How to use bundling to grow your tech business

Discover the secrets of using bundling to turbocharge your tech business growth. Learn practical strategies and real-life examples.

DALL-E generated image showing bundling as a growth strategy.

In today’s saturated business landscape, tech companies are constantly seeking innovative strategies to attract and retain customers. In non-tech businesses, one strategy that has proven to be highly effective is bundling. Bundling involves combining multiple products or services into a single package, offering increased value to customers while driving growth for the business. I believe bundling can be used in tech businesses as a strategy to enable continuous growth. Some tech companies are already doing this well.

Take Netflix, for example. By bundling free mobile games with its subscription, Netflix not only attracts new users but also keeps existing users engaged with the product and their brand. Similarly, Amazon bundles free same-day deliveries, ad-free music, audiobooks, free movies, and premium game streaming to enhance its value proposition and retain customers.

But bundling in tech is more than just adding extra offerings to your core tech product. It requires a deeper understanding of your ideal customer and their preferences. Essentially, bundling is about finding or creating offerings that your ideal customer enjoys on the channels where they are most active.

The key to successful bundling lies in meeting your customers where they are. By adding offerings that align with their interests and activities, you make their experience more enjoyable and exciting, ultimately strengthening your brand’s equity with them.

GitHub’s Student Developer Pack and Paystack’s Paystack Catalyst are prime examples of companies leveraging bundling to target their ideal customers early on. GitHub offers students limited-time free access to essential tech tools, while Paystack provides discounts from other startups, catering to businesses in the early stages of development.

Consider Netflix’s decision to bring the popular Hades video game to iOS via their mobile game bundles. This strategic addition not only attracts former customers but also prevents current subscribers, like myself, from considering cancellation.

Developing your Bundling Strategy

To develop an effective bundling strategy, consider this framework:

Bundling Strategy Framework = Customer Segmentation + Product Selection + Pricing Strategy + Channel Selection + Promotion + Monitoring & Optimization

Let’s break down each component:

1. Customer Segmentation: Identify and segment your target customers based on demographics, behaviour, and preferences. Understand their needs, wants, pain points, buying power and behaviours to tailor bundled offerings that resonate with each segment.
2. Product Selection: Choose complementary products or services to bundle together based on customer preferences and market demand. Ensure that bundled offerings provide added value and address specific customer needs or problems.
3. Pricing Strategy: Determine the pricing strategy for your bundled offerings, considering factors such as perceived value, competitive pricing, and willingness to pay. Optimise pricing to maximise revenue while remaining competitive in the market.
4. Channel Selection: Select the channels through which you will offer and promote bundled offerings. Consider the channels where your target customers are most active and ensure seamless integration and accessibility across all touchpoints.
5. Promotion: Develop a comprehensive marketing and promotional strategy to raise awareness and drive adoption of bundled offerings. Utilise various marketing channels and tactics to reach your target audience effectively.
6. Monitoring & Optimization: Continuously monitor and analyse the performance of your bundling strategy. Track key metrics such as sales, customer satisfaction, and profitability to identify areas for improvement and optimization. Adjust your strategy based on insights gathered to maximise effectiveness and ROI.

By following this framework and adapting it to your specific business context, you can develop a robust bundling strategy that drives growth, enhances customer satisfaction, and maximises revenue. If you’d like me to break each of these components and give more detail, let me know in the comments below.

Checking the effectiveness of your Bundling Strategy

If we distil this into a formula, we’d have:

Bundling Efficacy Ratio = (Value of Added Offerings + Alignment with Customer Preferences) / (Accessibility on Active Channels + Cost of Implementation)

This formula helps businesses evaluate the effectiveness of their bundling strategy. Let’s break it down:

1. Value of Added Offerings + Alignment with Customer Preferences: This numerator represents the benefits or value that customers perceive from the bundled offerings. It includes factors such as increased utility, convenience, cost savings, and alignment with customer preferences. The more valuable the bundled offerings are to customers and the better they align with their needs and preferences, the higher the numerator will be.
2. Accessibility on Active Channels + Cost of Implementation: This denominator represents the costs associated with implementing the bundling strategy. Accessibility on active channels refers to the ease with which customers can access and engage with the bundled offerings through their preferred channels. The cost of implementation includes resources, effort, and any associated expenses required to develop, market, and maintain the bundled offerings. The lower the costs and the higher the accessibility, the lower the denominator will be.

By dividing the numerator (benefits) by the denominator (costs), the formula provides a ratio that indicates the overall effectiveness of the bundling strategy. A higher ratio indicates that the benefits of bundling outweigh the costs, making the strategy more effective in driving growth and enhancing customer satisfaction.

In summary, bundling represents a forward-thinking approach to loyalty programs, effectively productizing or automating them to drive growth. For businesses adopting an organic growth strategy, integrating bundling early on can be instrumental in attracting and retaining customers. Extensive loyalty programs like this create the growth loop required to build moats around your business and allow your customers to become your biggest advocates.

I am looking to write on more growth strategies like this, and even dive deeper into the concept of Bundling and cover Unbundling and Rebundling. If you’d be interested in this or any other organic growth topics, please let me know in the comments below. If you’d like me to help you with your organic growth strategy, feel free to also reach out.

Until my next post, you can find me on Twitter and LinkedIn.