Navigating the B2B Revolution
Insights for Founders, Innovators, and Investors
Hello, I am Saurabh Tandon and welcome to the free weekly edition of More than Buzzwords.
Today’s newsletter is particularly useful for founders of early-stage B2B startups and innovators in the B2B space, especially those interested in SaaS, fintech, procurement platforms, and other solutions that help SMBs thrive. It will also be valuable for venture capitalists, angel investors, and institutional investors interested in the B2B ecosystem and SMB market.
Important topics that we will be discussing in this newsletter are:
The role of B2B marketplaces in empowering SMBs
Product-Market Fit for B2B companies
How B2B companies help SMBs improve operations and cut costs
B2B business models and monetisation
Upcoming Opportunities in the B2B market
Measuring customer experience in B2B
Let’s get started!
Part 1: The Power of B2B - A Business Revolution
Before we dive into today’s hot topic—B2B marketplaces—let’s first talk about the backbone of India’s economy: the SMBs. SMBs, or Small and Medium-sized Businesses, are a vital component of the country's economic engine.
The Growth of India's SMB Market
It’s no lie that SMBs contribute significantly to both employment and GDP of India. Do you know there are over 70 million SMBs in India which contribute 30% of India’s GDP?
These SMBs employ over 450 million people, significantly boosting employment opportunities in India. How amazing is that?!
However, despite the size and potential of SMBs, many face significant challenges, including limited access to capital, technology, and structured operations.
These challenges hinder their ability to scale and compete effectively. So, who do you think helps them solve these challenges?
Tech enabled B2B marketplaces
This is where the B2B companies step-in- they bridge the gap for SMBs, offering them innovative solutions that can increase their efficiency by multifolds, drive growth, and guide SMBs through the course of digital transformation.
B2B marketplaces offer more than just a sales platform, they help them connect to the right suppliers, provide them technological solutions, and provide financial support.
In essence, B2B marketplaces serve us end-to-end solutions that streamline workflow, reduce costs, and simplify technology for SMBs.
Consumer internet has been on everyone’s mind and yes, B2C offers much more visibility and instant reward and appreciation, but still many go after the B2B model. This is because, while B2B might not be as glamorous as B2C, it sure is highly impactful.
The B2B model provides more sustainable, long-term value by ensuring critical operational needs for businesses. It’s about creating meaningful and lasting solutions that promote efficiency and drive scalability for other businesses.
As a result, B2B Marketplaces have emerged as a much larger market than B2C Marketplaces.
You would be surprised to know that many successful businesses that we now associate with consumer products started off as B2B companies.
For example- Microsoft which started with software for businesses and Adobe which began as a software company for publishing and graphic design.
Part 2: Achieving Product-Market Fit (PMF) in B2B - Founders vs. Investors
For B2B companies, achieving Product-Market Fit (PMF) is crucial, but founders and investors often view it through slightly different lenses. Here’s how both perspectives align and differ when it comes to PMF:
For Founders
Founders focus on solving a clear problem for businesses and ensuring their product is genuinely needed. For them, PMF means:
#1. Strong Customer Validation
Early customers not only use the product but rely on it to solve a critical business pain point.
Indicators of this factor are repeat usage, positive feedback, and customers becoming advocates by referring your products to others.
#2. Revenue Growth and Retention
Consistent revenue growth from paying customers demonstrates demand.
High retention rates and low churn indicate that the product is "sticky" and essential to the client's business operations.
#3. Scalability of the Solution
Founders ask: “Can we scale this product to more businesses with minimal customisation?” If the answer is positive, it signifies strong product-market fit. A scalable product indicates that PMF holds true across a broader market.
#4. Market Pull
When there is an organic demand for the product in the market, i.e. when customers start approaching the company themselves, founders recognize strong PMF.
Some of the early signs include long-term contracts, larger deal sizes, and enterprise-level interest.
#5. Operational Efficiency
Founders gauge product-market fit by assessing how easily they can attract and keep customers compared to the cost of acquiring them. They do so by calculating CAC vs. LTV.
CAC stands for Customer Acquisition Cost and LTV stands for Customer Lifetime Value. A healthy business model aims to have a higher LTV than CAC, indicating that the company is profitable and sustainable.
