Car manufacturers know this. When you buy a new car you get the option of a winter pack, or an entertainment pack. Mobile operators offer data, inclusive minutes and texts, as well as free own network calls and fast food restaurants have been selling super-sized meal deals for an eternity. Residential communications companies are using it to great effect with triple and quad play offers being advertised relentlessly.
A study in 2012 showed that bundled solutions work exceptionally well when a component part of the bundle can be produced or purchased at low cost (fries in a meal deal, own network minutes on your mobile) and of course the key element is that the bundled products need to work well together (The car’s winter or entertainment pack). This cost effective and mutual support of bundled elements is what will set the bundle apart from your competitors offering whilst generating margin and flexibility for your customers.
There are plenty of examples of the different ways you can approach bundling your services, but they generally fall into the following types.
- Commercial Bundle: A bundle of solutions at a lower cost than the individual elements. Research shows that this is the one that resonates with most customers, which isn’t surprising. People are unlikely to pay more for a bundle than its individual elements.
- Value bundle: This relies on the network effect and is usually sold as a feature. It can include things such as free calls to other users of the service or platform. Such as free minutes in mobile bundles.
- Extended Bundle: Access to a new product that is unavailable or advantageous to be sold on its together; line rental with ‘cheap broadband’
- Control Bundle: Giving the customer a fixed amount to pay. This is another way to offer mixed bundling, i.e. giving the customer choice to purchase a bundle at a fixed price, or to buy the elements separately. £5 per month for unlimited calls to local and national numbers. Costs by large networks are hidden in these bundles and can be very difficult to compete against.
So what does that mean for you, if you don’t offer bundled services currently, how do you start?
Measure everything. What are your customers consuming, in what quantities? Where are your biggest sellers being consumed? What margins do you make?
Understand where your products complement each other and how they can be bundled together. Good product knowledge from your customer’s perspective is critical to bundling solutions that will sell.
Control the message to the customers. If you are bringing a commercial bundle together, ensure that the message is crystal clear as to the benefit to the customer and why it’s different to everyone else’s.
Improve your offering on a regular basis. Critically re-bundling to meet market needs and keeping your prices up to date will allow you to stay in constant contact with your customer. As long as you don’t devalue historic propositions.