Product bundling in telecom

Product bundling has proven to be an effective strategy for telecom companies that want to reduce churn and maximize their customers' lifetime value (LTV). Customers want the convenience and cost savings of having their telecommunications services bundled with the products they need for everyday life.

Many telecommunication service providers offer to bundle their product offerings, which has proven to be an effective strategy.

As many as 63% of consumer respondents to an Omdia article have purchased a bundle of two or more services.

Multi-play packages are helping telecoms 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 telecom-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 of 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 bundles.

By adding non-traditional bundles to offerings, telcos can increase their 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 have the client’s needs in mind regarding what content they are consuming.

Value-add partnerships with streaming services can make telcos more attractive to consumers

Other areas 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 transmit data.

For example, 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 and a specialized home internet package that the IoT devices would use to send and receive data. This partnership style is good for the customer and benefits both companies.

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.

Bundling options will improve customer experience, increase loyalty and reduce churn rates. Adding strategic partnerships will help increase market share and make up for dwindling retail numbers.

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.

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Editor's note: This article was originally published on February 18, 2021. It has been updated for freshness, accuracy and comprehensiveness.