pool.


Let's take a peek at the taxi world, ruled by big players like Uber, Lyft, Bolt, and Yandex Taxi. We'll see how they deal with regular customers who just want a quick, affordable, and reliable ride. On the flip side, there are corporate customers with a whole different wishlist – they're into service integration, detailed billing, and top-notch safety measures. It's like they have a whole set of demands because of their more complicated needs.


Now, if your company is thinking about leaning towards or away from the business side, this comparison is gold. Knowing what each group wants is key to customizing your services, sorting out how things run, and planning your marketing game. It's like having a map to navigate the different roads of customer demands.


B2C segment

Alright, picture this – you're in the hustle and bustle of B2C commerce, where businesses are all about selling stuff directly to regular folks like you and me. It's like a big party with all kinds of shops – from the local stores around the corner to those fancy online shops and even your favorite diners. They all want to be buddies with us, the customers, trying to make a direct connection.


Now, for these businesses, the main goal is to make us happy by solving our problems or meeting our needs. They want their stuff to be not just cool but also competitive in the market. And here's the trick – they don't have to be the best at everything. What they need is their special thing, like a "secret ingredient" that makes people pick them.


Take the ride-hailing gang, for example. Us regular folks care about the cost, how fast and reliable the ride is, the quality of the service, how easy the app is to use, and any cool extras that make the service even better. It's like a global rule – no matter where you are, everyone wants the most bang for their buck. That's the name of the game, everywhere.


Imagine you're picking a ride, and there are two types of folks on your mind. First, some dig the VIP treatment – willing to shell out a bit more for a swanky experience. They crave a ride that screams quality. Then, there's the crew who's all about personalization. They want their ride to vibe with them, maybe choosing the tunes or deciding if they're down for a chat.


Now, some companies get it. Like Wheely – they're all about rolling out the red carpet, focusing on those high-end customers. On the flip side, there's Gett, letting folks in Russia tailor their ride, choosing everything from the music to their preferred chat level.

But here's the cool part – Yandex Go wants to be the superhero for everyone. They offer different service levels, from Economy to Premium, trying to catch the eye of all kinds of customers.


No matter who they're targeting, these companies are on a mission to make us regular folks happy. It's like a dance, always switching things up to keep us, the customers, at the center. It's pretty awesome how each of them has their own way of making us feel special.


B2B segment

In the B2B (Business-to-Business) sector, companies primarily cater to other businesses, including manufacturers, wholesalers, and providers of business services. This model involves a transactional relationship where the end consumer is typically another business, acting as an intermediary. In the B2B realm, the focus shifts to creating value for business partners, rather than directly for individual consumers.


For instance, in the taxi service industry, engaging B2B clients often entails offering transportation services to corporate employees rather than enabling other businesses to resell services. The emphasis here is on understanding and fulfilling the unique needs of business clients.


A critical first step in addressing the B2B segment is to categorize it into sub-segments, each with distinct needs:

  • SMB/SME (Small and Medium Enterprises): Representing the majority of businesses globally, SMEs usually have a smaller number of employees (less than 250).
  • Large enterprises: These are bigger companies with more employees and established internal processes and policies to manage operations effectively.


Addressing the needs of each segment requires a nuanced approach. For SMEs, the strategy might resemble B2C tactics due to their size and structure. Conversely, when dealing with large enterprises, it's crucial to tailor value propositions to internal decision-makers within the company, often valuing their needs as equal or sometimes more critical than the end users (passengers) themselves.

SMB segment

When it comes to small and medium-sized businesses (SMBs), they use taxi apps a bit differently. The person who decides in these businesses is often someone who either uses the app themselves or hears feedback from employees using it. Unlike apps made for regular folks, the ones for businesses need to think about what the company needs and what the actual users want. Getting this balance right is super important for making products that work well and get good results for the business.


These business decision-makers might use the app for both work and personal stuff, trying to mix it into their business when they need to.


Why focus on SMBs:

  • If you're already doing well with regular customers (B2C), you don't need extra stuff to get into the SMB market.
  • Companies might use different ways to get business clients, like making it easy for them to join or doing marketing to bring them in.
  • And the cool part? You don't need to grow your team much to handle this new business.


So, if your app doesn't match what regular customers love, these business clients might leave. But making things better for regular customers will also make the SMB folks happy.


Challenges of the SMB segment

  • Each joining business likely contributes a small incremental revenue due to the small size of the businesses, requiring a significant volume of companies to make a substantial impact.


  • Instead of creating solutions with direct consideration of the end-user, developers must navigate through a complex network of business needs, stakeholder expectations, and profitability goals. The ultimate aim? To build a product that not only satisfies the immediate needs of the business but also supports its long-term strategic objectives. However, this business-centric focus does not diminish the importance of the end-user. On the contrary, understanding and addressing the end-user's issues are critical to the product's success and, by extension, the business outcomes it seeks to achieve.


