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February 5, 2021 | Authored by: Nelson Veiga

Are service bundles the answer to subscription fatigue?

Subscription fatigue is a very real concern in today’s subscription market, especially as top performers solidify their market position and new challengers compete for audience members. Consumers simply don’t have an endless appetite for subscription services, and the threshold for the number of accounts they’re willing to manage at any given time is relatively low. Take, for instance, video streaming services: on average as of December 2020, U.S. households subscribe to and pay for 4 streaming services alone, according to J.D. Power.

It’s a matter of when — not if — subscription fatigue will take hold with individual customers. For disruptive and innovative subscription companies that want to break into this crowded market, subscription fatigue makes that goal all the more difficult to achieve.

Bundling services with other platforms, offerings, and providers give subscription businesses another way to reach customers without asking them to purchase and manage a separate subscription. It might just be the answer to outmaneuvering subscription fatigue.

Key Strategy: Stay relevant by delivering more value to subscribers. Consumers open to using more subscriptions through bundling

A recent study jointly conducted by Vindicia and PYMNTS highlighted the appeal of subscription bundling in today’s environment. The report revealed that consumers are willing to subscribe to more services through bundles than they otherwise would in taking an à la carte approach.

There are a lot of advantages to bundling from both the provider and customer perspectives. Bundles increase the variety and value of services by diversifying offerings, complementing products, and filling in delivery gaps. For instance, Verizon customers who sign up for an unlimited data plan can receive a free subscription bundle that includes Disney+, Hulu, and ESPN+. Pairing unlimited mobile data with large video streaming platforms makes perfect sense for the target audience in this case.

For subscription providers, bundling and partnering services increase social credibility and help expand the brand footprint. With the right strategic partnerships, subscription providers can convert more users and acquire other customer segments that might otherwise be difficult to engage.

By bundling services, subscription companies can also address one of the biggest drivers of churn: cost. Service bundles offer major cost savings, enticing potential customers who may be on the fence about signing up for a standalone subscription. In fact, the PYMNTS study found that cost savings are among the most important factors consumers consider when purchasing a subscription bundle. Nearly one-third consider cost savings to be the number one 1 reason to purchase subscription bundles. At the same time, consumers expect to save, on average, 21.5% through bundles, so you have to make the offer worth their while.

Build the right bundles for your audience

It can’t be stressed enough that as a subscription provider, you need to be customer-centric and continuously look for ways to increase the value you bring to your subscribers. One way: be strategic about your bundling partnerships. However, If the services don’t complement each other or provide meaningful value, customers won’t bite. According to our survey, the top reason consumers don’t consider buying bundles is that they don’t want to pay for services that they won’t actually use — even if it’s at a steep discount.

On the other hand, organic bundles — multiple products and services offered by a single company, such as those typified by the tech giants (like the six-in-one Apple One bundle) that have the scale and product diversity to create their own bundles — were the most popular form of subscription bundles. Nearly one-quarter of survey respondents reported using them.

Creating bundles that complement each subscription and bridge the gaps in those services will present a more enticing option to customers. To do that, you must be sure that each offering satisfies a distinct need with minimal overlap in service offerings. A good example of this relationship in action is how leading D2C home security companies like Front Point and SimpliSafe’s home security subscription, both combine physical home security products (motions sensors, security keypads, entry sensors, cameras, etc.) with a monitoring subscription to provide additional support and peace of mind.

Another best practice to follow is to give customers different bundling options to choose from. The study found that 68.7% of consumers would prefer to select which subscriptions were included in their bundles rather than select from a limited number of packages with very little variability.

Talk to your customers…they’ll willing to help you understand what they want from bundled services

Before you can create a bundle that hits the mark with your customers, you have to understand what they are looking for in their subscription services. One effective yet commonly overlooked method: Just ask. Your customers will provide insights on what is interesting and compelling to them. Don’t guess, building effective bundles requires an enormous amount of insight into user preferences and feedback. Additionally, subscription intelligence tools can also help in your process by enabling you to monitor customer reactions and responses to different bundling combinations and price points, allowing you to understand what consumers value most and what aspects are absolute deal-breakers. Don’t be afraid to experiment with a variety of packages to find the offerings that will resonate with your customer segments.

Another step to consider is giving your customers more control over their subscription bundles. Removing friction that your subscribers may face should be a top priority. For example, allowing a single identity to access offerings across the service bundle using single or multiple sign-on makes it easy for subscribers to see a singular view of the subscription.

That includes allowing them to swap out services, downgrade or upgrade subscriptions on-demand and pause or resume services whenever they want. If you can make the customer experience more streamlined and easier to navigate — i.e., not forcing users to jump through a lot of hoops to make changes to their account — you can remove some of the subscription barriers that turn away potential and existing customers. Read about these other thoughtful strategies for making bundling strategic and personal.

Keep in mind that bundles are a great way to upsell and cross-sell services. Customers may become attached to services they wouldn’t have considered before, especially if those offerings are organically incorporated into a more holistic subscription experience. However, managing the commercial and technical needs of a partnership bundle strategy is challenging. Entitlements are particularly tricky to navigate without the right platform that can streamline operations.

With the right bundling strategy, you can gain more revenue over the long run by giving customers more reasons to stay subscribed. As customers enjoy more perceived value from their subscription packages, they’re less likely to cancel, helping your company effectively manage active churn.

Leverage service bundles to stave off subscription fatigue

Subscription bundles can be a win-win for everyone involved. Customers receive a wider variety of services that enrich their subscription experience and receive greater value from their subscription. Subscription companies, meanwhile, can reach a wider audience, expand their market footprint and address some of the most common drivers of subscription fatigue and customer churn. Bundles offer a more streamlined and cost-effective option to consumers who don’t want to keep track of or pay for multiple subscriptions.

Whether you choose to bundle services internally using only your own offerings or through strategic partnerships with third-party providers, explore every opportunity to refine your approach to better meet customer preferences and expectations. The logistics of subscription bundles may seem challenging, but Vindicia’s MarketONE all-in-one subscription platform can help you make sense of it.

Read our white paper “Twelve essential steps to building subscription bundling success” or talk to our team today to learn how to manage your subscription bundle strategy, no matter how complex it may appear.

About Author

Nelson Veiga

Nelson Veiga

As Vindicia’s VP of Enterprise - Americas, Nelson’s team drives/delivers desired business outcomes for Vindicia’s clients. A proven cross-functional leader with 20+ years of experience, Nelson has delivered success in senior roles in technology companies across sales, customer success, operations and technical roles. His years of experience include serving as VP of Sales and eventually COO of Duetto, VP of CS at Bazaarvoice, and VP of Latin America Sales at Lithium Technologies. He holds an MS in management information systems from Florida International University.