Bundling for Growth: Service Add-ons to Increase ARPU

Mitchell Paul-Soumis

Mitchell Paul-Soumis

 | 08 April 2022

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Attracting new customers to your service offerings can be a challenge, whether you’re an established player in the market or a new entrant. Balancing profitability with affordability is a delicate balancing act, but a necessary one to succeed. Some companies opt for rock-bottom introductory pricing, while others use referral systems to incentivize free promotion of their services. These methods and many others present a tried-and true pathway to establishing foundational growth.

You’ll find bundling available in almost every industry, and for good reason. Insurance companies offer bundle rates, internet service providers offer service bundles, and fast food restaurants offer food-and-drink bundles. It’s almost impossible to avoid the fact that, no matter how you slice it, bundles are good for business.

One often overlooked method is by bundling low-profit services with other, higher-profit offerings. This allows you to increase your average revenue per user by providing a grouping of services that combine to form a cohesive value offering that is both enticing to customers, and profitable for your business. There’s no one bundle to rule them all, but Sonar is ready to adapt to any bundle you decide to deploy.

What are Service Bundles

Service Bundles are a catch-all term referring to a grouping of 2 or more services offered by your business. They’re common practice for internet service providers and will frequently contain Internet, Voice, and TV services, referred to as a “Triple-Play” package. However, there are no distinct rules surrounding what you can bundle, it’s primarily about making sure that the contents of the bundle make the customer reflect on its actual value. Consequently, bundles will often include an expiring discount, making it more attractive for the subscriber, even if the long-term pricing is more advantageous for your business rather than the consumer.

Consider the Good-Better-Best approach to pricing – bundling services allows you to occupy a unique value proposition. By pricing a bundle offering multiple services below your highest-tiered service, it becomes instantly more attractive to consumers when compared to having just a single service. This encourages customers to subscribe to a bundle, even if the cost is more than they anticipated paying.

Structuring your bundles

When considering creating service bundles, you’ll want to first decide the purpose of the bundle:

  • Is this bundle designed to increase ARPU?
  • Is this bundle designed to capture new subscribers?
  • Is this bundle designed to entice existing customers to upgrade?

While there’s no wrong way to use service bundles, making sure you know who you want subscribing to the bundle makes it easier to tailor the specific services to appeal to the intended subscriber.

Think about it this way – a bundle created with an expiring discount likely shouldn’t be offered to existing subscribers. They’re already paying for their service, and would jump at the chance to pay less. This would lower your ARPU, however, targeting the bundle towards new subscribers, whether through marketing campaigns or as an on-call offer, will promote new sign-ups, increasing your overall revenue. This is why you’ll see some providers offering such steep discounts on introductory packages because breaking even in the short term can lead to profitability long-term with the right package of services.

Promoting Growth

The best marketing is the marketing you don’t need to do at all, though following closely behind that is marketing you only need to do once. Offering competitive pricing is the best way to stay ahead of the curve, and offering limited-time offers or discounts can help tip the scale when consumers are on the fence.

There are pros and cons to offering a sales discount, which HubSpot outlines well in one of their articles, but from a pure growth perspective it’s hard to argue against their effectiveness. Rather than discounting your services outright, you can offer the customer a set amount of their services for a set amount of time, outlined in a signed contract. All of this can be done directly in Sonar, with full control over your services, your packages, and your contracts.

You can also implement a similar strategy to offer customers underutilized services, which can help turn a break-even product into a revenue-generating machine. By including the service as part of a first-time subscriber bundle, you can easily add new users to an existing service, increasing market share, adoption, and long-term viability of the product.

How Sonar Makes it Happen

Rather than relying on a traditional billing system, Sonar can simplify your service bundles by providing you total control over who can see them, who can subscribe to them, and who can add them to accounts. Furthermore, Sonar also includes a built-in Business Intelligence Reporting system that will enable you to review customers with ongoing or expiring promotional bundles. And if that’s not enough, Sonar will also natively integrate with your MarketBroadband account to facilitate the promotion of your services and bundles to encourage new subscribers based on your actual serviceable address database.

If you’d like to learn more about how Sonar can bundle your services, or partner to grow your business, contact us or schedule a demo today!