For Investors
Investors view PMF through the lens of sustainable growth and market opportunity. For them, it means:
#1. Clear Evidence of Demand
Investors look for concrete evidence that businesses are willing to invest in the product.
Examples: Strong annual recurring revenue (ARR), increasing sales, or growing customer cohorts.
#2. Repeatable Sales Process
A scalable sales process, independent of the founder's personal efforts, signals strong product-market fit. Investors seek businesses with a proven ability to consistently acquire customers.
#3. Retention and Net Revenue Expansion:
High retention rates (e.g., over 90% for SaaS) and a Net Revenue Retention (NRR) exceeding 100% indicate satisfied customers who continue to spend more with the company over time.
Investors see high churn as a warning sign and prioritize companies that can expand their business with existing customers.
#4. Unit Economics and Growth Metrics
Metrics like LTV/CAC ratio (3:1 or better), low churn, and healthy gross margins prove the business is not just growing but doing so efficiently.
#5. Market Size and Scalability:
Investors assess if the product has a large Total Addressable Market (TAM) and whether it can scale across different customer segments or geographies.
Overlap Between Founders and Investors
Both founders and investors agree that PMF is validated by: Customer demand, retention and growth, scalability, and growing ARR and NRR.
For founders, PMF is the lifeblood of building a successful product. For investors, it’s the confidence that the product will generate sustainable, scalable growth in a large market.
So how do B2B companies solve this market puzzle?
Part 3: The Value Proposition of B2B for SMBs
B2B companies solve the market puzzle and help small and medium-sized businesses (SMBs) by addressing their unique challenges and providing tailored solutions that enable growth and efficiency. Here's how they do it:
#1. Streamlining Operations
B2B companies provide software and tools (like CRM, ERP, and accounting software) that simplify complex business operations.
For example, Tally, an Indian company, offers accounting and enterprise resource planning (ERP) software that helps SMBs streamline their operations by automating financial management, inventory control, and business analytics.
Other notable examples are Salesforce, Autosys, Google Analytics
#2. Access to Resources
SMBs often don't have the budget or scale to access premium resources. B2B companies bridge this gap by offering shared or subscription-based services, such as:
Co-working spaces (e.g., WeWork) for flexible office solutions.
SaaS tools (e.g., HubSpot, Canva, Figma) for marketing, design, and analytics.
#3. Reducing Costs
B2B companies help SMBs reduce costs by offering economies of scale or replacing traditional, costly methods with efficient alternatives.
Payment solutions like Razorpay streamline transactions at a lower cost.
Procurement platforms like Bizongo help SMBs reduce procurement costs and streamline operations by offering bulk purchasing at discounted rates and optimising the supply chain process.
#4. Building Market Reach
Many SMBs struggle with reaching their target audience. B2B companies provide marketing and distribution platforms. Leadsquared is one of them
For example Google Ads or Meta for Business help SMBs run affordable, targeted campaigns and marketplaces like Amazon Business give SMBs access to a vast customer base.
Reaching a large number of people has been made significantly easier!
#5. Enabling Digital Transformation
B2B companies enable SMBs to adopt digital tools and keep pace with larger competitors. For instance, Shopify enables SMBs to set up e-commerce stores easily.
#6. Providing Financial Support
Many SMBs lack enough working capital. B2B companies offer tailored financial products to solve this problem.
For example, ZipLoan offers flexible and quick loans to SMBs in India and KredX is an invoice financing platform that helps SMBs unlock cash flow by offering invoice factoring services.
#7. Expertise and Insights
B2B companies also take up the role of strategic partners by offering market insights and advisory services to SMBs.
For example, Zoho provides a set of AI-driven tools that help SMBs analyze customer behavior, streamline operations, and make data-driven decisions.
Another notable example is LinkedIn that offers networking opportunities, professional connections, and access to industry insights for SMBs.
In essence, B2B companies act as enablers for SMBs, by providing scalable, cost-effective, and innovative solutions that address their core business challenges. This helps SMBs compete and succeed in a competitive market.
This value prop gets visible through the 7 key user flows that focus on unlocking the full growth potential of your B2B SaaS business.
