Marketers are always looking for new ways to boost sales, increase customer value, and stand out from the crowd. One strategy that continues to prove its worth is bundling—the practice of combining multiple products or services into a single package deal.
Everyone loves a bundle, and there are reasons why it is such an effective marketing tactic—and why so many top brands rely on it.
The Power of Bundling
Bundling works by tapping into consumer psychology but also basic economic principles:
- Perceived value: Bundles tend to offer more value than items purchased separately.
- Simplification: Bundling makes buying decisions easier by presenting pre-selected combinations.
- Cross-promotion: Bundles introduce consumers to products they might not have otherwise considered.
- Increased AOV (average order value): Bundles almost always have a higher price point than individual items.
- Inventory management: Bundling can help move slower-selling items alongside popular ones.
This is why so many of today’s most popular brands can’t stop bundling:
- Amazon Prime. It’s hard to say no to free shipping along with video streaming, music, and other perks—Prime members spend an average of $1,400 per year on Amazon, compared to $600 for non-members, according to Statista.
- McDonald's Meal Deals. The iconic value combos have been so successful that bundled meals account for up to 70% of McDonald's sales, according to QSR Magazine.
- Microsoft Office Suite. A workplace juggernaut, Office helped Microsoft capture 87.5% of the office productivity suite market as of 2021, according to Gartner.
- Costco's Bulk Offerings. An entire business model built on bundling has also driven amazing customer loyalty, with a 90% membership renewal rate in 2021.
Is Bundling for You?
There’s a quick way to know whether or not bundling can work for your own business. Stack your product or service offering up against any of these 5 Bundle Types:
- Complementary Products—Can you bundle items that naturally go together? A skincare brand, for example, might offer a "complete routine" bundle with cleanser, moisturizer, and sunscreen. Or, at the movies, popcorn with soda.
- Tiered Bundles—Can you offer different bundle sizes or levels to meet various customer needs and budgets? Cable, the king of bundles, has always offered basic or premium tiers. These days, there’s much more, including options to combine TV, Internet, and even mobile and streaming services all in one deal.
- Limited-Time Bundles—Can you create urgency with seasonal or promotional offers? Around holidays, for example, we see brands selling gift sets that bundle popular products at a slight discount.
- Customizable Bundles—Can you let customers create their own bundles from a selection of products? Meal kit services like HelloFresh use this approach, letting customers choose preferred recipes each week.
- Digital + Physical Bundles—Can you offer both digital and physical offerings together, or in harmony? For example, a continuing education company might bundle physical workbooks with access to online video tutorials.
Time to Test & Measure
If you see a clear fit with one of the 5 Bundle Types, it’s probably a smart move to budget for a test. Just be prepared: any bundling strategy that works takes testing over time to get the recipe right. You’ll want to test and measure (a.) which products and services are the best match, (b.) your target audience segments, (c.) marketing channels, (d.) creative, and (e.) offers. If you’re a digital business, don’t forget to optimize the landing pages.
KPIs to keep an eye on include:
- Conversion rate on bundles
- AOV for bundled vs. individual purchases
- Bundle customer LTV
- Inventory turnover rates for bundled items
- Bundle customer retention, satisfaction, and repeat purchase rates
Build Your Bundle
Bundling can be a smart strategy if you’re looking for new ways to boost sales. A study by the National Bureau of Economic Research found that bundling can increase sales by up to 30% compared to selling items individually.
There’s also potential for increased loyalty if you’re creating real customer value. Can your bundle deliver convenience, for example? A survey by the National Retail Federation found that 83% of consumers prioritize convenience when making purchase decisions.
So assess your product offering and see if one of the 5 Bundle Types can work for you. Test it, read your data, ask for customer feedback, adapt, and iterate. With the right approach, bundling can pay off for your brand, customers, and your top and bottom lines.
