Which Multi-play Bundling Approach Should YOU Take?
In a recent analysis conducted by Ovum, we found that Communications Service Providers (CSPs) tend to take three distinct approaches when introducing their multi-play bundles to the market:
- Discounting bundling, i.e. encouraging users to subscribe to multi-play bundles by pricing it at a sum that’s less than the total of its parts.
- Reward bundling, in which CSPs steer the conversation away from reduced prices and instead offer some kind of service or upgrade in return for committing to this new type of bundle.
- Various hybrid approaches straddling both discounts and rewards.
But which approach should you take? That depends a lot on what your organization is aiming to achieve. In this blog, we’ll discuss the discounting strategy, before weighing in on the other two and delivering the final verdict in our next post.
Discounting: Handle with Care
The discounting approach works off the premise that customers will only purchase a larger bundle and/or commit to a longer contract if they’ll get to pay less than what the total bundle is worth. In such cases, the CSPs’ revenue comes from the net, long-term value of larger orders and longer contracts as opposed to getting their investment back directly on the discounted bundles.
This approach is particularly conducive to increasing customer or market share, reducing churn, or dealing with intensely competitive environments.
However, though the discount approach may provide more instant gratification in terms of signups, it often proves to be less sustainable, as it can trigger a competitive race to the bottom, which benefits no one. It can also accelerate commoditization and decelerate customer loyalty.
In next week’s blog, we’ll discuss the Rewards and the Hybrid bundling approaches. If you’re curious to find out more, download our whitepaper.About the author: Alon Bar is a product marketing manager at Amdocs, with over 16 years of experience in the communications IT industry. He is responsible for creating awareness, positioning and bringing to market Amdocs’ portfolio solutions. This role includes defining the business strategy and direction and encompasses new offering development, innovative technology and market insight.