We often don’t think about products and services as being bundles, but most are. What’s the downside of bundled products and services?
A bundle means you buy it the way it’s offered or you can leave it and walk away. Here are some examples:
- Mass-produced automobiles: you select a vehicle on the car lot the way it is configured; you can do little to influence the features and options–it is what it is. In order to get different options that are available from the manufacturer, the dealership has to special order it, at a much higher cost to you.
- Cable TV bundles: you can select any number of bundles but you can’t exclude any channels within the bundle–they offer bundles and that is the only variable available. They don’t care if you only want 12 channels–you may need to purchase multiple bundles to be able to view just those 12 channels. This means you might need to acquire 300 channels to see the 12 you actually want.
- Combination menu items at a Mexican or Chinese restaurant that loudly proclaim, “No Substitutions.” A number 8 won’t be a number 8 if they allow substitution of items. To keep things simple for them, they insist on purity in the execution of their bundles.
Some years ago, I wrote an article for FastCompany.com called We offer it, you buy it; take it or leave it. Here’s an excerpt:
Does the headline of this article represent an attitude that customers are drawn to? It sounds like a customer strategy taken right from the Seinfeld’s “Soup Nazi” playbook!
Do customers prefer choice and the ability to influence every last detail in their decisions about certain products and services? I say “yes”—they prefer choice. Unilateralism on the part of product and service providers is not the pathway to marketplace success; it creates undesirable friction in the relationship.
The more sophisticated the buyer and the more configurable the product or service, the more giving the customer access to what they want comes into play.
What happens when a consumer is limited to buying in bundles?
Friction. Friction is induced in the relationship. Friction means consumers will keep their eye out for a way to get what they want without having to compromise. Friction is induced when the consumer is stuck with the purveyor’s business paradigm, not predicated on the consumer’s wants and desires. Friction means the buyer is looking to replace you.
If you were to ask the cable TV company about this issue, their responses would be, “That’s not how we do business.” Yet, we all know that if one major cable TV company were to make the shift, the others would be forced to adapt rather quickly. The cable companies caused friction that caused consumers to “cut the cord” and opened the door for streaming subscriptions to thrive. People could now choose only the channels they want.
Is there a right or wrong way to offer A La Carte products and services?
Yes! There is a right and wrong way to offer a la carte products and services. Here are critical issues to think about:
- Problem: As volume and variety increase, customizers suffer greater and greater inefficiencies that drive down profits.
- Solution: The A La Carte Customer® is a business approach that drives down the cost of variety while enabling greater profits.
- Problem: A company can’t thrive as a customizer if both volume and variety are increasing.
- Solution: An operational strategy built around a la carte customer enables greater efficiencies within the enterprise and out into your sales channel.
- Reality: An a la carte customer strategy isn’t a quick fix–it will take time to drive operational improvements. Start now.
This is the era of the A La Carte Customer®
Why offer options when you’re doing fine “as is?”
- When you offer a la carte, your consumers get exactly what they want.
- By eliminating friction in the customer relationship, you ensure your continued viability.
- When consumers are happy, they share their experiences with others.
- Putting blinders on and ignoring this issue won’t serve your business well. Don’t be like the cable companies.
If you don’t offer variety and choice, now is the time to start. What are you waiting for?
Thought for the week:
“Fundamentally, customers do not want choice; they just want exactly what they want.” – B. Joseph Pine II