Impacted Metrics: Customer Satisfaction | Brand Value | Purchase frequency
Previous Tip: $300 today or $30 every year for the next 20 years? (All tips here)
Recommendation: Don’t always try to push your customers to buy bundled packages. They might seem like a great deal at first but can lower your product value later on.
What is bundling bias?
The bundling bias describes our tendency not to use up all the experiences that are bought as a group, which means that we don’t get the full value of a bundle compared to an individual purchase.
For example, if you purchase individual tickets to five different shows for a music festival, as opposed to buying a full pass, the chances of you attending each individual show will be higher.
From a study!
A study conducted by researchers has found strong evidence for this bias (Soman & Gourville, 2001). Using historical purchase and attendance data of a 1997 Summer Shakespeare festival, they found that theatergoers who purchased tickets to a single play were certain to use the tickets. On the other hand, budding theatergoers who had purchased tickets to four plays (“a bundle”) were only 84% likely to use their first-play ticket and only 78% likely to use any of their other tickets, across the four plays. In the words of the great man himself, “go wisely. Those who rush (into buying an all-access pass) stumble and fall…”
Why is it important
The bundling bias indicates that we often lose out on the full value of a bundled package because we don’t use each item in that bundle. That means that when we spend our money on a bundled package, we are not necessarily making the most rational decision because we base our purchasing decision on the overall value of the bundle, not the value of each individual item.
How to implement it
Simply unbundle to motivate This bias can be of great use for marketers in the service industry. If trying to increase consumption of a service, consider unbundling the service in some way to motivate consumption and create a greater feeling of value for money.
Awareness is the secret to a successful bundle Consider making the cost of each unit within a bundle more clear. For example, if you run a fitness coaching center and are trying to promote regularity of attendance with a multi-session pass, consider highlighting the cost of each session in the fee.
Use timely reminders to inject value into a bundle For membership that includes free tickets as part of the purchase, remind people that they still have tickets available.