Bundling

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Bundling turns out to be a whole science unto itself. When one founder asked whether the coffee-in-a-teabag business could use the same free-entry strategy as Wistia, another rightly pointed out that bundling feels different: with a taster (two weeks of free cups of coffee at the kiosk in Kenya), the “free entry” model is different from cross-selling or upselling. There is no single right answer. There are lots of times bundling makes sense, but you have to think about it as a separate science.

Startup Secret: rather than half-answer bundling, treat it as its own discipline. For a fantastic view on bundling, look at Shishir Mehrotra, the founder of Coda (the tool the Startup Secrets workbook is built in), who also used to run YouTube. He has done a great video on bundling and is an expert at it. (See the linked podcast and the bundling toolkit and four myths of bundling references in the workbook.)

Symantec’s total solution: bundling to 2.6x. After the antivirus subscription flip, our team realized customers were not really buying virus software, they were buying protection for their data. So we took a thought-leadership position instead of a feature position. We took out full-page ads in the Wall Street Journal and the Financial Times (my board had a heart attack: “how can you afford that?”), went on radio and TV, and ran a data security campaign about what the customer actually cared about. We got customers to believe we had a complete suite, the “total solution,” doing everything from protecting data from viruses, to backup, to restore. We used to sell one to one and a half products per customer per seat across all our tools. By bundling five or six products together into the total solution and pricing it at roughly 50 percent more, people were willing to pay even more once they saw the value of the complete solution, and the natural average went from 1.5 to 2.6 products per seat, a 160 percent uplift, a 2.6x. That is what we call upsell today. Our revenues spiked, we put competitors like PC Tools and Central Point out of business, and we went public. It was game-changing, and it had nothing to do with technology. We learned two things in sequence: first, customers were really interested in data security (so we repositioned), and then that bundling the products together drove another uplift.