How to Avoid the Risks of Bundling

avoid the risks of bundling ecommerce

Retailers, etailers, service providers, and pretty much anyone who sells anything ever use bundling techniques to improve sales and make customers happy. After all, who wouldn’t want to receive a discount on more? The problem is that bundling comes with a unique set of problems that could hurt your sales in the long run. Becoming aware of the risks is the first step to avoiding them!

Diminished Value

When you combine two or more products and set a lower price for the bundle, you might see those items fly off the shelves and out of your warehouses. That sounds amazing, right? What kind of risk does that involve?

Now, try to sell those items individually and at the original price for each. The question on every buyer’s mind will be this: Why pay more for each when I can get both for less? In other words, you’ve affected the perceived value of every item in one swift motion.

Not only will buyers wonder why they have to pay more for the individual items, they’ll also wonder how much the markup is for everything else you sell. After all, if you can afford to take such a cut on those bundled items, then you must be making a whole lot of money on everything, right? Once that little seed is planted, it’ll grow into something ugly.

How to Fix It

With bundling an important part of sales, you can’t necessarily just vow never to do it again. Instead, you’ll need to be aware of the potential pitfalls and plan for them. How can you protect the perceived value of your products while still offering great deals for your favorite customers?

1. Bundle items you won’t sell again

Just as with discounts and clearance sales, items bundled at lower prices should be those you don’t intend to sell again. Bundles are great for ridding yourself of inventory to make room for more. You don’t need to worry what customers will think about those items at regular prices because you won’t ever offer them at those prices again.

2. Provide bundled items to loyal customers

If your bundled items are reserved only for those customers who have proven loyalty over time, then you won’t need to worry about the perceived value of your products. Those who’ve earned enough points or spent enough money to gain access to bundled prices will obviously be back for future purchases no matter what.

3. Only separate the bundles for replacements

This is only an option if the bundled objects really don’t work without each other. For instance, an MP3 player and headphones, or a laptop and charger cord. Should one part of the bundle break, buyers won’t care that the individual item is a little more expensive on its own than it was when purchased as part of the package.

Sunk Cost Effect

When you bundle services or events, buyers are actually less likely to use every item purchased. For instance, if you sell an pack of five yoga classes, those who buy aren’t likely to attend all five times. In fact, they may never make it past the first lesson. The same is true for a season pass to a theme park, tickets to sporting or entertainment events, technology services, and entry to webinars or online classes.

To the seller, this may seem like winning rather than losing. You’re making money on five when the buyer uses far fewer. What’s not to love? More cash for less work. The problem is that buyers end up dissatisfied with the services or events because they spend money for something they didn’t receive. Convincing them to purchase again is next to impossible.

How to Fix It

Again, you can combat this to ensure customers remain happy with your bundling options and come back for more.

1. Provide individual tickets for each event

If those customers have something to hold in their hand, it will represent the money they spent for the package or pass. If the cost isn’t immediately visible, buyers don’t feel as obligated to attend.

2. Offer the bundles to loyal customers

As with the bundling of products, the bundling of services or events could see better results if they’re only available to proven customers. Those who have used the service before or attended numerous events before will be more likely to keep making purchases.

3. Send timely reminders to buyers

If buyers select the bundle but then neglect to use the services, they may do so because they feel there is plenty of time. If you sent reminders to let them know how much time is left in their agreement or how many passes are still left for future events, they may be galvanized into action.

Keeping customers happy is the key here, not proving the value of the service. If buyers use the bundled services, they’ll feel they go their money’s worth. That means they’ll be more likely to make repeat purchases.

Will you continue offering bundled products or services? Which of these solutions might help you bring in more revenue? We’d love to know your thoughts, so leave us a comment!

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