The following article is part 4 in a 5-part series on how to boost business cash flow.
We all know the experience of going to a fast food joint for a sandwich, only to come out with the sandwich plus an order of fries and an extra large drink we didn’t want or need. How do they get you to do that?
We’ve also probably sent or received a gift basket at one time or another — my favorite is the wine, cheese, crackers, and fruit basket.
These are classic examples of bundling, where you offer several products together at a reduced rate for better value. During this present crisis, you want to give your customers as much value as you possibly can. You also want to increase the lifetime value of all your customers.
One simple way to do this is to bundle your products and services together. Not only will you provide more value, you will increase the purchase price.
The Power of Bundling
The concept seems quite simple at the outset – you offer a bunch of stuff for a low price. But it doesn’t work unless you really know what you’re doing. The value your bundle offers needs to be well worth the price the customer is paying, which is more than a single product.
In addition to the cash boost a bundle can give your business, this technique offers the chance to further show people the unique value you offer by giving them more products — the more products of yours they actively use, the more loyal they become to your brand. It also helps you move inventory.
However, it’s not just a matter of throwing stuff together. You need to think about the needs of your customers so that you can offer them a combination of products that helps them overcome problems they’re facing and accomplish more.
Pricing Your Bundle
A good combination is one that’s a win-win for both parties. This means it needs to be low enough in price that it’s a bargain for the buyer, but also profitable enough that it’s worth it for you. Decide how much you need to make before you start setting prices.
There are two cases where you might want to offer a super-low price. One is when you’re trying to bring new people into your business’ orbit. You might offer one or more of the products at a loss in order to spread awareness of your brand and get new leads. You can then offer the full bundle as an upsell or cross-sell that earns you a profit.
The other case is where you need a quick burst of cash. You can create a limited-time offer where people can buy the bundle but only while supplies last.
However, you can also price your bundles as tiers. In other words, you can offer three or four different price points with each tier providing additional layers of value.
How to Bundle Products
Bundling options include:
- Products that are used together, such as a game console and a game
- Similar products that are used for the same thing, such as scented soaps, bath salts, pumice stones, and bubble bath
- A high-seller and a low-seller in order to move stock of the low-seller
- The highest-selling products together for the most sales possible
- A product that comes with a service using it; for example, a collection of social media content along with the service of posting the content for the client
- Physical product with an information product, such as a digital report explaining different ways to use the product
- Products or services with expert consultation, such as a live virtual training session
Choosing the Right Offer
To put together the right offer, understand your market and their buying behavior. What products do they use together or buy together? Look at sales data and carry out surveys or other methods for gathering market information.