Strategy & Best Practices

Moving up the SMB Value Chain with a Winning Bundle Strategy

By Mary Montserrat-Howlett / July 28, 2017

Since McDonald's first offered the Happy Meal, bundling has been an integral strategy for multi-product companies like banks, telcos, e-tailers.

Bundling has many benefits:

• It’s a simple and effective way to bring different products and services together to create new compelling offerings

• It’s been proven to lower churn and drive revenue and profitability

• With the right mix and match of products and services, it adds convenience and value for the buyer (e.g. paying for multiple services at a lower price, on one bill)

When it comes to creating attractive SaaS bundles for SMBs however, many service providers haven’t yet cracked the code.

Bundling SaaS for SMBs - not a one size fits all approach

Service providers bundling cloud services for SMBs may find themselves challenged by this diverse and complex market. Compared to enterprise, SMBs are more prone to churn and more sensitive to large price tags. They may also require extra support to onboard and deploy new cloud services. This makes it critical for service providers to understand the unique needs and outcomes SMBs are looking for in cloud solutions and adapt their bundles accordingly, with trained sales and support experts available to help customers along the way.

Our Customer Success team goes in-depth on the three popular ways to bundle cloud apps. When it comes to SaaS, the main ways to bundle include: bundling with core (e.g. high-speed internet + Microsoft Office 365), bundling with multiple cloud applications (e.g. productivity + security + online backup), or bundling with adjacent VAS services (e.g. Office 365 + data migration or onboarding).

Whichever strategy or combination of strategies that you choose, you should ensure that the bundle:

1. Addresses the unique needs of the SMB (the right combination of services, to address the right needs, at the right price)

2. Offers the support SMBs need to deploy or manage their services

3. Offers flexibility (option to mix and match products, switch services, etc.)

Successful bundles provide… value for money

Bundling done right can be a key driver for improving customer retention, driving revenue and enhancing customer experience.

Bundling done right can be a key driver for improving customer retention, driving revenue, and enhancing customer experience. But a bundle is only as good as the value customers perceive they are getting from the bundled offer. In other words, customers have to feel like they're getting value for their money. Because the more services you include in your bundle, the faster their bill adds up.

Take a consumer broadband bundle that includes wireless and DTV. If you add a mobile data plan - a customer might be receiving a $500 bill from one service provider every month. When they get the bill and see “I give this one company $500...a month!" it gets scary. Expectations change and customers quickly start to wonder what they're getting for their dollar. “Am I using the products I am paying for?” “Do I really need all of those services.”

SMBs may have similar concerns when it comes to their SaaS bundle, so aim to craft bundles that address the elements that will matter most:

• Price: Is the bundled price of the products/services better than à la carte. Does it create value for my money?

• Usefulness: Do the products in the bundle work well together? Will I use them on a regular basis?

• Personal meaning/worth: Do the products in the bundle have significance for me? Improve my life? Bring me security?

• Benefit/gains: Will the bundle simplify a process? Improve the way my team works? Help me save money?

• Support: How will I be protected if I invest in this bundle? What level of support will I receive? Will I get a better Customer Experience?
  
  
  

  

A successful SaaS bundle strategy is a balancing act between the actual products and services you sell and the value, benefits and outcomes customers get from using them. Products and offers can work to attract customers. But it’s the return on using those products together that retains them.

Successful bundles deliver... desired outcomes

In order to add value to your SaaS offers, think about the services that will bring the best outcomes for your SMB customers. Customer outcomes are critical. Companies today aren’t just competing through the products and services they sell; but how well they can deliver measurable results that are important to the customer. I’m not buying a Nest thermostat, I’m buying a solution to make my home more energy-efficient.

When you’re bundling with a “customer outcome” in mind, you need a deep understanding of the context in which bundled products and services will be used. For example, at AppHelp we offer onboarding, remote training, and support services that can be bundled with different cloud applications in order to ensure customers get value from their software, right from the start. One of our partner’s most popular bundles includes high-speed internet, security, online backup, and premium tech support delivered by AppHelp and boasts monthly churn rates as low as 0.01%. Interestingly, the same bundle is also offered without support but churn is significantly higher. Why does support affect churn? We believe it’s because with support customers get a better customer experience and get to know the true value of the services they are paying for.

Many SMBs don’t have the time or the IT resources to choose, deploy and manage the different apps available to them, so including value-added support services in bundled offers is a way to ensure they actually adopt the products and start seeing value from them right away.

Successful bundles are... customer-centric

An Insightsquared report found that 70% of a business’ churn rate could be attributed to poor customer service. In order to reduce "bundle churn", figure out what the perfect customer service experience looks like when a customer chooses your SaaS bundle versus a competitor’s. Do you provide expertise to help them choose the best cloud services for their business? Do you bundle support services to help them deploy new apps faster, more securely?

A recent study found a $3 return for every $1 invested in the customer experience. Yet the majority (88%) of decision-makers surveyed in the study said that factors like outdated systems and lack of internal skills posed the greatest barriers to delivering great customer service. That said, service providers will need to look to third party specialized experts to provision, onboard, and support end-users if they want to grow and expand their cloud portfolio.

If you really want to differentiate your SaaS bundles, support can be a great way to enhance customer experience and help SMBs achieve the outcomes they’re looking for in your cloud offerings. The right bundle strategy can be a win-win for both you and your customer. When products and services work well together, they perform better together. And support - is key to making it all work.

Learn more about providing support for SMBs moving to the cloud by downloading our white paper.