How to increase sales through product bundling?

A few months ago I was in one of my favorite cafes. There I was ordering my usual double espresso when a waiter stopped me and asked if I was familiar with their latest offer.

The offer entailed 10% off chocolate cake with every purchase of coffee. Honestly, knowing how good their coffee was, I was sure that the cake must be delicious as well.

So, of course I didn’t hesitate in taking advantage of the offer. While I was enjoying my coffee and cake, I began thinking of the great sales strategy (by utilizing product bundling) this cafe shop had just employed.

Not only was this a great way of increasing their profit but it was also a clever way to increase customer satisfaction too.

As someone who has been working in sales for quite some time, I already knew tactics such as bundling, cross selling, up-selling are great strategies to accelerate sales as well as improve customer satisfaction.

But as I wiped the crumbs off my mouth, I reflected that this was further proof how powerful these tactics can be.

So, Product Bundling, if done right, can not only help accelerate your sales but can increase customer satisfaction too.

There are many ways your business can benefits from such a marketing strategy. Offering product bundles will increase an average order value. By steering consumers towards buying product bundles instead of individual products you will increase your average order value.

This can translate into higher turnover. If you are thinking of optimising the shipping cost here too, there is good news as well – bundle pricing generally has a very positive impact on reducing shipping costs!

Another way of utilising a product bundling strategy is through reducing the old inventory. You can reduce the stock of old products that have been stagnating for some time in a warehouse by bundling them together with more popular products.

The discounted price of the bestseller item, even though it is combined with less a popular product, will increase the intent of purchasing. This type of product bundling will help you clear old or slow-moving inventory.

If you are operating in a very competitive ecommerce market, offering product bundles can make it harder for customers to compare your products’ prices with competitors.

Furthermore, the discounted price of combined products will create a positive association with your ecommerce website as customers will feel like they can get a good offer in your store.

Moreover, let’s not forget the convenience factor. Enabling customers to purchase with a single click complementary products will save them a lot of time. The time they would normally spend on finding the complementary product themselves.

Now, let’s take a look at how to create and position Product Bundles in an ecommerce store

You have probably already noticed while shopping online yourself that product bundling is created from two or more complementary products.

The amount of products you will combine into package deal depends on your strategy. You can combine two products, as well as multiple products, as long as it makes sense for consumers and your profit margin remains positive.

Let’s take a look at the example:

Imagine you are in the Phone accessories business and offering complementary products: Phone chargers, phone holders, phone screen protectors, etc.

So, how can you create product bundling from these?

If you have just launched an ecommerce store and you don’t have enough data to help you with creating product bundling, then simply try to use a bit of common sense.

In the example above, the bundling could be created from next products: Phone Finger Holder + Phone Desktop Holder.

Think of the reasons why a customer would like to buy a phone desktop holder. Convenience is most likely the main reason! Having a phone desktop holder means you don’t need to hold your phone every time you make/receive calls.

A reduction in the time spent constantly holding your mobile device is probably the main motivation behind the majority of customers’ decisions to purchase this particular product.

Now, think of the benefits that owning a phone finger holder product might have. This would allow your hand to relax while eliminating the constant clutching of mobile devices. Therefore, this seems like an ideal product to be used alongside the phone desktop holder. The same logic can be applied when creating any product bundling in your shop.

So, you have created a product bundle. Now what price strategy should you utilize?

Imagine the desktop holder costs $15 and the phone finger holder is $7. If the customer buys them separately she would pay in total $22.

These two products are now being offered for a reduced price in your bundle. The discount you can afford depends on your profit margin. You should always strive to maintain a decent profit margin.

In this particular example:

if the profit margin allows it, try giving at least a 9% discount. This discount will entice your customer as a pricing point of $19,99 is reached. Even though we’re talking a difference of just one cent, keeping the price below $20 will improve the discount perception in the eyes of the customer.

Once you have determined the products you wish to bundle and their bundle price, you can try out different messaging techniques for discounts. In some cases it will resonate better if you promote a relative discount (e.g. 9% off) but in other cases you might achieve better results if you promote absolute savings (e.g. save $2).

However, in this particular case I would go with promoting 9% discount. Because the value and psychological impact is clearly bigger.

The next step is to promote them within your shop. Make sure they appear at the top of their relevant categories. If you have a category with phone holders and within these category you offer products such as: phone desktop, fingers, car holders etc. Then make sure the bundling of phone desktop + phone fingers holder is positioned at the top of this category.

It is also very important not to forget to monitor your sales data, as well as customers’ feedback. Depending on the feedback and amount of sales you receive, you can then fine-tune your bundles.

In conclusion, if you haven’t started offering product bundles yet, please start as soon as you can. I know it takes time, but believe me, the acceleration of sales it can achieve can be massive.

Every time I have seen product bundling being offered, sales have always gone through the roof. This just proved how powerful this win-win strategy can be.