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Which Bundle Is Right for You?

January 16, 2014 | By Lisa Singer

Many organizations are working toward simplifying their product lines by offering bundles, as opposed to a long list of options that buyers must choose from. Sellers do this for a number of reasons, such as gaining share of wallet and helping buyers chose the correct level of offering. The question is: What is the best way to construct a bundle without leaving money on the table or offering over-featured bundles to customers who really just want the bare minimum?

Some bundles are too small. Some bundles are too big. This one is just right!

Many organizations are working toward simplifying their product lines by offering bundles, as opposed to a long list of options that buyers must choose from. Sellers do this for a number of reasons. First, it may help gain share of wallet, since bundles provide value for buyers, ideally by offering components together at a lower price. Second, bundles help buyers chose the correct level of offering, especially if the offering is new and buyers don’t know exactly what they need to purchase. The question is: What is the best way to construct a bundle without leaving money on the table or offering over-featured bundles to customers who really just want the bare minimum?

Segment Your Market

First, segment your market and understand the different groups of users you are selling to. Isolate what makes them unique in relation to your product: Is it business size? Number of employees? Number of SKUs they sell? Installed equipment or operating systems? Additionally, conduct persona research to understand the key challenges and opportunities the buyers in these segments share.

Create Bundles Tailored to These Segments

Once you have a grasp of how the segments differ, begin creating bundles tailored for those segments. Ensure that the core offering, service and support, as well as the upgrade path, match the needs of those buyers as closely as possible. When this is done right, a bundle should meet the needs of 80 percent of the potential buyers in its segment. The additional 20 percent may end up with offering components that they feel they don’t need, or may need to purchase a la carte components to complete the offering.

Over-featuring vs. Under-featuring

Just like distinct products, solution bundles can be over- or under-featured. However, it may be too costly to maintain a SKU for every single user type. For buyers or markets that are highly price sensitive, be careful of overbundling. The high cost could very well knock your offering out of consideration. In less price-sensitive markets, over-featuring may be more acceptable, especially if the added offerings can provide value once customers know their purpose and how to use them. Avoid throwing features in for free as opposed to creating newer, slimmed-down SKUs. Features offered for free are devalued in the eyes of the user, the sales force and channel.

Market to Your Target Segments

Finally, direct customers to the bundles that are right for them. Use messaging that describes targeted users based on the key value driver you address: For example, address “large sales teams, 250 and up,” as well as businesses that handle more than 200,000 transactions per year, those that use more than 10 GB of storage, and so on. Consider using vernacular picked up during the persona development process so that prospects can easily connect their needs to your solutions.

Lisa Singer

Lisa Singer is a Senior Research Director of Product Management Strategies at SiriusDecisions. Lisa has more than 20 years of international experience with global marketing and product management, with an emphasis on strategic alliance and business development. Follow Lisa on Twitter @lisagsinger.
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