Part 4: Driving Growth in B2B SaaS: A Focus on the Customer Journey
#1. Sign-up flow
A seamless signup process is key to converting prospects into users. For B2B SaaS companies, optimizing this flow is essential for boosting conversions and engagement. So, focus on:
Communicating value
Offering a frictionless trial
Minimizing friction during the sign-up process
Monitoring metrics such as conversion rates, sign-up abandonment, and time to activation
One thing that is now often done to minimize friction and simplify signups is by offering a quick and easy signup using mobile numbers, reducing friction.
#2. Onboarding flow
Onboarding is crucial in shaping the first impression and ensuring users understand the value of your product. For B2B companies, crafting a seamless onboarding journey is important for long-term engagement and retention.
To ensure seamless onboarding, focus on-
Personalizing onboarding to different user types.
Ensuring users have easy access to support.
Ensuring an intuitive, streamlined onboarding process.
Setting clear expectations by outlining the product’s value.
Providing In-App guidance using interactive walkthroughs and tooltips.
Measuring metrics like time to first action and feature adoption to improve the onboarding process.
Noteworthy example- Tally personalizes workflows based on whether the user is an accountant, business owner, or auditor.
#3. Activation flow
Activation ensures users engage with the key features of your product, turning initial interest into ongoing use. For B2B SaaS companies, having an optimized activation process can drive more meaningful engagement and long-term success.
For an optimized activation flow, focus on-
Simplifying navigation.
Showcasing essential features early.
Testing A/B feature placements and flows.
Encouraging engagement by using in-app prompts.
Balancing utility by focussing on relevant features that align with user goals.
#4. Upgrade flow
Encouraging users to upgrade from free or lower-tier plans to premium ones is essential for scaling a B2B SaaS business.
Therefore, B2B SaaS companies can increase revenue by understanding how users behave and offering relevant upgrades that align with their business needs.
Here are some key strategies for driving user upgrades:
Create urgency by offering time-sensitive discounts.
Leverage user data to tailor upgrade offers based on their activity.
Use targeted notifications and email campaigns to encourage upgrades.
Test variations in messaging, pricing, and offer structures to optimize conversion rates.
Clearly communicate the benefits of upgrading, focusing on features that matter most to your B2B customers.
Identify critical moments when users hit usage limits or encounter bottlenecks. At this point, offer them higher-tier plans to unlock more features like multi-channel support and automated workflows.
Do you know Razorpay uses in-app prompts to notify users when they're reaching a threshold of transactions? This offers them a seamless upgrade path to unlock higher transaction limits and better reporting tools.
#5. Core work-flow
The core product workflow is the central hub of any SaaS solution since this is where users engage with the product’s most important features.
In B2B SaaS, ensuring this workflow is efficient, intuitive, and streamlined is crucial for user retention, customer satisfaction, and long-term success.
This is how you can optimize the core product workflow for your B2B SaaS company:
Offer clear guidance and real-time feedback to make the experience smoother.
Incorporate the latest design principles to keep the workflow fast and responsive.
Create a streamlined workflow which eliminates unnecessary steps and improves efficiency.
Pinpoint the most critical tasks your users perform regularly and make it as streamlined and intuitive as possible.
Continuously gather user insights through feedback surveys, analytics, and A/B testing to identify pain points and iterate on your product.
Optimizing the core-work flow has significantly helped Freshworks CRM. This is because they focus on simplifying customer engagement and task management by offering a clean interface and easy-to-navigate features.
In contrast, some legacy systems might overwhelm users with too many options or complex processes.
#6. Integration flow
Integrations are essential for modern B2B SaaS, as they allow users to connect various tools within their tech stack. A seamless integration experience, whether during onboarding or later, is crucial for user satisfaction and retention.
Here are some key considerations for effective integration flows:
Prioritize native integrations with popular tools to simplify workflows for non-technical users.
Simplify complex integrations by providing developer support and detailed documentation for tools requiring API connections.
Make integrations a prominent part of your UI/UX, with a dedicated section listing supported tools and step-by-step connection flows.
Prioritize essential integrations, such as CRM with payment gateways or accounting software with banking systems, to streamline workflows.
