Bundling for Growth: ISP Service Add-Ons That Increase ARPU

Bundling low-profit services with higher-profit offerings is one of the most reliable ways for an ISP to increase ARPU. By grouping two or more services into a single, well-priced package, you give subscribers a more attractive value proposition while improving the long-term economics of every account.

Attracting new customers to your service offerings can be a challenge, whether you're an established player in the market or a new entrant. Balancing profitability with affordability is a delicate balancing act, but a necessary one to succeed. Some companies opt for rock-bottom introductory pricing, while others use referral systems to incentivize free promotion of their services. These methods and many others present a tried-and-true pathway to establishing foundational growth.

You'll find bundling available in almost every industry, and for good reason. Insurance companies offer bundle rates, internet service providers offer service bundles, and fast food restaurants offer food-and-drink bundles. It's almost impossible to avoid the fact that, no matter how you slice it, bundles are good for business.

One often overlooked method is bundling low-profit services with other, higher-profit offerings. This allows you to increase your average revenue per user by providing a grouping of services that combine to form a cohesive value offering that is both enticing to customers, and profitable for your business. There's no one bundle to rule them all, but Sonar is ready to adapt to any bundle you decide to deploy.

What Are ISP Service Bundles?

Service bundles are a catch-all term referring to a grouping of 2 or more services offered by your business. They're common practice for internet service providers and will frequently contain Internet, Voice, and TV services, referred to as a "Triple-Play" package. However, there are no distinct rules surrounding what you can bundle, it's primarily about making sure that the contents of the bundle make the customer reflect on its actual value. Consequently, bundles will often include an expiring discount, making it more attractive for the subscriber, even if the long-term pricing is more advantageous for your business rather than the consumer.

Consider the Good-Better-Best approach to pricing - bundling services allows you to occupy a unique value proposition. By pricing a bundle offering multiple services below your highest-tiered service, it becomes instantly more attractive to consumers when compared to having just a single service. This encourages customers to subscribe to a bundle, even if the cost is more than they anticipated paying.

How to Structure Your Service Bundles

When considering creating service bundles, you'll want to first decide the purpose of the bundle:

Is this bundle designed to increase ARPU?

Is this bundle designed to capture new subscribers?

Is this bundle designed to entice existing customers to upgrade?

While there's no wrong way to use service bundles, making sure you know who you want subscribing to the bundle makes it easier to tailor the specific services to appeal to the intended subscriber.

Think about it this way - a bundle created with an expiring discount likely shouldn't be offered to existing subscribers. They're already paying for their service, and would jump at the chance to pay less. This would lower your ARPU. Targeting the bundle towards new subscribers instead, whether through marketing campaigns or as an on-call offer, will promote new sign-ups and increase your overall revenue. This is why you'll see some providers offering such steep discounts on introductory packages: breaking even in the short term can lead to profitability long-term with the right package of services.

Promoting Growth With Bundles and Discounts

The best marketing is the marketing you don't need to do at all, though following closely behind that is marketing you only need to do once. Offering competitive pricing is the best way to stay ahead of the curve, and offering limited-time offers or discounts can help tip the scale when consumers are on the fence.

There are pros and cons to offering a sales discount, which HubSpot outlines well in one of their articles, but from a pure growth perspective it's hard to argue against their effectiveness. Rather than discounting your services outright, you can offer the customer a set amount of their services for a set amount of time, outlined in a signed contract. All of this can be done directly in Sonar, with full control over your services, your packages, and your contracts.

You can also implement a similar strategy to offer customers underutilized services, which can help turn a break-even product into a revenue-generating machine. By including the service as part of a first-time subscriber bundle, you can easily add new users to an existing service, increasing market share, adoption, and long-term viability of the product.

How Sonar Makes It Happen

Rather than relying on a traditional billing system, Sonar can simplify your service bundles by providing you total control over who can see them, who can subscribe to them, and who can add them to accounts. Furthermore, Sonar also includes a built-in Business Intelligence Reporting system that will enable you to review customers with ongoing or expiring promotional bundles. And if that's not enough, Sonar will also natively integrate with your MarketBroadband account to facilitate the promotion of your services and bundles to encourage new subscribers based on your actual serviceable address database.

If you'd like to learn more about how Sonar can bundle your services, or partner to grow your business, contact us or schedule a demo today!

Frequently Asked Questions

What is an ISP service bundle?

A service bundle is a grouping of two or more services offered together by your business. For internet service providers, this often means a "Triple-Play" package combining Internet, Voice, and TV, though there are no fixed rules about what you can bundle.

How do service bundles increase ARPU?

Bundling low-profit services with higher-profit offerings combines them into a cohesive value offering that is enticing to customers and profitable for your business, raising your average revenue per user. Pricing a multi-service bundle below your highest-tiered single service makes it more attractive while lifting overall revenue.

Should bundle discounts go to new or existing subscribers?

Expiring-discount bundles are best targeted at new subscribers. Offering them to existing customers, who are already paying full price, would lower your ARPU, while new sign-ups increase your overall revenue.