June 04, 2020

Building Better Subscription Bundles

By Vivian Xie, Product Marketing, Vindicia

One of the most effective strategies for attracting new customers is to offer subscription bundles, pairing multiple products or services at discounted rates. The communications industry's bundling of Internet, TV, wireless, and mobile devices is a classic example of this strategy for packaging a group of related services and products together. During these challenging times brought on by COVID-19, people are looking for resources and experiences to stay entertained with a large variety of content and services for a relatively inexpensive price. People like to feel they are getting a deal.


Should businesses consider launching subscription bundles?

Walt Disney Co. is offering a combination of its popular Disney+ streaming service bundled with two other Disney-owned video services, Hulu and ESPN+, at $12.99 each month, saving consumers more than $5 each month compared with signing up for each subscription separately. This all-in-one bundle was created with the diverse preferences of an average household in mind. Following a similar strategy to satisfy diverse audiences, T-Mobile joined forces with Quibi to expand its distribution channels by providing its users Quibi's exclusive content designed for mobile consumption consumed in ten minutes or less. And those subscribers who already take advantage of T-Mobile's Netflix On Us deal can choose between either Netflix or a Quibi subscription "on them" at the end of the first year.

Recently, Google and Spotify partnered to satisfy and retain existing subscribers by giving away Google Home Minis. Don't have a speaker to play Spotify in the most seamless way possible? Now you do, with your new Google Home Mini. This collaboration continued the brand recognition for Google smart speaker, as it kept Spotify listeners happily subscribed to their premium service -- a win-win for both Google and Spotify.


4 tips for creating a popular subscription bundle

While there isn't one bundling strategy that will yield results for every subscription business, there is one surefire strategy that gets people excited about your bundle of digital products: offer value and variety. Also, offer co-marketing opportunities to brands you are bundling with. To build a successful business partnership with the other company, joint marketing and offering promotions attract more customers to bundles.

1. Leverage collaborations and partnerships

2. Make subscribing personal

3. Mix it up and use subscription intelligence
It is important to experiment and iterate with various bundle combinations and discount rates to find the right pairings for every customer demographic. To be successful, subscription businesses need to analyze every aspect of their bundle to determine what subscribers prefer, what attracted new subscribers, how subscribers like to pay -- the list goes on. Comparing different packages, tweaking combinations and price points, and extensively testing bundle effectiveness with various customers will help deliver better ROI.

4. Think about subscriber retention
Because any point in the subscriber lifecycle can lead to churn, subscription businesses should implement strategies for retaining customers over longer periods to more proactively prevent churn. Customers who purchase multiple services in a bundle may be more likely to discover newfound likes, thereby lowering the likelihood of churning. Vindicia's analysis also shows that new subscribers are most likely to churn within the first three months of service. Tracking usage history can help you identify cancellations before they occur. Decreased usage is another indicator of churn risk. Identifying such changes in usage patterns should trigger an outreach program that employs strategies such as save offers, satisfaction surveys, loyalty programs, and other tools to reignite engagement and prevent cancellation.

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