#7. Cancellation flow
Cancellation flows are crucial moments in the customer journey. They can either end a business relationship or provide valuable insights for improvement. By optimizing this process, B2B SaaS companies can retain customers and refine their offerings.
Take a look at some key strategies for handling cancellation flows:
Simplify the cancellation process to minimize frustration and negative experiences.
Providing a brief survey with multiple-choice questions or an open text field for reasons behind the cancellation can give you crucial feedback.
Instead of letting customers walk away immediately, offer alternatives like discounts, a pause on their subscription, or an opportunity to downgrade.
Cancellation doesn’t always come as a surprise. Monitor user behavior to identify potential churn risks early on. Proactive engagement can help retain customers.
Offering live chat or easy access to customer support during the cancellation flow can increase the likelihood of saving a customer
With these user flows, B2B organisations can attain far reaching impact on ground
Part 5: On-Ground Impact of B2B Companies
B2B companies play a crucial role in driving industry growth by improving efficiency, innovation, and scalability. They empower SMBs by optimizing operations, strengthening supply chains, and enabling them to compete globally.
We’ve all heard and read about Alibaba, haven’t we? The company has significantly boosted China’s manufacturing ecosystem, propelling it to dominate the global manufacturing domain.
The Alibaba equivalent of India is often considered to be IndiaMART. Just like Alibaba, IndiaMART operates as a B2B (Business-to-Business) online marketplace, connecting buyers with suppliers, manufacturers, and exporters.
IndiaMART allows businesses to showcase products, negotiate deals, and connect digitally—replicating the role Alibaba plays in facilitating online commerce.
It hosts millions of sellers and suppliers across various product categories, similar to Alibaba’s vast supplier base.
Both these platforms- Alibaba and IndiaMart- cater heavily to small and medium businesses, enabling them to access a broader market and grow their businesses.
Other Indian Platforms Worth Mentioning:
Udaan: it’s a fast-growing B2B platform specializing in wholesale trade, particularly for retailers and small businesses. Udaan focuses on sectors like electronics, groceries, and clothing.
Another example is of an Indian B2B logistics startup called Delhivery which has revolutionised how goods are transported, ensuring timely deliveries and enabling businesses to scale without the burden of setting up their own logistics infrastructure.
When impact is created, then customer success metrics soar, lets take a look at two of them
Part 6: Measuring Customer Experience in B2B
In the B2C marketplaces, it’s quite easy to quantify user experience- thanks to ratings and reviews. However, it’s not the case with B2B marketplaces. So, how do B2B companies measure customer experience? Let’s see!
In the B2B world, CSAT and CNPS are widely used metrics to measure customer satisfaction and loyalty. These metrics help businesses understand client perceptions, improve relationships, and drive growth.
CSAT (Customer Satisfaction Score) measures how satisfied a customer is with a particular product, service, or interaction. It’s typically obtained through surveys asking clients to rate their satisfaction.
The higher the percentage, the higher level of customer satisfaction. An important thing to note is that it demonstrates short-term satisfaction related to a specific interaction or experience. (e.g., support calls, product delivery, or a service update).
It’s crucial in identifying gaps in service quality or product performance.
CNPS (Customer Net Promoter Score) measures customer loyalty and likelihood to recommend your business to others. CNPS helps measure long-term customer loyalty and advocacy in B2B.
Loyal customers are crucial for B2B businesses as they drive repeat business, referrals, and future growth opportunities. A high CNPS indicates strong revenue growth and customer retention.
Wrapping it up
As we’ve explored, the B2B landscape is brimming with opportunities, from evergreen markets like SaaS to emerging tech niches. Whether it’s understanding the immense potential in emerging sectors or optimizing user flows to drive growth, success in this space comes down to staying focused on solving real, impactful problems.
As a founder, investor, or startup enthusiast, it’s crucial to pay close attention to customer journeys, leverage data to make informed decisions, and continually innovate. The world of B2B isn’t just about building businesses; it’s about creating lasting value and driving industry-wide transformation.
Thanks for joining me in this edition of the newsletter. Stay tuned for more insights, strategies, and trends to help you navigate and thrive in the B2B ecosystem. Until next time, keep solving, innovating, and growing!
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