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The Benefits of Bundling

Published: February 1, 2011 by Guest Contributor

The passage of the Telecommunications Act of 1996 increased competition in the telecom industry. These days, nearly every telecommunications company is offering, or considering offering, bundled services to attract new customers, increase retention of current customers, or both.

Every time I turn around, there seems to be a new variety of bundled services. Quality, ease of use, and the right price points in a market, make these bundles very attractive to consumers.

Most offers are directed at consumers, but the industry is looking for emerging market spaces. AT&T just announced it would be offering its U-verse IPTV product and its via-resale DirecTV service, bundled together with landline voice, wireless voice and broadband Internet services, to the small business market. The company explained this package might be attractive for small businesses with client waiting rooms.

Bundle of joy
While there are a few risks involved in offering bundled services (a topic we will explore in a future post), by and large, the benefits of bundled services are many:

1. Enhanced customer loyalty
– Customers are less likely to go to the trouble of unbundling services in order to switch providers.
– Customers feel more connected to your organization on multiple fronts.
(Both of these help to shield you from competitive displacement attempts.)

2. Simplified customer experience

– Consumers enjoy the convenience of bundled services, which allows them to manage multiple services with a single billing statement and a single payment.
– When money is tight, bundle customers will generally pay the entire bill, as opposed to paying only part of the bill.

3. Save provider time and money

– Bundled billing reduces the number of bills sent each billing cycle, which means less paperwork for you and your customers.
– Fewer bills sent also means fewer payments to process.

4. Penetrate new markets

– Partnering with a company, who has a bigger footprint in a particular market, allows you to leverage that partner’s existing customer base.
– Bundling also can help you penetrate a new market with more competitive price points.

5. Easier and less risky up-selling path for larger share of consumer products and services

– The partner, already having an established relationship with the consumer, will have an easier time up selling your product offerings to their customer base.

If you’re thinking about getting into the bundling game — or expanding on your current bundling strategy — you need to know that getting bundling right is no easy task. Check back for future blog posts in which I’ll discuss what makes a “smart” bundled offering, as well as how to ensure you’re offering the right bundle to the right customers. In the meantime, if there are specific topics in the realm of bundling you would like to see addressed, please be sure to comment on this post.