  • Moreover, feedback mechanisms inherent in B2B and B2B2C models add another layer of complexity. In direct-to-consumer (DTC) sales models, feedback can be direct and immediate, with users directly conveying their impressions, issues, or suggestions to the product team. In contrast, in B2B and B2B2C models, end-user feedback often goes through several layers—be it through their organizations, direct supervisors, or indirect channels—before reaching developers. This indirect feedback path can dilute the clarity of the user's voice, making it more challenging to identify and meet their true needs and preferences. Integrating direct user interaction tools into the product, such as interactive surveys, in-app feedback modules, or user forums, facilitates direct communication. This direct dialogue enables the collection of first-hand user feedback, providing valuable insights into their experience and needs.


Enterprise segment

Unlike small and medium-sized businesses (SMBs), getting into the enterprise market means dealing with big companies. It's not just about having a good taxi app; you need to connect with the people inside these companies, convince them, and make sure your app meets their needs. But here's the catch: the folks who decide on buying or developing the product might have different ideas than the ones actually using it. They might like features that seem cool but don't really matter to the people who use the app every day.


To win over big clients, you've got to think about what the decision-makers want. It's not as simple as offering a cheap and reliable taxi app. You need to solve their specific problems, like giving them negotiated rates, a system to manage expenses, and tools to handle employees. Dealing with big companies also means spending a lot of money and having a special team to meet their unique needs, which might include customizing the product.


How big companies work

Most big companies have someone or a whole team making decisions. For example, a transportation department would:

  • Figure out what transportation the company needs.

  • Find transportation partners.

  • Make sure costs are predictable and the terms are good.

  • Run daily operations and make sure everyone who needs access has it.

  • Manage and cut down on costs.


But going after big companies has some good things:

  • These companies often have branches in other countries or employees traveling for work. A taxi service that works internationally can make things way easier for their global business.
  • Big companies need a taxi service that can do it all – local rides, long-distance trips – to fit all their needs.
  • Working with big companies usually brings in a lot of money.
  • Just one contract can mean getting hundreds or even thousands of clients.
  • Lots of clients still want the same kinds of things.
  • There's a good chance that not many others in your industry are focusing on big companies.
  • Big companies aren't expecting fancy designs like you see in regular customer apps. If your product already looks modern, that could make you stand out in this market.


For example, here's what some corporate platforms for booking taxis and flights look like…)

Challenges include:

  • Entering this segment requires your company to invest in several directions:
    • Market research to assess its real size

    • Hiring a team of experts

    • Creating products and operational processes ready for B2B

    • Meeting specific customer needs here and there


Moreover, your company needs to understand the specific problems of these individuals in your industry. For the taxi market, typically relevant aspects include:

  • Contractual, predictable rates: Unlike the B2C market, where service prices can fluctuate based on current demand and supply, most large companies expect fixed rates for the duration of the contract.

  • Centralized expense management: Your product should provide centralized reporting and billing on agreed terms, ideally ready for integration with internal expense accounting systems.

  • Centralized employee management: Provide the decision-maker with tools for centralized employee management within the service, ideally through integration with the internal HR system.

  • Centralized expense management: A tool that allows limiting employees' use of trips according to internal policies.


As an example, consider the key advantages global mobility platform uses to attract the corporate segment in the UK:


And here we come to the main challenges:

First, get ready because stepping into this industry means you'll need a team of pros in sales and customer service. They'll be the experts in talking and keeping good relationships with big companies.


Second, focus on making a product that suits the folks who make decisions in the company. Create something that helps manage the company's profile within your product.


Third, remember, quick and small approaches usually don't work with big companies. They want your product to be perfect from the get-go, not getting better bit by bit.


So, you'll need to put in a bunch of money upfront, way before you get the first big company to use your product


Here's the lowdown: sometimes, a partner might ask for things that seem totally new and unexpected. You didn't plan on making these for regular customers or the businesses already using your app. But guess what? 80% of the time, those requests might not be that unique. It's worth digging into the market more to check if other folks need the same thing.


For the other 20%, you've got a choice to make. Stick to your regular product and maybe lose this client, or make your product fit whatever they want. But here's the real deal: going all customizable can cost you more in the long run.


The upside? If the top management in the company is happy with the tools in your product, little hiccups in your main product (like not finding a driver twice for employee X) won't make them ditch the deal. And in the taxi world, where a perfect ride isn't guaranteed, that's a win.


But here's a heads-up: don't let the top management down. Another mess-up in getting a ride might make the travel manager think twice about keeping you around. So, get to know these VIPs and go the extra mile to make sure their trips (or any other deals) go smooth.


Conclusion

Instead of a lengthy conclusion, I propose three main takeaways from this article:

  1. Big companies want a full-fledged product from the get-go. They expect solutions not just for the basics but for different jobs in the company. And that often means tweaking the product, which can jack up the costs.
  2. Top management at companies want top-notch security in your product. That means spending more on checks, following rules, and maybe sticking to providers that meet their strict standards.
  3. Solving problems for big companies can spill over into regular people's lives, opening up new chances in the regular customer market.