Bundling dictionary 101

Bundling dictionary 101

Bundling is actually a quite common marketing strategy (Happy Meal, anyone?), but it’s only lately spread to the digital services frontier. About 5 years ago it became popular to bundle digital services with physical goods - for example headphones with music streaming.

Co-marketing through bundling has become widely popular in the telco industry during the past few years, with mobile operators partnering up with video and music streaming service providers. Often the companies target the same audience and in this case it’s an option to include several products in the same offer.

Here is a short dictionary to give you a better understanding of the mobile operator bundling partnerships.

Bundling - grouping various services as a package to increase the appeal to potential customers and reduce advertising, marketing and other expenses associated with delivering multiple services.

Hard bundles - mobile operators often sell service packs where the consumer pays a fixed amount for a fixed amount of call minutes, text messages and mobile data. Third party services are bundled in the same way, with access to the digital service coming as part of the fixed price pack. As long as the consumer keeps using the telco service itself, he/she also has access to the digital service. It’s the main model of cooperation today.

It’s mostly used to sign up new subscribers or have existing ones upgrade to a more expensive service pack. Hard bundles work great for postpaid subscribers where the mobile operator has the capability to charge users on a monthly basis.

Soft bundles - the digital service is not directly tied up with a fixed price pack, but offered to mobile operator subscribers as an add-on. Soft bundles enable service providers to tap into the dominant prepaid audience of emerging markets.

Bundle partnership - the service provider(s) and the telco who join forces to offer a combined offer to their consumers. Today streaming services are still the main bundle partners for telcos, but more and more services are being consumed through smartphones. Fruitful partnerships could also sprout from productivity tools, communication apps, transportation, etc.

Mini-bundle offers - when users unsubscribe and churn after the bigger bundle deal runs out, tailored offerings can be created to bring those users back to the service. For example, an initial offering might involve getting 3 days of free service with the purchase of a $0.5 SIM card. If such a user activates the bundle offer but then does not continue as a paying customer, a follow-up offer can be sent: “Load 5GB of data onto your account and get 2 weeks extra access”.

Bundle upselling - marketing the bundle offer so it reacher more subscribers. Launching a bundle offering has a fixed cost. Potential growth on the other hand is not limited and the return on investment depends on how many existing and new subscribers can be convinced to participate.

Reselling - telcos are partnering up with OTTs by becoming their vendors and setting up digital storefronts through which they sell OTT services to their subscribers, effectively becoming digital experience enablers. Bundling and reselling aim to achieve different goals and are not mutually exclusive. While for bundling the goal of telcos is to upsell subscribers and achieve bigger sales of the telco’s own services, reselling provides an opportunity to earn revenue from the sale of digital services directly.

Reverse bundling - when a consumer buys a digital service, they get free or discounted data from the mobile operator. This nudges the consumer’s habits towards mobile data consumption. Reverse bundling works better for emerging markets where consumers are not keen on making the switch from prepaid to postpaid.

Trident Bundling Platform - Fortumo's open platform for co-marketing. Trident can be used to launch bundles and reselling for new user acquisition, monetisation and retention.

Learn more from our other bundling themed articles and white papers on our blog.