Building Block 4: Bundling
Overview
Everyone loves a good deal, which is precisely why offering a bundle is a smart idea.
Bundles give buyers the impression that they’re getting good value for their money, and buying related products together can also be more convenient for customers. There are three popular ways to bundle SaaS, and each strategy comes with benefits and drawbacks.
Three bundling strategies:
- Bundling with core
- Bundling multiple cloud applications
- Bundling applications with adjacent services
Bundling with Core
Looking across AppDirect’s channel partners, the most popular bundling approach is what we call “bundling with core.” This is when a provider bundles a core service—high-speed internet, for example—with an adjacent cloud application, such as Microsoft Office 365, Symantec, or Mozy.
This approach can be especially effective because the sales targets and compensation plans are already built around the core service, so providers don’t need to create specific incentives to drive sales of cloud applications.
The challenge of hard bundles: Sales agents may not necessarily sell the SaaS component of the package. Many of them may stick to what they know—selling core services—and won’t stretch to pitch the benefits of the attached SaaS offer.
The bottom line: Bundling with core is only viable if you have the capability to develop a streamlined customer onboarding process with the main objective to drive activation and usage for the attached cloud application.
Bundling multiple cloud applications
Another bundling strategy is to combine multiple cloud applications together. For example, if you’re an AppDirect partner, you can bundle cloud applications on your marketplace with just a few clicks.
This can help you drive higher ARPU and better stickiness with customers. It can also be a great way to differentiate from competitors who don’t have the technology to easily combine multiple solutions into a single package.
The challenge: However, the more cloud applications you add to your bundle, the more complicated it can be to articulate the full value proposition to the customer. Customers might also ask to unbundle the package.
The bottom line: Bundling cloud apps works best when your sales team has been selling standalone cloud solutions for many years, and is looking to drive increased value to an existing base of customers.
Bundling applications with adjacent services
The last bundling option is to combine cloud applications with adjacent services. For example, packaging Microsoft Office 365 or Google’s G Suite with services such as customer onboarding and 24/7 premium technical support.
The challenge: Bundling adjacent services can create increased complexity during implementation. When you need to combine apps from the marketplace with services from your own catalog, it may require additional development to provide a seamless customer experience.
The bottom line: Bundling adjacent services is a no-brainer for feature-rich cloud applications like Office 365 or G Suite, which often require some live assistance in the deployment phase. For SaaS apps that feature relatively straightforward set up, offering adjacent services may not make the most sense.
Ultimately, choosing the most relevant bundling approach for your business means having a detailed understanding of your own objectives and capabilities.
