Bundling Up

Businesses and consumers already look to you for wireless. So how do you sell them on other service, too?

Bundling has become a popular strategy for wireless-service providers, and analysts say convergence of services, or 1-stop shopping, is the future of communications. Why? By offering combinations of local and long-distance wireline, wireless, paging and Internet in a single package, the provider can be the one name consumers think of for all their telecom needs.

The Strategis Group's 2000 studies "Branding & Bundling: Business Telecom Services" and "Branding & Bundling: Consumer Telecom Services" found that 66% of businesses and 63% of consumers want bundles with at least two services.

"Telecom bundling is the new reality of the market," said James Mendelson, The Strategis Group analyst and the study's lead author. "Consumers demand it, businesses demand it and operators are finally beginning to provide the service. It's now a race to become the customer's 1-stop communications partner."

Bundling Buzz
Alltel is one example. It offers wireless, paging, Internet, local and long-distance service in bundles, and it's planning to include wireless data.

"What we've tried to do is have discounted bundles and solution bundles so a customer can find the perfect bundle for them," said Regina Woziwodzki, director of strategic marketing. "The more services that (customers) add, the better deal they get."

Alltel's solution bundles target business' specific communications problems, and discounted bundles are designed to provide consumers with value by combining products that they normally would purchase separately and discounting individual parts to encourage them to buy the whole package.

Bundle flexibility also is key.

"When we present (consumers) with one bundle, they may like it, but then they'll say, 'If I could get it with this . . .'" Woziwodzki said.

Alltel recently targeted its Georgia wireline customers with a direct mailing about saving $75 if they add wireless, paging, long-distance or Internet services. Each additional service brings a one-time, $15 discount.

Whereas Alltel bundles around wireless and wireline, CFW Communications bundles around PCS, said Rob Cale, director of marketing. PCS subscribers can add Internet and residential long-distance services at a discount and get a single bill. For example, CFW's unlimited Internet service alone costs $19.95 a month, but PCS subscribers can add it for $17.95 a month.

CenturyTel recently completed test marketing in the South and Midwest for two bundles. The $99.95 version includes two wirelines with enhanced services and long distance, Internet access and wireless. The $49.95 version includes one wireline with enhanced services, long distance and wireless. CenturyTel plans to launch its bundled options nationally in early 2001.

"Ultimately, we would like to offer an a-la-carte selection: You choose your price, and for that price you select these products," said Chuck Kinnison, CenturyTel segment manager of SOHO and small business.

Bundling & Branding
Brand image and high-quality service are key to selling bundles.

"Quality perceptions are especially important in marketing bundled telecommunication services," Mendelson said. "Bundling all or most services from one carrier demands a certain level of trust from the customer."

That observation isn't lost on CenturyTel.

"Brand has huge impact on bundling," Kinnison said. "CenturyTel's goal is that we deliver a quality product that customers can count on (and) customer service second to none. With that security level, customers will be attracted to anything that CenturyTel makes."

CFW's Cale said branding, image and how the company positions itself are critical.

"Our branding tagline is 'more ways to bring more people together,'" Cale said. "We focus on all the integrated services that we can provide to our customers, either on an individual basis or on a bundled basis."

CFW markets bundles in its 28 company-owned retail stores. As consumers stop in for wireless, salespeople explain the benefits of adding Internet or long-distance services.

"With PCS, you've got so much functionality built into the product that it becomes a very good bundling product because you have the ability to deliver e-mail, text messaging, Web information (and) stock information," Cale said. "All of that can come across the handset."

Even so, branding is only as good as the bundle. Bundling pushes providers to deliver a quality product because the individual services must provide value on their own merit.

"We try not to bundle services for the sake of bundling," Cale said. "There is truly an integration that occurs, (and) it makes things easier for our customers to use our products and services."

Successful bundling also requires paying attention to your consumers, Kinnison said. "You need to address the customer's market, and what is important to them."

Better Bundles
Consumers' lives are busier than ever, so the convenience of a single bill and a single point of contact is one attraction.

"We used to say value was the main driver, and to an extent it still is, but all of a sudden, convenience and ease of manageability are factors," Kinnison said.

A single point of contact for multiple services benefits provider and customer alike.

"It's a 1-stop-shopping strategy: Customers can come in and get everything they want," said Alltel's Woziwodzki. "Now you have to call only one point of contact and get your questions answered at one time. That's good on our customer-service side as well."

Convenience appeals to businesses, too.

"There's a lot of interest in cost savings and support issues: 'The less number of folks I have to call, the easier to support a product,'" Cale said. "Those providers that can provide integrated and cost-effective solutions and (are) able to support that have an advantage over a single-source provider who can't."

Other advantages for providers include increased loyalty and reduced churn.

"We have seen that (bundling) reduces churn by about one-third," Woziwodzki said. "Average revenue for our bundled customers is about 50% higher than our standalone wireless customers."

Kinnison said that demand for bundled services grows daily.

"A few years ago, the Internet was almost a luxury item for most people," he said. "Now it's become something people feel that they really need to have, and bundling is becoming that way, too."

The challenge for providers, Kinnison said, will be to "put products and services together in such a mix that the customer can see value in doing it." But above all, offer high-quality service, the ultimate market differentiator.

"Users aren't going to accept lesser quality to get a bundle, even if it's a little cheaper," Cale said. "If it's beneficial to the customer, and they see value in your services, I think they're more likely to stay with you, whether it's one service or two or three."

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Who Wants Bundles?

The Strategis Group surveyed more than 600 consumers in late 1999 to gauge their interest in bundling local and long-distance wireline, cable and satellite TV, Internet access, wireless and paging. Of the respondents, 93% showed interest in some type of bundle, and 25% were interested in bundles of six services.

A separate study posed similar questions to small to large-size business. Some highlights:

• 66% wanted bundles with two or more services.

• 33% preferred a bundle of local and long-distance wireline, cellular/PCS, paging, Internet access and enhanced data services.

• 20% wanted bundles of two or three services, and another 20% wanted bundles of four or five services.