Every time I tell the story of how I came to own a $20 “fingernail buffer” people laugh. Maybe that’s because most of us have a similar story. It happened last summer, as I was walking through the Premier Outlet Mall. A salesperson who worked at one of the kiosk-type shops in the middle of the mall stopped me and asked if he could demonstrate something quickly. I’m in marketing, so I figured this could be interesting! He pulled out a small nail buffer and proceeded to go to town on one of my fingernails. I must admit, when he finished, it looked great – smooth and shiny. The other nine fingernails, however, were looking and feeling neglected by comparison. I loved the product. And, I figured the most one of these things could cost was a couple of bucks – after all it’s basically a small block with three grades of sandpaper on it. Imagine my surprise when he said they don’t sell them individually. It’s part of a lovely bundle of products that together sell for $20!
What happened here? The seller opened with a product he knew was an easy sell. It was simple, unique, easy-to-demonstrate, and was observably effective. And, one could surmise that the quality of the other products in the bundle was equally good. If sold separately the value of each sale wouldn’t amount to much. They’d have to sell A LOT of those things just to cover their costs. But as a product bundle, even if they close fewer deals, their sales number is much higher.
By the way, this technique can be applied to services, as well. Other examples of the type of bundling described above are gift baskets, infomercials (remember Ginzu knives?) But wait, there’s more! Even your cable company gets into the action by offering a TV, phone and Internet bundle.
Another way you can bundle is to group slower moving items with better sellers. If you offer multiple products and services odds are you have a few that are clear leaders, and others that don’t move at the same high volume. One way to increase the sales of the slower items and therefore your overall sales volume is to bundle them with some of your better-selling products. Personal Computers, for example, are often offered with a printer and speakers.
Why it works:
People are enticed by the sheer volume and quantity of what is offered in a bundle. Most people assume if there are a lot of items in the deal, it must be worth a lot. Perhaps when you were a little kid someone older gave you the option of having 15 nickels for a dollar, or 10 dimes. We wanted more, so we naively went for the nickels. Some of that logic sticks with us. If we’re not sure of the exact value of each of the items, their sheer number helps us draw the conclusion that it must be a good deal.
Now that’s not to say that we should be deceptive. It merely means that as marketers, we can leverage human nature to our advantage by making our offer as attractive as possible.
To create a bundle:
- start with a fairly good seller and/or something that differentiates your product from a competitor’s
- find complimentary products/services you can add to the mix
- price lower than the sum of the individual items, yet still sufficient for healthy margins
- measure your results
Be thinking about ways to create a bundle for your products or services. And what if you don’t have multiple products or services? The challenge to you is to think of a new product or service that you could add to your offer.