Product Bundling in Telecommunications
Product bundling has proven to be an effective strategy for telecom companies that want to reduce churn and maximize the lifetime value (LTV) of their customers. Customers want the convenience and cost savings of having their telecommunications services bundled with the products they need for everyday life.
Resolutions for telecommunications providers during Covid
An excerpt and expansion on items addressed in our telecom ebook outlining how telecoms can improve digital customer experience and recover from weak retail sales.
Included in our full analysis:
- A brief look at the situations facing the telecommunications industry.
- New business strategies will need to be implemented in order to curb the recent retail losses.
- New solutions like product bundling, value-add product pairings and prioritizing 5G offerings may bolster flagging retail numbers.
- Now is the time to take a critical look at current business strategies and evaluate how those strategies can best be altered to add new technology and improve customer experience.
Read the full ebook here >
Many telecommunication service providers currently offer bundling in their product offerings, and it has proven to be an effective strategy. As many as 63% of consumer respondents to an Omdia article having purchased a bundle of two or more services. Multi-play packages are helping telcos reduce churn rates and maximize customer lifetime value, while customers are open to bundling as a form of cost savings on the products and services they need for everyday life.
Customers want their telco provided services bundled together as a cost-saving measure
Currently, most telecommunications providers have multiple legacy-style bundles, including internet broadband, fixed-voice, paid TV, and wireless phone options bundled into one-play, two-play, or multi-play options. As consumer demands change, the challenge for communication providers will be to amend legacy bundle options, for example, the traditional grouping broadband internet with paid TV and fixed-voice in one subscription, to include the non-traditional options that the next generation of consumers is looking for.
Customers want more services to come from a single-source provider
Non-traditional bundles, such as pairing fixed broadband with a smartphone and wireless offering, will become crucial to maintaining customer loyalty as we see many households moving away from traditional fixed-voice and paid TV offerings. If telecommunications providers can amend their traditional bundle offerings to include internet broadband service with better value wireless packages, they may see increased revenue in these new types of bundles.
By adding non-traditional bundles to offerings, telcos can increase market share
With the rise of streaming services such as Netflix and Amazon Prime, telecom providers would also do well to create partnerships with these streaming video on demand (SVOD) providers and offer those value-added partnerships in bundles for their clients. In doing so, customers will view the telco as forward-thinking, and having the client’s needs in mind in terms of what content they are consuming.
Value-add partnerships with streaming services can make telcos more attractive to consumers
Other areas that telecommunication service providers may consider adding to their offerings portfolio are partnerships with companies that manufacture wifi connected home security systems and Internet of Things (IoT) devices that connect wirelessly to a network and have the ability to transmit data. For example, by partnering with a company that offers connected devices like smart appliances, or smart thermostats, and creating a bundle where the customer gets a discount on the product purchase as well as a specialized home internet package that the IoT devices would use to send and receive data. Forward-thinking bundling and partnerships could pave the way for substantial growth in revenue if done correctly and offered to the right customer at the right time.
Partnering with home security products and IoT products opens more opportunities to capture market share
As more and more providers offer varied bundling strategies, less and less differentiation will be possible, so CSPs will have to continue to evolve overall bundling strategies to stay relevant and avoid high churn rates as consumers move to better, more dynamic offerings in the sector. Improving bundling options will improve customer experience, increase loyalty and reduce churn rates. Adding strategic partnership will help increase market share and make up for dwindling retail numbers from 2020.
Key areas to address in telecommunications bundle offers:
- Ensure that marketing messaging is strong enough that the consumer knows that the bundle they are looking at accepting will meet their needs
- Offer significant enough discounts on bundled products and services to be more compelling than purchasing the components individually
- Make the purchase journey of buying a bundle simple and clear to understand for both consumers and sales teams, in both B2C and B2B channels