Are you maximizing your return on investment from bundled offers?

It is absolutely unsurprising that recent carrier earnings calls are adorned with discussions of bundled offers. From the not-so-interesting attic of services once cobbled together by carriers trumpeting both one-stop shopping and a single bill, bundled services have emerged front and center.

Bundled services have overtaken the carrier industry like a locomotive. From the carrier’s selfish perspective, bundles are admittedly the best tool yet with the inherent ability to protect core revenues, pull through new service purchases (ARPU), and reduce churn. Customers both enjoy the discounts and occasionally the ability to purchase services otherwise not available a la cart.

The Pygmalion transformation of bundles has taken less than 10 years to occur. Now well past the tipping point, research performed by The Eastern Management Group shows that approximately 800 carriers worldwide are offering bundles. Bundles are evolving from a still-popular plain vanilla variety, comprised, let us say, of digital cable, a cable modem and voice telephony for an MSO, to value rich bundles. The latter reflect variations for different customer sets, the requirements of vertical markets (e.g., health care), packaging alternatives and product complexity. Product complexity or richness is pervasive among many of the cutting-edge new bundled offers, as are the inclusion of business partners (e.g., Microsoft), and the utilization of multiple distribution channels suited to market need.

Our years of creating and analyzing bundles show they do the trick. The simplest are sticky and have sufficient properties to retain customers and generate incremental revenue. However, bundles have existed for a sufficient number of years to empirically examine the difference between what just works and what works very well. A killer bundle, comprising a mix of services, and an effective go-to-market strategy can generate five times the results of another. Our fast follower research into bundles shows that good competitive research simplifies emulating a winner.

Every day, five to 10 new bundled offers arrive on the market around the globe. Half are improvements to ones already deployed by a company; the rest are truly new. A refinement to an existing bundle may be obvious (e.g., price change, feature additions) or subtle. The more transparent evolutions often represent shifts in marketing such as direct marketing, telemarketing and distributor incentives, all the way to billing changes or call center modifications. A client of ours had such a successful launch with a new bundle that 40,000 calls came to the call center each day after the bundle was introduced. Despite success, modifications to the bundle began almost immediately.

Worldwide, there are between 2000 and 3000 bundles in the market today sold by telcos, long-distance carriers, wireless providers, MSOs, broadband and satellite companies. Given the strategic importance of bundles to every carrier (bundles form a sentry around the core business), monitoring others’ bundles is mission-critical. SWOT analysis is effective for defensive positioning. Fast follower research and implementations can deliver new revenues (this year), shorten the time to market, minimize risk, maximize revenue and retention, and allow first-to-market solutions, copied from effective bundles observed in other states and countries.

John Malone is President and CEO of Eastern Management Group, one of the oldest and largest management consulting firms focused exclusively on the communications industry. He can be reached at jmalone@easternmanagement.com.