Advantages: The main advantage of B2C2B [selling to individual employees as a path to an enterprise sale] compared to traditional top-down sales is that it can significantly reduce your customer cost of acquisition. The traditional B2B sales process requires large marketing budgets and long sales cycles. It’s very expensive to generate highly qualified leads that will convert to promising enterprise customers, whether with search advertising, native advertising, or trade shows and events. The B2C2B model provides free or cheap solutions targeted at individual employees or small teams with far cheaper cost of acquisition, whether word of mouth, search optimization, or viral distribution.
Success depends on: employees’ influence over decision makers. For more broad-based employee solutions, individual employees have leverage with decision makers purely through scale.
Levers: With B2C2B, you can gather detailed demographic and behavioral data on each of your end users that can help to significantly optimize and prioritize your upsell and sales efforts. LinkedIn was lucky enough to have this information for all of our end users since they provided their current employer on their LinkedIn profile, but you can alternatively gather this information through parsing the corporate domain name of the email addresses they registered with, reverse IP lookup leveraging the MaxMind database to determine the company accessing your site, or simply just asking the user as part of registration.
Challenges: The cost associated with maintaining the free or cheap tier of service for your non B2B customers can be significant. Also, you need to be able to create compelling differentiation between your free/cheap tiers and your enterprise solution to convince decision makers to rollout a company-wide solution as opposed to simply allowing their end-users to continue to use the tool as is. Coming up with this free vs. paid line can be incredibly difficult and is a careful balancing act.
(1) While upselling from individuals to a team is a big opportunity, don’t forget Mark Roberge’s advice — “individual before team”. See For SaaS startups — how to avoid increasing costs inefficiently and prematurely.
(2) “Coming up with this free vs. paid line can be incredibly difficult and is a careful balancing act” — this is exactly our experience in Seeking Alpha with SA PRO.
(3) Cf. How to extend a SaaS business from small to large sales without using outbound calling.