Make them an offer they can’t refuse!1
We all know you always need a baseball bat to conduct effective business, but sometimes there isn’t just one around so a little clever maneuvering can be handy.
For example, when you’re looking to increase revenue, trying to get people to buy high ticket items isn’t always the best way to go about doing things, especially if you’re a retailer with products that top out at $25. In these cases, volume is your friend, and bulk discounts and “free” shipping are your keys to the castle – which you’ll be able to buy thanks to your increased sales.
Bundles aren’t just for ISPs
Many people assume that package deals are for services, such as Internet and cable, but au contraire mon frère2, they also represent a great opportunity for retailers as well. Many of the same principles that make bundling popular choices for cable providers, mechanics and salons can be applied to companies that sell products.
Bundles can do three things:
- make people spend more
- increase the perceived value to a purchase
- for recurring services, they can make customers “stickier”
Shut up and take my money
If you go to Amazon, you’ll find that the vast majority of items can be bundled with another similar or related item for a discount. For example, why just buy the first book in the latest massively popular dystopian teen vampire trilogy when you can buy all three and save a few dollars? Or, let’s say you need a new mouse. Well, why you’re getting a new wireless mouse, why not also get a matching wireless keyboard and save some money. I mean, it’s probably going to run into problems soon as well, right?
It’s like I’m losing money if I don’t take advantage of this deal
This is where the perception of increased value comes into play. People who save a certain amount of money buying something that intended to already (ignoring the bit where they weren’t also planning on purchasing the extra bit) – well, they’ve gotten a bargain, haven’t they?
I used to work for a major cable ISP that provided phone, Internet and TV services. We offered, as everyone else does now, reduced pricing which increased as the number of services you got increased. For example, stand alone Internet might cost $60 and stand alone TV might cost $50, but together they were $99. Packages of premium networks, like HBO and Showtime, also induced people to select more than one premium channel. Let me just say, these offers worked like gangbusters. (Pun intended.)
Would you please explain the “sticky” thing?
Companies that offer recurring services want you to sign up for as many as possible. When I worked at the ISP, we were told that the more services someone had, e.g. TV, Internet or phone, the less likely they were to change service providers. If someone had just TV with us and we screwed up, they were far more likely to call up Dish Network than if they had TV and Internet with us. Customers with the most services (3 for the math challenged) were the most likely to stick with us, so they were “stickier.”
1 Yes, I’m aware that Michael Corleone said it, but the headline worked better this way.
2 My favorite french term is s’il vous plaît because of the little hat the “i” is wearing.