How legacy brands can enter the new world of bundling

Companies are ditching discounts and delivering value, writes POSSIBLE's director of strategy.

Somewhere in the last five years, the humble bundle got an upgrade. From super-sized meals and big boxes of software, it grew into healthy, ready-to-cook, organic meal kits; services that send you expertly selected outfits of clothes; and integrated assistants that extend the capabilities of a product. Think total package.

So, why is this something new? Price. Old-school bundling was primarily all about price. Companies would take products and services -- often with only a tangential relationship to each other and sell them together at a discount. Everyone likes a bargain, and these bundles simply reflected a company’s acquisition strategy rather than delivering a clear advantage for the consumer.

The new bundling is different. It starts with the customer experience and aims to deliver value. It takes things that add up to more than the sum of their parts. Netflix and Hulu produce original content not because they’re making your entertainment options cheaper -- but because they’re making them better. Stitch Fix does not discount the items it sends you, but it has a professional choose them because it saves you the trouble of being your own fashion designer.

In more extreme cases, the bundles reach across companies. This happens because brands are thinking outside their own portfolios. They are looking at the customer experience first, determining what would make it better, and then reaching out internally and externally to find the right partners to make it work.

For legacy brands, the question is: How can they enter the new world of bundling?

Unify data
This is most obvious step -- although by far not the easiest. Many brands have deep silos or have grown by acquisition, leaving them with disparate legacy data systems that are extremely difficult and expensive to reconcile. But to the degree possible, successful bundles need to come from a single view of the customer. Companies such as Netflix and Amazon use their data advantage to determine the kinds of content and services their customers would like to see.

Make it work together
Traditional bundles didn’t need to be integrated, they needed to be cheap. Modern bundles need to grow out of an obsession with making the customer experience better. Part of that means that you really shouldn’t see the components of the bundle in isolation; rather all parts should seem like they’re coming from the same place. If you’re offering cell phone and TV service, the phone itself should easily be able to control content on the TV -- including by voice. Above all, no one should be able to sense your company’s structure or org chart through the experience.

Make it better together
The best new bundles often sell for more because they deliver more. It probably costs less than a dollar for a food service brand to put the ingredients for a soup into a box. But when it’s delivered with a recipe and a how-to video, the brand is able to sell the package at many times the original cost.

When bundling, it’s no longer good enough to slap together two services and expect to win. Brands need to create smart services that link the two, add educational content, and make it easy to get the most out of the combination. AirBNB, for example, has added experiences, which are curated by locals and include things like tours, concerts, retreats, and adventures. This enables travelers to get to know their destination far better than they likely would on their own.

Team up for the win
If you’re trying to help your customers, you may find that your existing product or service portfolio has gaps that impede you from providing a better experience. Brands that bump up against this limitation can often succeed by partnering up. The traffic app Waze realized that no car journey is complete without music, so they partnered up with Spotify to ensure your navigation and music live in harmony. Users control their Spotify tunes within Waze or get turn-by-turn navigation while in Spotify.

Customers have more choice and higher expectations than ever before. Modern bundling means creating incremental value when various components are combined -- delivering a superior customer experience that increases a customer’s share of wallet and strengthens loyalty.

Sean Weller is the director of strategy at POSSIBLE.

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