If you’re starting a SaaS company, should you prefer to sell to B2B or B2C companies? And if you would like to sell to both, how should you allocate your sales teams? If you were to hazard a guess about the share of B2C vs B2B companies, what would it be?
I often find myself wondering this question in a board room or reading through S-1s of soon-to-be-public companies. What are the demographics of the customer base and how are they reflected in the sales team?
Across all US companies, B2B companies outnumber B2C companies 1.6:1. For every B2C company, there are 1.6 B2B companies.
Quick aside: some companies sell to both, but this analysis is a high level and defaults to the primary buyer, eg Google is B2C, Amazon is B2C, etc.
If we examine the distribution of companies by employee size, we see that in the mid-market, the ratio is 2:1 in favor of B2B. In the very large employee counts, the ratio is closer to 1:1.
Here’s one hypothesis. There are more consumer companies that enjoy monopoly dynamics or economies of scale through brand. These winner-take-more dynamics skew the distribution at the top end of the spectrum more in favor of B2C. And the mid-market has a greater share of B2B as a consequence.
If your company sells a product whose value doesn’t change as a function of B2B vs B2C, and both markets are equally addressable, the analysis suggests that your sales team should likely be 1.6:1 or 2:1 depending on the customer size you target and the the relative price points you can command in each segment. What is yours today?