This is the third post in our series about bundling. In the previous two posts, I discussed
1) the many benefits of bundling services and
2) how to determine who might be a good candidate for bundled services.
When it comes to maximizing upside and mitigating risk, of primary concern is knowing your customer’s payment history and creditworthiness. But once you’ve identified good candidates for bundled services, just what is it you should offer?
An offer they can’t refuse
As with most marketing practices, there is no exact formula for creating a successful bundled package. Some considerations include:
- Making sure the package is worth more than the sum of its parts. If it costs the same to buy each of the services separately, your customers might very well go shopping elsewhere for each individual service.
- Creating a package that makes it easier to choose from various options. An overly complicated offer is more likely to drive customers away. On the other hand, an offer that simplifies your customer’s life is going to be more attractive.
- Ensuring that the customer feels at least one product in the bundle is a “need” item. For example, many consumers require a landline for an alarm system, which makes the landline a “need item” for them. Linking an essential service or product (“need item”) to a luxury product/service (“nice to have”) adds value to the package and makes it more attractive to certain consumers. Because the package includes a need item, these consumers would think twice before skipping a payment.
- Providing a few choices rather than a one-size-fits-all offer. Create several packages at different price points that include different options. To determine the most appropriate services to bundle, you need to drill down to find out what products are most appealing in a particular market. For instance, bundling might be more appealing in some higher income point populations as opposed to lower income areas.
- Understanding a customer’s cash flow situation and accommodating for a certain degree of bill shock can go a long way toward creating bundled offers that customers actually respond to in a positive way.
Any questions?
If you’re thinking about getting into the bundling game — or expanding on your current bundling strategy — you have a lot to consider beyond these three posts. If you have specific questions in the realm of bundling you would like to see addressed, please be sure to comment on this post.